October 23, 2018 / 7:18 PM / in 9 months

Breakingviews - Record lottery threatens Silicon Valley self-worth

Signs display the jackpots for Tuesday's Mega Millions and Wednesday's Powerball lottery drawings in New York City, New York, U.S., October 23, 2018. REUTERS/Mike Segar

NEW YORK (Reuters Breakingviews) - The Mega Millions lottery jackpot, available in 44 U.S. states, the District of Columbia and the U.S. Virgin Islands, has reached a record $1.6 billion. A successful punter or several will become at least as well off as founders of a hefty Silicon Valley technology unicorn. Rubbing shoulders on rich lists might rankle with startup billionaires – but their wealth owes plenty to luck, too.

The accumulation of all great fortunes involves a dollop of chance. Tuesday’s drawing may create one entirely on luck. The net, assuming a lump sum payout – smaller than the headline figure, which assumes regular payments over years – would probably be somewhere north of $500 million after tax for a single winner. That’s more than many paper billionaires in Silicon Valley are probably worth, given the proliferation of private companies with vapor-fueled valuations.

The lottery structure of many dud bets and a few giant payouts is also familiar to venture-capital and angel investors. The economics are better, however. Jackpots roll over when there’s no winner but only new $2 tickets are valid, so right now expected returns on Mega Millions are positive. Buying all 303 million number combinations – if that were somehow possible – would net at least a share of the jackpot and about $75 million in secondary prizes. That’s surely better odds than backing a pool of new cryptocurrency and dog-walking startups.

If the top prize again goes begging, Friday’s prize will be far larger, as each bigger tally attracts more players than the last and a slice of their stakes are added to the next. Before long, an eventual winner could land in rarified levels of wealth, even for Palo Alto.

More than a few tech leaders cling to the idea that smarts, skill and perspiration took them to the top of the heap. Wealth is merely a handy scorecard for these traits. Perhaps it’s easier than admitting that, in a world of winner-take-all companies, a chance of investment or timing could have easily favored another social network, advertising platform or dating app. For them, a lottery winner with a fatter bank account may induce some psychic distress.


Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.

Sign up for a free trial of our full service at https://www.breakingviews.com/trial and follow us on Twitter @Breakingviews and at www.breakingviews.com. All opinions expressed are those of the authors.

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below