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Minnesota couple claims $180 million Powerball jackpot

Topic closed. 35 replies. Last post 9 years ago by KY Floyd.

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San Diego, CA
United States
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February 12, 2008
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Posted: May 8, 2008, 11:05 pm - IP Logged

Why is the Mega Millions cash option so much higher than the Power Ball version? Don't they both use the same method of paying out the advertised jackpot with treasury bonds? Maybe I should read up on it...

 

180M PB = 88 Million (about 49% of the annuity jackpot).

145M MM = 88.3 Million (about 61% of the annuity jackpot).

 

I know as the MM rises, the percentage lowers, but it's still starts off almost equal to Powerball where the starting jackpot is three million higher, then again MM has worse odds too but that shouldn't matter too much. Or does it? Does PB pay out more money per drawing than Mega Millions when it comes to lower tier prizes?

MM is paid over 27 years.

    DC81's avatar - batman39
    MI
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    August 31, 2007
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    Posted: May 8, 2008, 11:22 pm - IP Logged

    Powerball is paid over 30 years, would three more years really make that much of a difference?

    You can't predict random.

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      San Diego, CA
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      Posted: May 9, 2008, 12:10 am - IP Logged

      Powerball is paid over 30 years, would three more years really make that much of a difference?

      Correction.  MM is paid over 26 years.  I believe that would make the difference.

       

      30 years is 15.38% longer than 26 years.  Factor in the compounding of 4 additional years, that should make the difference.

        DC81's avatar - batman39
        MI
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        Posted: May 9, 2008, 12:44 am - IP Logged

        Oh, I was thinking you said 27 to cover the first year of payments I think, which is why I said 30 for PB instead of 29. Either way, it's a three year difference.

         

        Still, you get more upfront with Mega Millions than you do with Power Ball.

        You can't predict random.

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          NY
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          Member #23835
          October 16, 2005
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          Posted: May 9, 2008, 12:00 pm - IP Logged

          MM annuities are spread over 26 payments, which is one up front and one for the next 25 years. For PB it's 30 payments over 29 years.  That's a 4 year difference, but there's much more to it. By spreading the remaining payments over 29 years instead of 25 there is more of the available money invested right at the start. The bigger diference is that MM payments are equal, but PB payment start smaller and get bigger as time goes by. With a total of 26 payments, MM pays just under 4% up front and invests a bit over 96%. The first PB payment is abpout 1.8%, so 98.2% gets invested.  That small extra investment and the extra 4 years  means that the total payout for a given amount of cash is about 25% more than what you'd see with the MM schedule.

          What you get upfront is exactly the same with PB and MM, if you take cash . Taking the cash means you get 100% of what they have to invest. The cash prize isn't smaller with PB, the annuity is bigger, at least in terms of the advertised numbers. Since they're both going to get the same investment results, the only real difference is how long it takes to collect the money.

          The cash value percentage changes with interest rates, but not with the amount of the jackpot.

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            NY
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            Posted: May 9, 2008, 12:01 pm - IP Logged

            You have to remember that the PowerPlay option  in the PowerBall game has to be paid from somewhere! I see the light going on now! lol

            The powerplay option is paid with 50 cents from every dollar they collect by selling the powerplay option.