What You Get From a Jackpot Lottery
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When a jackpot reaches hundreds of millions or even billions, lottery fever sweeps the country. But if you win, what you actually get to keep depends on the formulas and tax collectors.
Most people choose to take the lump sum — which for tonight’s Powerball drawing is $625.3 million. But if you take the annuity option, you’ll receive 29 annual payments that increase by 5% each year. Those payments will total about $100 million over 30 years.
The jackpot amount is calculated based on how many tickets are sold and the odds of winning. But when a jackpot grows to a mind-boggling size, interest rates play a key role in the final prize amount. The higher the jackpot, the lower the expected return on a ticket. It’s a virtuous cycle that can reduce your chances of winning.
But what if there was an easy way to improve your odds of winning? Richard Lustig has developed a software program called Lottery Maximizer that analyzes the probability of different number combinations. It then generates intelligent numbers that have a better chance of hitting the jackpot.
It’s a tool that anyone can use to increase their chances of winning. Lustig says he’s seen the software boost winnings by more than 15%. And while he admits it’s not foolproof, it’s certainly improved his own results.
A jackpot of this size is also likely to draw more players, boosting the odds that someone will match the winning numbers. That’s good for lottery sales, but it can drive down the expected returns on a single ticket.
In fact, the average expected return on a lottery ticket is lower when the jackpot is more than $270 million, according to a study by LottoAmerica. That’s because the underlying probabilities are lower when there are more numbers in play and more winners are possible.
Lottery winners also owe significant income taxes, especially if they take the lump sum payout. One way to offset this tax bite is to make a large contribution to charity in the year that you claim your winnings. That will help offset your lottery income and qualify you for a charitable deduction.
If you’re interested in playing the lottery, try Jackpocket, which offers official state games on your mobile phone. You can pick your numbers and place your order all on your smartphone — just don’t use it while crossing the street or operating motor vehicles. The service is available in 19 states and Washington D.C., as well as in Canada and the United Kingdom. To find out if it’s available in your state, visit the site. You can also play fun daily games that offer more chances to win. But remember: Always play responsibly! Don’t forget to check your local laws before you purchase a ticket. And never play while driving, using machinery or working with chain saws. Happy lotto!