Why is the cash option different than the advertised jackpot?
The Powerball jackpot is an estimated 29-year annuity value. When players choose the annuity option for their prize, the state lottery pays the prize out over 29 years (30 payments) by buying U.S. Government Treasury Securities, which earn interest and mature annually over the 29 years. That annual return is the amount the winners receive each year for the 29 year period. With the cash option, the state lottery will take the amount of money that would have been invested and will pay it directly to the winner in one payment. Both payment options have federal and applicable state taxes deducted from them.
The Mega Millions jackpot is an estimated 26-year annuity value. When players choose the annuity option for their prize, the state lottery pays the prize out over 26 years by buying U.S. Government Treasury Securities, which earn interest and mature annually over the 26 years. That annual return is the amount the winners receive each year for the 26 year period. With the cash option, the state lottery will take the amount of money that would have been invested and will pay it directly to the winner in one payment. Both payment options have federal and applicable state taxes deducted from them.
A. The Georgia Lottery Corporation advertises its jackpots at the estimated 26-year annuity value for Mega Millions. When players choose the annuity option on their prize, the Georgia Lottery pays the prize out over 26 years by buying U.S. Government Treasury Securities, which earn interest and mature annually over the time period. That annual return is the amount winners receive each year for the 26 year period. With Cash Option, the Lottery takes the amount of money that would have been invested and pays it directly to the winner in one payment. Both payment options have federal and state taxes deducted from them.
