[bryanlarsen]

Have you actually done the math? It's certainly not hard to find lotteries where the expected payout is above 100%. In the big rolling jackpot games, the average payout is about 50 cents on the dollar, but after weeks and weeks of paying 10 cents on the dollar with no big winner, the jackpot builds until it's higher than the expected number of dollars coming in.

[T-hawk]

It's certainly not hard to find lotteries where the expected payout is above 100%.

This is true, but there's more to it. It's not so easy to find a lottery where the expected post-tax payout is above 100%, since you'll need the pre-tax expected payout to be about 160%. You also have to figure in time value of money, since all large lottery prizes pay the advertised face value as an annuity up to 20-30 years into the future, so you're paying in 2011 dollars but receiving part of the prize in 2031 or 2041 dollars. Finally, you have to be the lone winner to come out ahead, and not be splitting the jackpot with another winner.

Multiply that all together and the situation does not happen. The largest Powerball jackpot ever was $365M, which barely overcomes just the loss to taxation on the 195M to 1 odds.

[bryanlarsen]

In Canada, lottery winnings aren't taxable. Buying lottery tickets can't be claimed as a business expense, so paying tax on the winnings would be hypocritical. Of course, being hypocritical rarely stops governments.

Lottery winnings in Canada are always advertised in the "lump-sum payout" amount.

The threshold varies slightly depending on how many tickets are sold, but for Lotto 6/49 in Canada, any payout above about $32M is "in the money". This isn't common, but it does happen several times every year.