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Headline-grabbing amounts seem to be the new normal.

Key Point

  • The Multi-State Lottery Association (MUSL), which operates the Mega Millions and Powerball lotteries, has made some major changes to its games.
  • A wider player base means more money going into the pot.
  • High interest rates can also artificially inflate the estimated jackpot.

You’re not alone in the recent trend of huge jackpots. In fact, catching the public eye may be exactly why the jackpots are getting bigger. In the past seven years, the 10 biggest lotteries won in the US, half of which will be his 2021 and beyond. But before you try your luck, it might be worth considering why these jackpots are stacking so high and what it means. you.

change the game

The Multi-State Lottery Association is one of the largest names in state gambling and has almost complete control over the games it operates. And with these games, including Powerball and the Mega Millions lottery winning billions of dollars, even small changes can have a big impact.

One of the reasons jackpots are so big is that they are hard to win. Prior to 2017, the odds of winning the Mega Millions lottery were approximately 1 in 258.9 million. In his October of that year, MUSL lengthened the long odds even further, dropping his chances of winning to about 1 in 302.6 million. The harder it is to win, the more likely the jackpot will continue to grow without being claimed.

What is $1 worth? If you he MUSL the answer might be millions. Among the 2017 rule changes, the Mega Millions Jackpot ticket price has been increased from $1 to $2. Changes that may not have a significant impact on consumers can significantly increase the grand prize.

MUSL’s roots go back to a 1987 agreement between five sparsely populated states and the District of Columbia. Since then, MUSL has grown significantly and now sells tickets in 45 states.

Most of that growth has occurred since 2009, with 14 new states added since then. This explosive growth can be attributed to a deal that allowed him to cross-sell Mega Millions and Powerball tickets that year he brokered in October.

The wider the player base, the more tickets you sell, and the more tickets you sell, the bigger the jackpot. So will this growing player base continue its upward trajectory? Probably not. As of this writing, he has only five states not currently selling Mega Millions or Powerball tickets, which limits MUSL’s room for expansion.

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rate of up

Another contributor to headline-popping jackpots has nothing to do with how the game is played or by whom. Rising interest rates could artificially expand the grand prize, or at least the oft-cited annuity options.

After the excitement of winning the lottery subsides, the winner is faced with a choice. For the Mega Millions and Powerball jackpots he is 29 years old. But there are pitfalls here. These he two options pay different amounts. That is the idea of ​​the time value of money.

Annuity options take into account annual interest rates, and when interest rates across the economy rise, so does the interest paid to lottery winners who choose an annuity. The annuity option counts these interest payments over decades into its total value. The latest, as-yet-unidentified mega He Millions winner earned $1.348 billion, but would only receive $723.5 million if he received a lump sum.

The staggering size of the jackpot seems to be the norm now, but given the math behind it, you might want to think again. Some of the inflation is artificial thanks to rising interest rates, but the game is getting harder and harder to win. Additionally, the more players there are, the more likely it is that you will have to split the prize if you win. However, it can be hard to pass up a $1 billion chance.

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