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CA MM Cash Value Less Than Other States?

Topic closed. 6 replies. Last post 11 years ago by danisiri.

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danisiri's avatar - Avatar all_for_Jesus.jpg

United States
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April 11, 2005
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Posted: September 6, 2005, 7:58 pm - IP Logged

I was reading a press release from the CA Lottery commission (http://www.calottery.com/Media/CurrentQuarter/MEDIAADVISORY_09-03.htm) and it stated that the winner of tonight's MM jackpot would receive about $75 million (before tax withholding) if the cash option is chosen.  Yet, the USA Mega site shows the cash option as being about $93 million before taxes.  Is CA different or are they just flippantly throwing out the "50% of the jackpot" value because that is close to what the CA SLP pays on cash options?

As a CA MM player, I am curious since it is about a 11% difference in the size of the cash options and affects my "if I am ever blessed with the win" plans.

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    Morrison, IL
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    May 13, 2004
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    Posted: September 7, 2005, 12:24 am - IP Logged

      Yeah, I think California is just throwing out the "50% of advertised jackpot" value.  The MM cash value option jackpot is the same for ALL states.

      danisiri's avatar - Avatar all_for_Jesus.jpg

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      Posted: September 7, 2005, 12:35 am - IP Logged

        Yeah, I think California is just throwing out the "50% of advertised jackpot" value.  The MM cash value option jackpot is the same for ALL states.

      That is my thought too, but I was just curious if someone knew definitely that CA must comply with the same rules for the JP.  All the other levels of prizes are pari-mutuel, so I though perhaps CA might have some special spin on the JP too.

      Of course, the larger the JP, the larger the potential discrepancy becomes!

        weshar75's avatar - Lottery-042.jpg
        Mcminnville, Oregon
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        December 13, 2003
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        Posted: September 7, 2005, 2:05 am - IP Logged

        In the how to play section of the california website it says that the cash value of the jackpot is pari-mutuel and it is roughly 40% to 50% of the advertised annuity jackpot.  It is different from the other mega million states.

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          Greenwich, CT
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          May 24, 2004
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          Posted: September 7, 2005, 9:43 am - IP Logged

          Wow...that's awful.  Now I don't feel quite so bad about NYS taxes.

            twisted's avatar - underground
            New Jersey
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            September 25, 2003
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            Posted: September 7, 2005, 6:26 pm - IP Logged

            I think the cash value in California is the same as the other MM states. Because I think it will take CA the same amount of cash to pay a $172 million annuity payment paid in 26 payments.

            Unless CA has the annuity payment structure for MM just like CA Lotto Plus and the new Powerball (which I dont think is the case).  I think to make their lives simple, they are saying 40-50 percent for both MM and CA Lotto Plus so there wont be too many questions by regular lottery players who just dont know/care.

            But just to make sure, I'm going to contact California Lottery and see what they have to say.

              danisiri's avatar - Avatar all_for_Jesus.jpg

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              Posted: September 8, 2005, 2:44 am - IP Logged

              I am interested to see what info 'twisted' gets from the CA lottery commission. 

              As far as I can tell from the CA Lotto website, the annuity is paid out in equal payments, not like the graduated payment structure of CA SLP.  So theoretically then, the cash value should be more since the amount invested must return enough to cover the equal value payments.  I ran some calculations in Excel to verify the cash value necessary to return an equal payment over 26 years and there is no way for CA to get a large enough return to cover the annual payments if they are only investing 40-50% of the jackpot into 10-year US Treasury Notes (~4% return).  They must invest the ~62% cash value reported on USA Mega. 

              But, if CA invests a smaller amount at a higher rate of return (though likely with more risk), then it would be possible to meet the promised 26 equal payments.  Though I think this scenario is unlikely.

              So...I am still curious to see what info anyone can find out.