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Why is the new cash option so low for MM?

Topic closed. 15 replies. Last post 3 years ago by ryanm.

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ttech10's avatar - blobdude
Texas
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Posted: December 18, 2013, 6:39 pm - IP Logged

October 4 - $12,000,000 annuity - $6,150,000 cash

October 8 - $14,000,000 annuity - $7,200,000 cash

December 20 - $15,000,000 annuity - $6,000,000 cash

 

I remember when the $12,000,000 rollover used to be $6,750,000 cash option at the minimum. $15,000,000 before the change used to be over $8,000,000 cash option.

I was excited for a minute seeing the raised the minimum but then I saw how misleading they were. Raise the annuity but drastically lower the actual amount.

I wish Texas didn't force you to choose your payout when you buy tickets so I could still select annuity for the lower amounts. I might have to reconsider my multi-draw now (which will be annoying, it's so nice only having to buy once a month).

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    Warren, MI
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    Posted: December 18, 2013, 6:51 pm - IP Logged

    on mega millions site it says 8 million cash option for 15 million jackpot, when the jackpot was 12 the cash was around 7.2 mill.

      mrcraft's avatar - images3lp4 zps7dbb4a10.jpg
      Los Angeles, California
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      December 2, 2013
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      Posted: December 18, 2013, 6:51 pm - IP Logged

      October 4 - $12,000,000 annuity - $6,150,000 cash

      October 8 - $14,000,000 annuity - $7,200,000 cash

      December 20 - $15,000,000 annuity - $6,000,000 cash

       

      I remember when the $12,000,000 rollover used to be $6,750,000 cash option at the minimum. $15,000,000 before the change used to be over $8,000,000 cash option.

      I was excited for a minute seeing the raised the minimum but then I saw how misleading they were. Raise the annuity but drastically lower the actual amount.

      I wish Texas didn't force you to choose your payout when you buy tickets so I could still select annuity for the lower amounts. I might have to reconsider my multi-draw now (which will be annoying, it's so nice only having to buy once a month).

      Along with the matrix change, MM changed the annuity from 26 years to 30 years.  It's marketing.  Many people just see the advertised annuity amount and won't know that the cash value relative to the advertised jackpot was considerably weakened with the change.

      I know this will never happen, but it would be nice if lottery jackpots are advertised with their cash values rather than annuity values, then people will be comparing apples with apples across various JP games, old/new, etc.  The annuity value can be tweaked and be misleading.


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        Posted: December 18, 2013, 7:05 pm - IP Logged

        They have to get their cut. The term "Too Much" is not their forte.

          haymaker's avatar - Lottery-012.jpg
          Egg Harbor twp.south Jersey shore
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          Posted: December 18, 2013, 7:05 pm - IP Logged

          Along with the matrix change, MM changed the annuity from 26 years to 30 years.  It's marketing.  Many people just see the advertised annuity amount and won't know that the cash value relative to the advertised jackpot was considerably weakened with the change.

          I know this will never happen, but it would be nice if lottery jackpots are advertised with their cash values rather than annuity values, then people will be comparing apples with apples across various JP games, old/new, etc.  The annuity value can be tweaked and be misleading.

          Yea, it's the annuity change w/out a doubt, amazing what a few years of compounding can do.

          Extraordinary Popular Delusions & the Madness of Crowds    -- Charles Mackay  LL.D.

            Jon D's avatar - calotterylogo
            Los Angeles, California
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            Posted: December 18, 2013, 7:07 pm - IP Logged

            October 4 - $12,000,000 annuity - $6,150,000 cash

            October 8 - $14,000,000 annuity - $7,200,000 cash

            December 20 - $15,000,000 annuity - $6,000,000 cash

             

            I remember when the $12,000,000 rollover used to be $6,750,000 cash option at the minimum. $15,000,000 before the change used to be over $8,000,000 cash option.

            I was excited for a minute seeing the raised the minimum but then I saw how misleading they were. Raise the annuity but drastically lower the actual amount.

            I wish Texas didn't force you to choose your payout when you buy tickets so I could still select annuity for the lower amounts. I might have to reconsider my multi-draw now (which will be annoying, it's so nice only having to buy once a month).

            You need to change your thinking. But many others also feel this way.

            The cash value is not low, it's really the annuity value is high. They're playing a mind trick on you.

            Not only did they boost the annuity from 26 years to 30 years, they changed from fixed to graduated payments with 5% per year increase, higher than Powerball's 4% per year increase. It's inflated for marketing purposes. And unfortunately, it works.

            Again, the cash value is not low, it's the annuity value that is artificailly high.

            Remember these famous words from Star Wars:

            Jabba the Hutt: "You weak-minded fool! He's using an old Jedi mind trick."

            Don't fall for it.

              ttech10's avatar - blobdude
              Texas
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              Posted: December 18, 2013, 7:28 pm - IP Logged

              on mega millions site it says 8 million cash option for 15 million jackpot, when the jackpot was 12 the cash was around 7.2 mill.

              Sorry, I mean the after tax amount. Before, their advertised cash option for a $15,000,000 annuity was $11,000,000 but the take home (at least in my state, without state tax) was $8,250,000.

               

              Thanks to the others for clearing it up, didn't realize they changed the annuity payout schedule/rules. I knew the payout schedule on USA Mega for the MM annuity seemed strange. I just recall them changing around the actual payout (advertised cash versus take home) well before the matrix change and figured they kicked it into overdrive.

              I may just end up going with 5 draws instead of 10.

                Win$500Quick's avatar - Lottery-050.jpg
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                Posted: December 18, 2013, 7:47 pm - IP Logged

                I will take any jackpot for $1.

                Guess Who's Back?

                  ttech10's avatar - blobdude
                  Texas
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                  Posted: December 21, 2013, 4:44 am - IP Logged

                  Seeing that the rollover amount jumped up by $2,850,000, I wonder if that's how much it will typically raise or if it's from people buying multi-draws when they went for Tuesday's jackpot.

                  Since the take home amount is how above what the usual 2nd rollover would be, I might just end up sticking with my 10 draw tickets. Maybe there will be a lower amount winner and we'll be able to see how the rollover amount changes then.

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                    Morrison, IL
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                    Posted: December 21, 2013, 10:37 am - IP Logged

                    Yeah, I think it's from people buying multi-draws, because the Mega Millions lotteries sold over 20 million tickets for last night's draw, according to the TLC website.  Also, the jackpot already increased by more than the minimum rollover advertised!  I've said it before, and I'll say it again, if Mega Millions really had as much guts as the MUSL (Powerball), they would have increased their opening jackpot to $20 million and still had the $5 million minimum rollovers, which would basically be the $1 version of the current Powerball jackpot scheme.

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                      Jon D's avatar - calotterylogo
                      Los Angeles, California
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                      Posted: December 21, 2013, 12:14 pm - IP Logged

                      Yeah, I think it's from people buying multi-draws, because the Mega Millions lotteries sold over 20 million tickets for last night's draw, according to the TLC website.  Also, the jackpot already increased by more than the minimum rollover advertised!  I've said it before, and I'll say it again, if Mega Millions really had as much guts as the MUSL (Powerball), they would have increased their opening jackpot to $20 million and still had the $5 million minimum rollovers, which would basically be the $1 version of the current Powerball jackpot scheme.

                      It's not so much that PB has more guts than MM, it's because they have that explicitly stated 2% of sales going to the reserve fund.

                      MM contributes 32.58% of sales to the JP, while PB contributes less: 29.98% most of the time, unless the reserve fund is fully funded to certain levels. They need to do this because of the inflated starting JP of PB at $40M which is not nearly supported by sales. Remember that stretch this same time last year when the PB JP kept getting early wins and went $40M/$50M back and forth during a 10 draw stretch! PB has to float a large reserve because of their inflated starting JP.(for marketing purposes)

                      MM doesn't need to do that. MM is fully funded on the 2nd or 3rd draw. PB needs to get to the 5th or 6th draw to be fully funded, partly because of that 2% going to the reserve fund to handle early JP wins. It's a choice in the game prize structure. I'm glad there is a difference between the two, not just copycats.

                        mrcraft's avatar - images3lp4 zps7dbb4a10.jpg
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                        Posted: December 21, 2013, 12:21 pm - IP Logged

                        It's not so much that PB has more guts than MM, it's because they have that explicitly stated 2% of sales going to the reserve fund.

                        MM contributes 32.58% of sales to the JP, while PB contributes less: 29.98% most of the time, unless the reserve fund is fully funded to certain levels. They need to do this because of the inflated starting JP of PB at $40M which is not nearly supported by sales. Remember that stretch this same time last year when the PB JP kept getting early wins and went $40M/$50M back and forth during a 10 draw stretch! PB has to float a large reserve because of their inflated starting JP.(for marketing purposes)

                        MM doesn't need to do that. MM is fully funded on the 2nd or 3rd draw. PB needs to get to the 5th or 6th draw to be fully funded, partly because of that 2% going to the reserve fund to handle early JP wins. It's a choice in the game prize structure. I'm glad there is a difference between the two, not just copycats.

                        Thanks for that detailed info.

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                          Morrison, IL
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                          Posted: December 21, 2013, 11:19 pm - IP Logged

                          It's not so much that PB has more guts than MM, it's because they have that explicitly stated 2% of sales going to the reserve fund.

                          MM contributes 32.58% of sales to the JP, while PB contributes less: 29.98% most of the time, unless the reserve fund is fully funded to certain levels. They need to do this because of the inflated starting JP of PB at $40M which is not nearly supported by sales. Remember that stretch this same time last year when the PB JP kept getting early wins and went $40M/$50M back and forth during a 10 draw stretch! PB has to float a large reserve because of their inflated starting JP.(for marketing purposes)

                          MM doesn't need to do that. MM is fully funded on the 2nd or 3rd draw. PB needs to get to the 5th or 6th draw to be fully funded, partly because of that 2% going to the reserve fund to handle early JP wins. It's a choice in the game prize structure. I'm glad there is a difference between the two, not just copycats.

                          I'm pretty sure MM has a reserve fund, but they don't need to steal from their jackpots as much because of how low their jackpots start relative to Powerball's.  MM SHOULD have a reserve fund though, because their cash prizes are set prizes.  I think their reserve fund is $50 million, because I've read in their rules at one point (unless it's changed recently), that the total prize liability cap is the lesser of 300% of sales or 50% of sales plus $50 million.

                          ---

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                            Morrison, IL
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                            Posted: December 22, 2013, 1:01 am - IP Logged

                            PB is over $70 million on its fourth draw in any given run for the first time ever.  Of course, sales for that game have been strong lately (partially thanks in part to the recent MM jackpot run giving publicity to these jackpot games in general), but this also could mean PB's set prize reserves are finally full.

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                              Jon D's avatar - calotterylogo
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                              Posted: December 22, 2013, 2:17 am - IP Logged

                              I'm pretty sure MM has a reserve fund, but they don't need to steal from their jackpots as much because of how low their jackpots start relative to Powerball's.  MM SHOULD have a reserve fund though, because their cash prizes are set prizes.  I think their reserve fund is $50 million, because I've read in their rules at one point (unless it's changed recently), that the total prize liability cap is the lesser of 300% of sales or 50% of sales plus $50 million.

                              Well, there's different reserves.

                              States have their own reserves in general for each of their lotteries. But I haven't seen anything about a MM jackpot reserve or how it is funded. PB on the other hand has an explicitly stated 2% of sales going to a reserve fund unless it is funded to certain levels. The states are responsible for the 2nd-9th prizes, and the liability cap is just to limit the damage to their profit margin. It's not the same as a reserve specifically for that purpose, although they probably have sufficient reserves to cover it.

                              California, being pari-mutuel, never has any unfunded prize liability, unlike the rest of the fixed prize states.