Topline
The Powerball jackpot soared to $700 million ahead of Saturday’s drawing, making it the 10th biggest lottery jackpot ever as both the Powerball and Mega Millions continue to reach astounding jackpots in recent years following key changes to the games’ formulas.
The Powerball jackpot reached $700 million this week, less than a month after a $1.35 billion Mega … [+]
Key Facts
This week’s jackpot is the sixth biggest Powerball grand prize since the multi-state lottery game launched in 1992—all of which came in the last six years, after the game announced a shake-up in its formula that made it pay out less frequently, but boosted the jackpot.
That change, in 2015, decreased players’ odds of winning the jackpot from one in roughly 175.2 million to an abysmal one in 292.2 million, while the odds of winning the game’s smaller prizes, like its smallest $4 prize, increased to one in 92.
The formula change increased the pool of white ball numbers available to select from 59 to 69 and decreased the pool of Powerball numbers from 35 numbers to 26—players need to match all five white balls chosen as well as the red “Powerball” to win the jackpot.
The Mega Millions, meanwhile, changed its formula in 2017, worsening players’ odds of winning the jackpot from one in 258.9 million to one in 302.6 million, after game officials were reportedly concerned more measly payouts could lead to “jackpot fatigue.”
That change decreased the pool of white balls to choose from 75 to 70, but increased the pool of “mega” ball numbers from 15 to 25 (just like the Powerball, players choose five white balls and one red “mega” ball).
Since then, there have been four Mega Millions jackpots that have surpassed $1 billion, including a $1.35 billion jackpot won last month by a ticket-holder in Maine, as well as a $1.34 billion grand prize last July and a $1.54 billion jackpot in October, 2018—the biggest Mega Millions jackpot in its 21-year history.
Contra
Although the Powerball jackpot on Thursday swelled to $700 million after no winning tickets were drawn Wednesday night, the winner will take home less than half of it, after federal and state taxes are taken out of a pre-tax cash prize of $375.7 million. A 24% mandatory federal tax withholding and a federal marginal rate as high as 37%—depending on the winner’s taxable income—would reduce it to as low as $236.7 million.
Key Background
The biggest jackpot of all time came in December, when a single ticket holder in California matched all six numbers in the Powerball, winning a massive $2.04 billion jackpot, although they took home less than half of that after federal and state taxes were removed. Before the change to the game’s formula, the biggest the Powerball jackpot had reached was $590.5 million in 2013. The biggest Mega Millions jackpot before its change came in 2012, when it swelled to $656 million. According to lottery officials, the change made the chances of winning any prize higher, even if it decreased players’ likelihood of winning the jackpot.
What To Watch For
The next Powerball drawing takes place at 11 p.m. Saturday night, while the next Mega Millions drawing, meanwhile, is Friday night at 11 p.m., with a jackpot of $20 million and a cash option of $10.7 million.
Further Reading
Powerball Jackpot Reaches $700 Million—Here’s What The Winner Would Take Home After Taxes (Forbes)
$2.04 Billion Powerball Winner Takes Home $628 Million After Taxes (Forbes)
Source: https://www.forbes.com/sites/brianbushard/2023/02/03/powerball-swells-to-700-million-heres-why-there-have-been-so-many-massive-jackpots-recently/