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Saturday, 13 april 2024

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Powerball's $1.725 billion jackpot becomes 2nd largest in history

With no hits in Monday's drawing, the Powerball jackpot climbs several positions to become the second largest jackpot in the world.

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4 bets missed out on the $1,550 Powerball jackpot with only 5 hits
4 bets missed out on the $1,550 Powerball jackpot with only 5 hits

There seems to be no end to the Powerball fever! In yesterday's drawing, Monday, October 9, there was also no ticket that managed to match the winning combination of numbers (16, 34, 46, 55, 67 and the Powerball 14), so once again the jackpot accumulated and climbed to the incredible sum of $1,725 million dollars.

With this figure, it becomes the second largest lottery jackpot in the world, leaving behind the $1.586 billion Powerball jackpot of January 2016, and only surpassed by the current record jackpot of $2.04 billion also from Powerball, drawn in November 2022. Are we close to a new record?

If no one manages to match the numbers of the next drawing, which will be held on Wednesday 11 at 22:59h US time, it is not daring to think that a new world record could be achieved. With the number of people playing Powerball around the world, sales of the latest draws have shot up exponentially in the hopes of winning the mega-jackpot.

In yesterday's drawing, 4 tickets were close to the first prize, as they matched the 5 numbers of the winning combination, but not the Powerball. Unfortunately, they will have to settle for the second prize of 1 million dollars each.

The Powerball jackpot after taxes: how much of the prize do you really get?

Although the juicy jackpot announced for Wednesday's drawing is $1.725 billion, the truth is that, in the case of U.S. lotteries, the prize won does not always correspond to the announced figure. The reason is that the jackpots are announced without deducting tax rates, so the real amount obtained by the player is always much lower.

However, it's not just taxes that enter into the equation to complicate prize payments. For starters, depending on the state where the ticket is purchased, state taxes may apply in addition to federal taxes. And, to top it off, in the U.S., jackpot winners have the option of collecting their prizes in two different ways: in annuities, or as a lump sum. Of course, each of these ways has different implications on prize deductions.

Let's go step by step to understand the complexity of prize collection. To begin with, as a general rule all jackpots are subscribed to a 37% federal tax payment. And, in addition, some states apply additional state taxes, which vary from state to state. Except for California, Florida, New Hampshire, New Hampshire, South Dakota, Tennessee, Texas, Washington (except DC) and Wyoming, all other states apply state taxes ranging from 2.9% to 10.9% on a case-by-case basis.

In addition, winners who choose to collect their prize with the lump sum option are subject to a withholding of almost 55% of the pre-tax prize for lottery administration fees. This withholding does not apply in the case of annuitization, although it is an option only available to players within the U.S. (it does not apply to people playing from other countries) and, in addition, it is the least chosen option, since players prefer to sacrifice a portion of the prize, but guarantee an immediate payment, instead of having to deal with several payments and the consequent loss of the real value of the prize over time that this implies.

Therefore, in the event that a player chooses the annuity payment option, he/she would receive the full $1.725 million dollars from the lottery, but distributed in annual payments, to which he/she would then have to deduct the corresponding taxes according to each case. On the other hand, if a player chooses to receive the prize in a lump sum, he would receive a payment of approximately $778 million from the lottery, after which he would have to deduct the corresponding taxes according to the terms of his ticket or wager.

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