Powerball’s jackpot recently hit an all-time high of 1.6 billion before it was finally won in three states. Winners in California, Florida, and Tennessee will have to split the jackpot three ways. The family that won in Tennessee elected to take the lump sum of 187.2 million dollars after taxes. So how did the Powerball jackpot go up so much?
The new Powerball rule changed the odds of winning from 1 in 175,223,510 to 1 in 292,201,338. Sales slumped since the jackpot hit 590.5 million back in 2013, so it was apparent that changes needed to be made. Tickets still cost $2 a piece, but this new rule won’t discourage gamblers from buying their tickets. While this rule makes the likelihood of winning the jackpot even smaller, the odds of winning any of the smaller prizes increases. When the jackpot surpassed 999 million, people were flocking to gas stations everywhere to buy their tickets. Even with 80 percent of the combinations purchased, no one won the jackpot. It was a combination of the new rule and luck that made the jackpot reach a record high. Changes aren’t anything new for Powerball. Over the last 23 years, the game has been changed seven times to make it more attractive to players. Increasing the pool from 59 number choices to 69 with this latest rule, more than doubled the number of combinations on the white balls, which would normally be discouraging for players. However, this just makes larger jackpots, which attracts more people. To compensate for this, the lowest prizes are even easier to win, so people have an incentive to play even when the jackpot is low. The change made the odds go from 1 in 175,223,510 to 1 in 292,201,338. Subsequently, the other top five prizes became harder to win, while the three lowest prizes became easier to win. So in general, the Powerball player now has a 1 in 25 chance of winning instead of a 1 in 32 chance of winning any prize.
The winners will have two options. They can either take a lump sum or receive pieces of their winnings each year. If the money is used correctly, it is almost always better to take the lump sum and invest in government bonds. Even winning comes at a price. A good chunk of the jackpot is taxed by the government and then in order to properly handle the money you do get to take home, you will have to hire lawyers, advisors, and financial planners. You will have to work one on one with a financial planner to figure out everything, which takes time. As soon as the winner redeems their ticket, the media is likely to swarm their house and workplace. The winners’ phones at home will be ringing non-stop and it will be difficult to live a normal quiet life for a while. After it’s all said and done, each of the three winners will still have plenty of money, which if managed right, will last them the rest of their lives.
