Since 1992, Powerball has been the most popular lottery game in the United States. In January of 2016, it garnered international attention when it set the record for the world’s largest jackpot of $1.586 billion. In fact, it’s one of the only lotteries in the world that offers such enormous cash prizes.
The tickets are sold all over the country and cost only $2 per play. As a result, they are easy to obtain by people from all walks of life, no matter their income. The odds of winning a prize are around 1 in 25, which encourages many people to purchase tickets on a regular basis.
The drawings are broadcast on live TV every Wednesday and Saturday. When it comes to the rules, they are pretty simple. Before each game, you have to select five numbers from 1 to 69 and one number from 1 to 26. If your numbers are drawn during the drawing, you win!
Now that you know the rules, you might be wondering if there is anything else that you should know about the Powerball Lottery. Well, there are quite a few pieces of information that you might find useful. Take a look!
Lottery Winnings Are Taxed as Ordinary Income
If you end up winning the lottery, taxes might not be the first thing that comes to your mind. But as you can probably tell, the federal and, in some cases, state governments have the right to take a large cut out of your winnings. As a result, if you hit the jackpot, you won’t be getting the amount of money that was advertised, but a significantly smaller sum.
When it comes to tax laws, the total tax rate on lottery winnings varies significantly depending on where you live. For instance, in California, Powerball winnings are only subject to the federal income tax, and there are quite a few states where there are no state income taxes at all.
It might seem pretty unclear, but you don’t have to do the maths on your own. Thanks to a convenient tax calculator, you can quickly check the Powerball payout online. All you have to do is type in the jackpot amount and select your state!
Prize Payouts and the Grand Prize
Powerball has nine different prize tiers, starting from only a few dollars and going all the way up to the multi-million dollar jackpot. On top of that, you can opt into Power Play, which will multiply any of your non-jackpot prizes by up to 10 times for an additional stake.
While the prizes for all of the lower tiers remain more or less the same, the Grand Prize changes before every draw. It’s usually determined by two things – the game sales and the annuity factor.
The game sales are pretty self-explanatory. The revenue the lottery receives from everyone who decided to buy a Powerball ticket accumulates into a prize pool. Then, the prize pool is used to fund all of the lower prize tiers and at least one-third of the jackpot.
The annuity factor is a bit harder to explain. The lottery is able to fund its prizes due to the fact that not everyone chooses the lump-sum payment upon claiming the Grand Prize. Some people choose to be paid in a series of 30 graduated payments over the course of 29 years.
During that time, the money that they haven’t received just yet is used to purchase securities. Those securities are then subject to market interest rates. The higher the interest rates get, the larger the Grand Prize is!
When nobody hits the jackpot in a particular drawing, the prize pool carries over to the next drawing. The process will repeat over and over again until there is a winner. After that, the next jackpot is guaranteed to be $20 million.
It used to be $40 million, but thanks to the COVID-19 pandemic, both the lottery ticket sales and the aforementioned interest rates dropped drastically. Consequently, Powerball administrators had to step in and reduce the minimum starting jackpot.
What Are the Odds?
The odds of hitting the jackpot are around 1 in 292.2 million. That’s quite a large number, isn’t it? Thanks to the number of combinations of potential winning numbers, you’re more likely to end up being attacked by a shark than winning the lottery. However, if you are still eager to try your luck, there are some methods out there that will legitimately increase your chances of winning.
Firstly, start aiming for the second prize instead of only focusing on the Grand Prize. Even though it still requires you to match five out of six numbers, the odds of winning are 1 in 11.7 million, which is much more promising. Secondly, start using computer-generated numbers. They tend to be the luckiest, and it’s very unlikely that someone else will pick the exact same set of numbers.
Claiming Your Prize
Your ticket actually has an expiration date. It can be 90 days, but it can also be a whole year, depending on where you bought it. To claim your prize, you have to either go to any licensed lottery retailer or go to a lottery office. However, if you want to claim the Grand Prize, you will need to visit the lottery headquarters.
The Powerball administrators will need to verify your identity before giving you the money. Some states may allow you to claim the prize anonymously, but there are some jurisdictions in which the lottery officials are obligated to provide any third party with your name, city of residence, and the amount of money you won upon their request.
Conclusion
Thanks to its gigantic prize pools, the Powerball lottery has become one of the most well-known lotteries on a global scale. Its popularity is basically unmatched in the United States. Enticed by the vision of a comfortable life with millions of dollars on their bank accounts, millions of Americans choose to buy lottery tickets on a regular basis.
And even though the odds of hitting the jackpot make it seem impossible, hundreds of people have already done it. As a result, even if they haven’t managed to win the Grand Prize in recent years, they don’t lose hope. After all, some people had been playing the lottery for decades and choosing the same numbers over and over before hitting it big!
If you want to join their ranks, all you have to do is keep your spirits up and choose legitimate methods of boosting your chances of winning. And then who knows, maybe you will finally become a millionaire?
