During the past year, lottery jackpots have soared. In the United States, Powerball and Mega Millions have offered jackpots that have exceeded $1.5 billion. Lottery operators are offering bigger jackpots as interest rates have risen.
The headline prize of Powerball’s drawing on Saturday is $1.6 billion. This is the largest lottery prize in the United States’ history. The prize is paid out in a lump sum, or an annuity.
The annuity is paid over 29 years. The winner would receive annuity payments of $68 million per year. This amount is reduced by federal taxes. It is also reduced by the taxation of the winner’s locality. The net amount of the annuity payment would be $43 million.
The Federal Reserve’s interest rate hikes are a big reason why the prize is so large. The yield on a 30-year US treasury bond has risen to over 4% since January.
The lottery’s advertised jackpot is based on the amount the winner would receive in annuity payments over 30 years. But the prize would be much smaller if the winner decided to take a lump sum.
The odds of winning the lottery are 1 in 292.2 million. The odds of winning the Mega Millions lottery were one in 292.2 million.
Powerball’s jackpot is played in 45 states and the District of Columbia. Tickets are sold in Georgia, Maryland, New Jersey, Oklahoma, Arkansas, and Oregon. Hawaii and Alaska do not participate in the lottery.
The odds of winning the lottery’s most recent jackpot are 1 in 292 million. The ticket prices have been adjusted to make winning a bit easier.