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Powerball jackpot seems very inflated.

Topic closed. 5 replies. Last post 5 years ago by Guru101.

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Bradly_60's avatar - disney37
Atlantic Mine, Michigan
United States
Member #416
June 23, 2002
1614 Posts
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Posted: April 11, 2010, 10:36 am - IP Logged

I don't remember the cash option ever being so low. 

$175M jackpot but only a $84.1M jackpot.  That is only a 48% cash option.  I don't remember it being so low and interets rates really haven't rise that much.

Mega Millions has a $105M jackpot and a $64M cash option.  That is a 61% cash option. 

I was surprised at how quickly the Powerball jackpot was rising, but if you look closely its really not that much.  What interest rate factor are they using?  I know their annuity is 5 years longer and gradually increases but still.  I can't remember the last time a cash option was lower than 50% of the jackpot.

Brad

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    DFW, Texas
    United States
    Member #78628
    August 18, 2009
    134 Posts
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    Posted: April 11, 2010, 5:10 pm - IP Logged

    The main difference between Mega Millions and Powerball annuities is the longer-term and graduated annuity Powerball uses, which benefits the Powerball annuitized value.

    A casual check of Powerball jackpots shows that cash values have been near 50% for the past several months, occasionally higher than 50%.  Now it seems to be consistently under 50%, but this lines up with long-term Treasury yields, which have increased in the past several months.  I don't know how these annuities are funded, but I wouldn't be surprised if they generally followed Treasury returns.  With yields returning to more normal levels we might expect higher annuitized values in all the games and Powerball cash values consistently lower than 50%.

      Avatar
      Kentucky
      United States
      Member #32652
      February 14, 2006
      5653 Posts
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      Posted: April 14, 2010, 11:31 pm - IP Logged

      The main difference between Mega Millions and Powerball annuities is the longer-term and graduated annuity Powerball uses, which benefits the Powerball annuitized value.

      A casual check of Powerball jackpots shows that cash values have been near 50% for the past several months, occasionally higher than 50%.  Now it seems to be consistently under 50%, but this lines up with long-term Treasury yields, which have increased in the past several months.  I don't know how these annuities are funded, but I wouldn't be surprised if they generally followed Treasury returns.  With yields returning to more normal levels we might expect higher annuitized values in all the games and Powerball cash values consistently lower than 50%.

      Now that both games are offered in so many states and it seems most jackpot winners take the cash, MM might be the better game to play when the jackpots are about same.

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        iowa
        United States
        Member #32899
        February 16, 2006
        46 Posts
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        Posted: April 15, 2010, 12:27 am - IP Logged

        While it is allegedly said to be tied to the return rate of the cash investment, the truth is they can manipulate their figures to claim that they are right, knowing full well that their is no one or no entity that will investigate if they are massaging the figures to amounts that they can advertise for a seemingly larger jackpot. We all know enough basic human nature to know or suspect that this is what their doing. It's interesting how the exchange rate changed so dramatically about the same time that the states started running both games and having to compete for the right to claim the higher advertised jackpot. I have e-mailed the IA lottery/Powerball public liaison and told them that jacking the advertised jackpot in such a way makes them look a little shady and gives purchase to those who think the Lotteries are fixed anyway. They basically responded with a "Who thinks that? Nobody thinks that it is illegitimate. Prove it." The interesting thing to notice is with the advertised Jackpot size being the deciding factor, and with their limited jackpot growth cap rules, is that if someone hits, let's say a $390 million pot, which is the next record cap limit "record" Jackpot, the actual cash value of the Jackpot would be a hell of a lot smaller than the previous Jackpot record mark. And if I could find historical data on past drawings like MM provides, I'm relatively guessing that the second to the previous Jackpot record amount would actually be significantly less actual cash value than the "new record" Jackpot would provide allowing them to crow all over the media about the new record Jackpot size while not even being worth as much as the second record mark. E-mailed them pointing this out, and surprise, they haven't replied yet. The first time they have not replied over the years.

          TheOtherOne's avatar - Lottery-027.jpg
          Nashville, TN
          United States
          Member #86740
          February 9, 2010
          479 Posts
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          Posted: April 19, 2010, 11:36 pm - IP Logged

          While it is allegedly said to be tied to the return rate of the cash investment, the truth is they can manipulate their figures to claim that they are right, knowing full well that their is no one or no entity that will investigate if they are massaging the figures to amounts that they can advertise for a seemingly larger jackpot. We all know enough basic human nature to know or suspect that this is what their doing. It's interesting how the exchange rate changed so dramatically about the same time that the states started running both games and having to compete for the right to claim the higher advertised jackpot. I have e-mailed the IA lottery/Powerball public liaison and told them that jacking the advertised jackpot in such a way makes them look a little shady and gives purchase to those who think the Lotteries are fixed anyway. They basically responded with a "Who thinks that? Nobody thinks that it is illegitimate. Prove it." The interesting thing to notice is with the advertised Jackpot size being the deciding factor, and with their limited jackpot growth cap rules, is that if someone hits, let's say a $390 million pot, which is the next record cap limit "record" Jackpot, the actual cash value of the Jackpot would be a hell of a lot smaller than the previous Jackpot record mark. And if I could find historical data on past drawings like MM provides, I'm relatively guessing that the second to the previous Jackpot record amount would actually be significantly less actual cash value than the "new record" Jackpot would provide allowing them to crow all over the media about the new record Jackpot size while not even being worth as much as the second record mark. E-mailed them pointing this out, and surprise, they haven't replied yet. The first time they have not replied over the years.

          Wow, It is because they KNOW man!

           

          Good research there, congrats on that!

           

          It is so obvious they control this stuff, particularly the smaller games such as pick 3 and pick 4. I just hope 'they' allow me to win one soon!

            Guru101's avatar - rw6jhh
            Indiana
            United States
            Member #48725
            January 7, 2007
            1843 Posts
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            Posted: April 20, 2010, 2:10 pm - IP Logged

            I don't remember the cash option ever being so low. 

            $175M jackpot but only a $84.1M jackpot.  That is only a 48% cash option.  I don't remember it being so low and interets rates really haven't rise that much.

            Mega Millions has a $105M jackpot and a $64M cash option.  That is a 61% cash option. 

            I was surprised at how quickly the Powerball jackpot was rising, but if you look closely its really not that much.  What interest rate factor are they using?  I know their annuity is 5 years longer and gradually increases but still.  I can't remember the last time a cash option was lower than 50% of the jackpot.

            Brad

            Thud

            This has been explained so many times. 2 different games. You need to stop thinking "Powerball's cash option is lower" and start thinking "Powerball's annuity is higher".

            Gonna win.Big Smile