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Why the difference in payout between Powerball and Megamillions

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

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CDanaT's avatar - tiger avatar_04_hd_pictures_169016.jpg
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Posted: January 16, 2012, 9:05 am - IP Logged

I am now even more perplexed at the difference between Powerball and Megamillions. The new claim of larger payouts certainly lacks some common sense reasoning. I am sure we have noticed the "Cash" payout difference between Powerball and MM is 10%. I wonder why ? administrative costs ? It now costs twice as much to play.
Bash

    HiFi's avatar - police

    United States
    Member #3792
    February 21, 2004
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    Posted: January 16, 2012, 10:02 am - IP Logged

    I am now even more perplexed at the difference between Powerball and Megamillions. The new claim of larger payouts certainly lacks some common sense reasoning. I am sure we have noticed the "Cash" payout difference between Powerball and MM is 10%. I wonder why ? administrative costs ? It now costs twice as much to play.
    Bash

    it costs twice as much because now its twice as much fun to play.

      Coin Toss's avatar - shape barbed.jpg
      Zeta Reticuli Star System
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      Posted: January 16, 2012, 10:17 am - IP Logged

      CDanaT,

      From the Powerball website FAQ page:

      WHY IS THERE A DIFFERENCE BETWEEN THE CASH PAYOUTS IN THE POWERBALL AND MEGA MILLIONS GAMES?

      A fixed percentage of every Mega Millions and Powerball ticket sold goes into its CASH jackpot. The cash jackpot is all the money that the lottery has on hand from the sale of tickets in the game. If a player chooses the cash option, then the lottery will pay the entire cash amount to the winner (less income tax withholding amounts required by federal and state laws).

      The lottery also offers an ANNUITY jackpot option that can help reduce taxes and offers the winner a 100% guaranteed income stream over time. The two games offer different types of annual income streams, giving the players more options. If a winner elects the annuity option, then the lottery will invest the entire cash amount before taxes are deducted. The difference between the CASH jackpot and the ANNUITY jackpot is the interest earnings that build over time. The Powerball annuity jackpot earns more interest for two reasons.

      1. The Powerball Annuity Jackpot invests more money for a longer period of time. The Powerball annuity is paid out in graduated amounts (rising by 4% per year to keep up with inflation) over 29 years (30 payments). The annual payments grow larger to keep pace with the winner’s expected cost of living. The Mega Millions annuity is paid out over 25 years (26 payments) with equal payments each year. In both cases, the first payment is an immediate cash payment.

      2. The Powerball Annuity Jackpot is invested in a wider variety of securities than the Mega Millions Jackpot, allowing more interest to be earned. All of the securities used to support both games’ jackpots offer significant levels of U.S. Government backing. It is important to understand that the lottery is invested in these securities; not the winner. The winner has a contract with the states to pay the annual prize payment, no matter what happens to the securities.

      Since the two games' jackpots are invested differently, if the CASH jackpots are the same, the Powerball jackpot will pay a larger ANNUITY over time than Mega Millions. If the ANNUITY value of the jackpots are the same, then Mega Millions' CASH jackpot will be larger than Powerball's CASH jackpot. The CASH jackpot amounts present the true present-day values of the jackpots. A winner who wishes to take the CASH jackpot should compare only the CASH jackpot amounts. The ANNUITY jackpot amounts will be important for those winners who plan to select a long-term, fully guaranteed income stream.


      Those who run the lotteries love it when players look for consistency in something that's designed not to have any.

      Lep

      There is one and only one 'proven' system, and that is to book the action. No matter the game, let the players pick their own losers.

        psykomo's avatar - animal shark.jpg

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        Posted: January 18, 2012, 1:18 am - IP Logged

        I am now even more perplexed at the difference between Powerball and Megamillions. The new claim of larger payouts certainly lacks some common sense reasoning. I am sure we have noticed the "Cash" payout difference between Powerball and MM is 10%. I wonder why ? administrative costs ? It now costs twice as much to play.
        Bash

        government has FINGERED out a way 2 make MOE>>>>>>>>>>>>>>>>>>>>>MONEY$$$$$$$$$$$$$$$

        HAVE>>>>>>>UUUUUUUU????????????FINGERED>>>>>>>>>>>>>>>>>>>>>MONEY MAKING out??????

        POWERBALL jacks^^^^^THEIR>>>>>FINGERED?????>>>>>!!!!!!!!<<<<<<<< ONE would NOCICE!!!!!!!!

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        GOING 2 D government CAPILAST444

        OUR..................................................>>>>>>>>>>>>>>>>>>>>>>>>WELFARE$$$$$$$$$$$$$$$$$$$

        PartyPartyPartyPartyPartyParty

        Jack-in-the-Box

          CDanaT's avatar - tiger avatar_04_hd_pictures_169016.jpg
          TX
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          Posted: January 18, 2012, 4:18 pm - IP Logged

          Thanks for the info on the different number of payments. I had forgotten about that. Still sticks in my "craw" that both large lotteries can have the same  large numbers but the cash payout for Mega is at 74% of the Jackpot and the Powerball is at 64%

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            Orlando, FL
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            August 28, 2011
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            Posted: January 18, 2012, 4:36 pm - IP Logged

            Thanks for the info on the different number of payments. I had forgotten about that. Still sticks in my "craw" that both large lotteries can have the same  large numbers but the cash payout for Mega is at 74% of the Jackpot and the Powerball is at 64%

            Yes MM is better IMO