This is a story about Kevin, who had an incredible chance to win a car on The Price is Right but refused and instead took $1,500.
Kevin was playing “Let ’Em Roll,” a game where the contestant has a chance to win a car if they roll all five dice and they show a car symbol. On Kevin’s first roll he managed to land four car symbols, a rare feat that comes up in just 6.25 percent of games.
At this point Kevin has two options:
- He can roll that final die two times, and if he gets a single car, he wins a car.
- He can walk away and take the $1,500 on the final die.
Without thinking or agonizing, Kevin took the $1,500. It surprised host Drew Carey so much that he wanted Kevin to be clear on the rules of the game, telling him that he essentially had two free rolls and a 50/50 chance to win a car on each one.
Still Kevin was adamant: He was taking the $1,500. Carey could only try to cope with the shock.
The knee-jerk reaction here is to think Kevin was an idiot not for rolling two more times. We’re conditioned to think the biggest prize is always the best, but in reality he could have been playing chess while we were all playing checkers.
Here’s why ...
In those final two rolls Kevin has a 50/50 chance of winning a car with each roll. Three faces on the dice are cars, three are cash in $500, $1,000, and $1,500 denominations. The odds of Kevin re-rolling another $1,500 are just one-in-six. Kevin is sitting on the best cash prize he can possibly get, and re-rolling doesn’t help his end game.
Winning the car sucks
I know this goes against every fiber of your being, but unless you were in the market for a new car and had the money aside to buy one, winning a car is horrible. Contestants still need to pay state income tax on whatever prizes they get, and it has to be paid before the prize is received.
It gets worse.
The tax is based on which state the prize was won in, and based on MSRP, which is much higher than you would pay in a dealership. For The Price is Right, this means paying California income tax on $13,165 (the price of the Nissan Versa S sedan Kevin could have won). The show also makes you pay before you get the car AND the car could push you into a higher tax bracket, potentially increasing your overall liability.
I think I’ve heard of this ...
You probably have. In 2004 when Oprah Winfrey gave away cars to her audience, it turned out to be a disaster.
The result of winning the $28,500 cars was that each audience member paid roughly $7,000 each for their car, which had to be up-front. Many of them had to get the money together to pay the tax, then try to sell the car in the hopes of just covering the tax bill.
So Kevin taking the $1,500 was actually genius?
Maybe. It depends on whether he wanted or needed a car, and had the money spare to be able to accept it. Taking the $1,500 was the safe answer that insured he got the maximum possible guaranteed prize. Sure, there’s a chance he could have flipped the Nissan Versa and made more — but this would have resulted in further income tax hits, possibly pushing him to a higher bracket.
Good move, Kevin, you’re the real MVP.