You know there is truth to the adage 'the lottery is a tax on people who are bad at math' when some of the most rapacious names in investment banking and private equity are lining up to buy a multi-billion-dollar lotto ticket.
Punters hoping to pick that multi-million-dollar win are getting a math lesson from the real millionaires' factory, Nic Moore's Macquarie Group. It has joined with the legends of private equity, KKR, in a plan to strip Tatts' lottery business out of the hands of its suitor, Tabcorp.
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What are the odds of winning the lottery?
Money editor Caitlin Fitzsimmons gets down to the numbers on what you should do if you win the lottery.
Why does this business interest the smart suits from the top end of town so much?
In simple terms, there is a guaranteed win for those behind the lotto registers who collect the cash from mug punters who buy $10 worth of hope for the next big jackpot.
![Tatts CEO Robbie Cooke at Tatts' headquarters in Brisbane.](/web/20161215043822im_/http://www.smh.com.au/content/dam/images/g/j/4/n/y/8/image.related.articleLeadwide.620x349.gtavd8.png/1481757479098.jpg)
Tatts reported that it generated $2.14 billion from lottery sales last year, up more than 8 per cent on the previous year.
It paid out $1.19 billion to state governments in the form of taxes, in what amounts to a very regressive tax on those who can ill afford it.
Tatts' profit margin (before tax) ate away another $320 million of last year's takings.
According to CBD's maths this less than 29¢ in every dollar available as a lottery win. But the legislation mandates that 55 per cent of the ticket revenue is paid out in prize money so don't rely on this columnist either.Â
![Tatts generated $2.14 billion from lottery sales last year.](/web/20161215043822im_/http://www.smh.com.au/content/dam/images/g/h/9/1/9/o/image.related.articleLeadwide.620x349.gtavd8.png/1481757479098.jpg)
But to give you an idea of what the real odds are for your average ticket holder on the street, Tatts states that the chances of winning a Division 1 prize in Oz Lotto is one in 45,379,620.
To put this in perspective, Jeffrey Rosenthal – a professor of statistics at the University of Toronto, who has been touring Australia – calculated that the chances of a randomly chosen Australian becoming our prime minister are much better at one in three million.
![Happy days: Andrew Forrest.](/web/20161215043822im_/http://www.smh.com.au/content/dam/images/g/p/e/o/k/a/image.related.articleLeadNarrow.300x0.gtavd8.png/1481757479098.jpg)
In a few weeks I'll be giving a series of research and public lectures in Australia -- all welcome! https://t.co/djftjzdMDx
— Jeffrey Rosenthal (@probabilityprof) November 8, 2016
Mother lode
Not all of the surprises were nasty this year. Not if you were one of Australia's lucky iron ore billionaires.
![Illustration: John Shakespeare](/web/20161215043822im_/http://www.smh.com.au/content/dam/images/g/t/b/a/i/2/image.related.articleLeadNarrow.300x0.gtavd8.png/1481757479098.jpg)
Mind you, Fortescue founder Andrew 'Twiggy' Forrest would tell you that luck had nothing to do with the rapid turnaround in the fortunes of his miner, which just last year was on its death bed if you believed the whispers from industry insiders.
It has survived in spectacular fashion and added $5 billion to Forrest's wealth this year as rising iron ore prices and falling debt levels put the company in an unusually safe financial position after more than its share of near-death experiences.
Not that Forrest would admit to this either.
"I had this rock-solid faith in Fortescue since I started the company," Forrest told BusinessDay in October. "With every really brave plan A, we had had a bulletproof plan B, and people don't give us credit for that. People just see the high-wire of the plan A. It's not a rabbit out of a hat."
Forrest's stake in Fortescue is now worth more than $6.5 billion, which has sent him rocketing back up the ranks of our most wealthy billionaires.
The fact that Gina Rinehart's Hancock Prospecting is privately owned makes it difficult to assess her exact fortune. But she – along with property developer Harry Triguboff – are the only billionaires standing between Forrest and top spot on the rich list.
Not that this represents the peak of his wealth – not in paper terms, at least. In 2008 the value of Forrest's shares hit $13 billion. This was the same year Fortescue dug up its first ounce of the steel-making ore.
When the iron ore market plunged to its nadir last year Forrest and Rinehart had lost almost $25 billion of wealth between them, on paper at least.
The resurrection of the iron ore billionaires is in stark contrast to the declining fortunes of the businesses which were meant to boom on the back of China's newly-emerging middle class.
Bellamy's Organic has been suspended from trading while it attempts to determine just how bad the financial damage is from the disastrous fall-off in milk formula sales from China.
The fortune of Blackmores chairman Marcus Blackmore has declined more than $460 million this year as the market's wariness hit the vitamin maker.
Got a tip? ckruger@fairfaxmedia.com.au
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