Welcome Guest
Log In | Register )
You last visited December 7, 2016, 7:02 pm
All times shown are
Eastern Time (GMT-5:00)

Dropping cash values?

Topic closed. 14 replies. Last post 13 years ago by CASH Only.

Page 1 of 1
PrintE-mailLink
Avatar
New Member
Tucson, AZ
United States
Member #1818
July 9, 2003
8 Posts
Offline
Posted: August 6, 2003, 10:26 am - IP Logged

Whoah, what's going on here? I've been watching cash values for over  a year now (CASH ONLY is the way to go!) and I've noticed a sudden drop in the cash values based on the advertised annuity value for both Powerball and Megamillions during this past few sets of drawings (ie: since the last time someone won).

Megamillions is currently $50m annuity and $28m cash. That's a cash value of 56% of what's advertised. But the last time it was $50m the cash value was $32m! Which puts it at 64%. Megamillions is usually above 60% ALWAYS, so I'm wondering what's going on? Rising interest rates? No. The Fed just cut them a couple weeks ago!!

Powerball is currently $42m with $21.9m cash. That's 52.14%. But Powerball has been over 55.5% for a while now.. for instance, the last time it was $42m the cash value was $23.8, which is 56.67%.

Shouldn't this cause people to ask questions? I mean, since like 70% of lottery winners pick cash anyway, isn't this somewhat deceiving since most of the billboards I've seen DO NOT advertise the cash value beside the annuity value. Seems a lot like false advertising to me (maybe not false, but misrepresenting the truth at least).

Thoughts? Comments?


    United States
    Member #1759
    June 29, 2003
    1156 Posts
    Offline
    Posted: August 6, 2003, 10:55 am - IP Logged

    That's why it's better to get an "ANNUITY"

      RJOh's avatar - chipmunk
      mid-Ohio
      United States
      Member #9
      March 24, 2001
      19828 Posts
      Offline
      Posted: August 6, 2003, 11:10 am - IP Logged

      It has been discussed before somewhere in this forum, that the value of a Jackpot is the amount that the cash would earn if invested in a 28 or 30yrs annunity. If the interest was more the jackpot would be more.  If the interest was 0%, the jackpot and cash amount would be the same, so the closer the interest rates get to 0, the closer the cash amounts and jackpots are.  Some are saying with interests on investments being so low and many people actually losing on their investments, the choice of an annunity may not be that bad in long terms.   

      RJOh

        Avatar
        New Member
        Tucson, AZ
        United States
        Member #1818
        July 9, 2003
        8 Posts
        Offline
        Posted: August 6, 2003, 11:48 am - IP Logged

        I know that. But the point is that the opposite is happenning, while the rates are getting closer to 0. :)

        So the exact opposite of what you said is happenning.. which is why I wrote my original post in the first place.

        Taking annuity or cash over one another is a personal choice. I will always choose cash. I don't care what someone else will do. What I do care about is what I wrote in my original post.. it troubles me that they would advertise a higher annuity jackpot for the sole purpose of higher sales (since higher advertised jackpots = more sales).

        And don't forget, that the "jackpot" is both an annuity jackpot and a cash jackpot. Depends on which you look at. Cash on hand, is the true jackpot in my opinion. We're the only country in the world that does this annuity nonsense with our lotteries - everywhere else advertises the cash value and does not tax lottery winnings.

        Regardless of what some say, a smart investor who wishes to do research and such can easily earn more on his/her investments than using zero coupon bonds. In fact, they could just use the same investment vehicles that the lotteries do, if they want annuity. Only disadvantage is the entire amount is taxed first, as opposed to if you let the lottery invest it for you (it's taxed in installments).

        My question still stands.. why are they advertising a higher annuity jackpot relative to their cash on hand when the interest rates have not risen?

          Avatar
          New Member
          Tucson, AZ
          United States
          Member #1818
          July 9, 2003
          8 Posts
          Offline
          Posted: August 6, 2003, 11:50 am - IP Logged

          CASH Only, where are you? Back me up against Pick-4_Master! Clearly cash is the only way to go. :D


            United States
            Member #1759
            June 29, 2003
            1156 Posts
            Offline
            Posted: August 6, 2003, 12:26 pm - IP Logged

            CASH is good if that's your Choice,but ANNUITY

            is a good decision also.Honestly having 2 choices in a Lottery Winfall can be based on how a person wants to handle there winnings not everyone wants a LUMP sum and there are reasons for that.You can't say that CASH is better just like you can't say ANNUITY is better it all depends on the situation.There equal as far as how they would benefit the winner in the long or short term.


              United States
              Member #1759
              June 29, 2003
              1156 Posts
              Offline
              Posted: August 6, 2003, 12:31 pm - IP Logged

              I was just messing around in the previous post about it being better to get an ANNUITY there both good choices.


                United States
                Member #379
                June 5, 2002
                11296 Posts
                Offline
                Posted: August 6, 2003, 12:52 pm - IP Logged
                a002:

                Good question. It could very well be that   LONG-TERM interest rates (ie, the length of lottery annuities) have increased, while SHORT-TERM percentages have yet to do so.

                Don't let anyone talk you into switching to annuity, a002.

                  Avatar
                  New Member
                  Tucson, AZ
                  United States
                  Member #1818
                  July 9, 2003
                  8 Posts
                  Offline
                  Posted: August 6, 2003, 3:13 pm - IP Logged
                  Quote: O

                    United States
                    Member #1759
                    June 29, 2003
                    1156 Posts
                    Offline
                    Posted: August 6, 2003, 3:16 pm - IP Logged

                    And don't let anyone talk you into CASH if you decide to take ANNUITY

                      vincejr's avatar - wallace
                      Somewhere in VA
                      United States
                      Member #1944
                      July 29, 2003
                      130 Posts
                      Offline
                      Posted: August 6, 2003, 3:59 pm - IP Logged

                      Part of the problem may be

                        Avatar
                        New Member
                        Tucson, AZ
                        United States
                        Member #1818
                        July 9, 2003
                        8 Posts
                        Offline
                        Posted: August 6, 2003, 7:08 pm - IP Logged

                        T-Bills at 5.25%? That's a bit high, no?

                        http://wwws.publicdebt.treas.gov/AI/OFBills

                        I know they're extremely stable.. but they do fluctuate. Their rates are considerably lower now than they were in 1999 for example.

                        I'm saying that their change isn't enough to warrant Powerball and Megamillions advertising a larger annuity jackpot vs their cash amount on hand.

                        It is also my understanding that both MM, MUSL and most lottery commissions in the US, purchase zero coupon bonds (probably STRIPS) and not T-Bills. Even then, on the open market those are yielding at most 5.5% or so and have NOT changed much - just like you said.. very stable.

                        That's exactly why I'm complaining about the cash value's sudden change.

                          Avatar

                          United States
                          Member #434
                          June 30, 2002
                          675 Posts
                          Offline
                          Posted: August 6, 2003, 8:04 pm - IP Logged

                          a002,

                          You make some valid points. The even scarier Annuity vs. Cash situation is for PA's Super 6. It hasn't been hit in like 10 months now. Well for about 9 of those months the Cash value was 50% of the annuity value. Then one foggy Friday in late May/early June they switched it. Now ever since the cash value has grown at roughly $500K per drawing and the Annuity grows at $200K.

                          By my calculations in about another 55-60 rollovers the Cash Value will actually EXCEED the Annuity! I sincerely hope it happens too because I'm sure it would be the first time in history.

                            Avatar
                            New Member
                            Tucson, AZ
                            United States
                            Member #1818
                            July 9, 2003
                            8 Posts
                            Offline
                            Posted: August 6, 2003, 8:36 pm - IP Logged

                            Yeah, honestly I hope


                              United States
                              Member #379
                              June 5, 2002
                              11296 Posts
                              Offline
                              Posted: August 9, 2003, 3:35 pm - IP Logged
                              Look at Colorado Lotto; AFAIK their cash value has ALWAYS been 40% of the annuity. If there's one game where cash option winners are cheated, it's the Colorado 6/44 game.

                              CO would do well to replace its 6/44 with "Hot Lotto", since CO is a MUSL member.