Welcome Red Barracuda to the blogroll. At RTFT, we like the Eastern Europeans.

Here’s a question. If someone offered to spread a table game in a casino for you, where you could only bet $1 at a time, and the payouts were as set out below, would you do it?

1:75 winner pays $2.

1:141 winner pays $3.

1:306 winner pays $7.

1:844 winner pays $10.

1:13,781 winner pays $150.

1:15,313 winner also pays $150.

1:689,065 winner pays $10,000.

1:3,904,701 winner pays $250,000.

Overall odds of winning on a single play — 1:40.

Looking at the numbers, this is clearly a bad play, probably one of the worst that any casino could ever offer. If you had a $100 bankroll, you could easily blow through it without winning a single game.

The odds and payouts listed above are, of course, for the Mega Millions lottery, and looking at the stark numbers, it’s very clear why many people refer to the lottery as a “stupid tax”. You’d have to be stark raving mad to take those kinds of odds for those payouts, right?

Except – the one thing I left out is the jackpot odds. Jackpot odds are 1:175,711,536. Pretty long odds indeed. So why will I be buying a Mega Millions ticket later today?

Overlay! The jackpot for the next drawing, on Tuesday, is estimated to be $340MM, almost fully double the odds of winning. I likes me some positive expectation, no matter how slim or remote the chances of actually hitting it are. I also likes me the ability to fantasize what I would do if I won the jackpot, and the slight moment of anticipation as I grab my ticket to check the numbers. These things alone are worth $1.

Sure, the naysayers will tell me that my “overlay” ignores the possibility of a split jackpot, or that taxes reduce the overlay, or that the lump sum payment that most people opt for reduces the overlay (although, interestingly, with the jackpot as big as it currently is, does not eliminate the overlay if there is only one winner, since the Mega Millions jackpot lump sum value is usually in the neighborhood of 56-59% of the annuity value). I tell those people to stop raining on my parade.

After deducting taxes, the lump sum jackpot prize of Tuesday’s drawing will be worth approximately $114MM, depending on which state the winner is from. That kind of money is unfathomable to me – but it won’t stop me from spending a dollar and daydreaming about it.

You might consider this the next time you’re playing in a poker game with a bad beat jackpot and have to make a long-odds call on the turn to hit the jackpot.