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7 things you need to know about the world's largest jackpot - the US Powerball

Wed 08 Jun 2016, By Jerry Westford
7 things you should know about the US Powerball

Thanks to record smashing jackpot of $1.5 billion that was split between three lucky winners at the start of the year, there are very few people on the planet that haven’t heard of the US Powerball lottery.

If you’re one of those unfortunate people, then here’s everything you need to know about the world’s most popular lottery.

1. It’s has the biggest starting jackpot in the world

Once a jackpot has been won, the amount for the next draw is automatically set to $40 million. That’s a decent starting point and given the recent changes to the way the game is played, it’s likely to see a few rollovers before another lucky winner walks away with the grand prize.

In November 2015, the state gaming commission made a small but significant change to the field of numbers in play. The number of white balls increased from 59 to 69, while the number of red balls decreased from 35 to 26. The result is that your chances of winning the jackpot decreased slightly, but the possibility that you could walk away with one of smaller prizes got better.

2. Your odds of winning the Powerball lottery never change

With the current changes, your odds of winning the grand prize are 1 in 292.2 million. But all it takes is one ticket. And no matter how many people play, those odds never change. Ticket sales only influence the size of the final prize.

The amount you see advertised is based on the projection of ticket sales. Every state contributes half of the money based on ticket sales to the pot, which is split evenly if there is more than one winner. And 68% of that money is allocated to the grand prize.

3. You can buy your tickets online

That’s great news for Canadians and other non-US citizens. You don’t have to be living in the United States to be eligible to play and win the Powerball lottery. And it means you can get around an obscure law that doesn’t allow you to enter the US while in possession of a lottery ticket.

While you could hop on a plane and buy your ticket in person, if you happen to win the lottery you may not be able to bring your ticket back into the US to claim your prize. But buying your ticket online allows someone else to buy the ticket on your behalf. Your winnings are deposited directly into your bank account. So you can still be a winner without ever having to step foot on US soil.

4. You will have to pay tax on your winnings

Lottery winnings are considered a form of income which makes them subject to tax. The IRS automatically withholds 25% of the final prize money to cover federal taxes. Should a non-US citizen win the jackpot, they’ll see 30% of that money go to federal tax.

After that, state taxes will also be deducted. California, Florida and Tennessee don’t levy any state tax on lottery winnings, but rest of the states do to varying degrees. If you bought your ticket in New York, you’ll pay the largest state tax of 8.83% on top of the 25% in federal taxes.

5. You only get the full prize if you take the annuity

If you’re lucky enough to be the winner of the grand prize, you have two options. Either take the cash in a lump sum, or let the lottery commission invest it (tax free) and get an annual payment for the next 29 years.

Any total you see advertised is only what you would get if you take the second option. Most experts will tell you that it’s actually better to take the lump sum and pay all the taxes upfront. You may walk away with a bit less than the advertised jackpot, but you won’t have to worry about paying tax on your future earnings, which could be much more if there are changes to the tax law.

6. You’ll probably have to share your prize

In all the time that the Powerball lottery has been running, only a few people have managed to claim the grand prize all to themselves. So if you are lucky enough to win the grand prize, chances are good that you’ll have to share it with a few other people.

The record-smashing jackpot of $1.5 billion in January 2016 was split between three people who each walked away with $187 million after taxes. The last individual winner of a big jackpot was way back in March 2013. It went to Gloria Mackenzie who walked away with a staggering $590.5 million at the ripe old age of 84.

7. You might forget to claim the smaller $1 million prize

It happens more often than you think. Often, when players hear the news that a jackpot has rolled over, they forget to check their tickets to see if they might have won a smaller prize.

To date, almost 114 people have not come forward to claim their prize of $1 million. Even if it’s not a grand jackpot, it’s still a respectable amount of money. And that’s another reason why it pays to buy your tickets online. That way, you won’t miss out on claiming the smaller prizes. If you play often enough, they could add up to a tidy sum of extra cash.

The Powerball jackpot really hit the headlines in a big way earlier this year. And with the reputation it has gained for record jackpots, it’s no surprise that more people are buying tickets for every draw. Even if it seems like the odds are stacked against you, and you may have to share your prize, there are still plenty of reasons why you should play it. After all, somebody has to win, and you can’t win in if you aren’t in it!