Originally Posted by regnis View Post
Here is my problem with just looking at +EV. What if the lottery has carried over to $500,000,0000, and the odds of winning are 1 in $250,000,000 (theoretically---i have no idea what the odds are). Does that make buying 1 lottery ticket a good bet?

So I think you have to look at +EV and variance.

In horse racing we have "bridge jumpers" who bet hundreds of thousands to show on a heavy favorite that can't possibly lose to get a 5% return. However, if one of them does lose, you can never recoup. So is that a good bet? 5% in 2 minutes sounds good---until one loss ruins you.
I was one of those said "bridge jumpers" in the mid-1990s. Do you remember a "can't lose" horse named Gentlemen? He was supposed to be up against another really good horse and a few scrubs at Hollywood Park, but the good opponent got scratched and it was just Gentlemen against the scrubs.

Because Hollywood Park cold not go lower than 1:20 payouts, everyone hammered Win and Place. I bet Place because it was the same 1:20 payout as Win!

Was sure it was free money. More than a million dollars (total, not mine) was wagered on Gentlemen, with very little on the other horses. There were only 5 horses total in the race.

Gentlemen ended up finishing last.

He actually got booed after the race.

Turned out that he had some major health issue which they didn't disclose. I don't believe he raced again.

Oh, and in your lottery example, yes, it's a good bet. However, it wouldn't be a wise bet to throw too much on it, given the insane variance.