SAN ANTONIO — The Powerball had another one-billion dollar plus jackpot winner this month. KENS 5 viewer Bill Debner says he thinks the actually cash payout has actually gotten smaller over the last several years.
These mega jackpots over a billion dollars have become much more frequent lately, thanks to additional numbers that can be drawn for each multi-state lottery. That makes the choice of taking the annuitized option, which results in more money over 30 years, or the cash option where you get less money but all at once, a little more tricky.
THE QUESTION
Is it true that the cash option for the Powerball and Megamilions has decreased considerably over the past couple of years?
THE SOURCES
- Steve Helm, the acting media relations director for the Texas Lottery
- Usamega.com, which keeps track of any and all numbers related to both lotteries.
THE ANSWER
TRUE
WHAT WE FOUND
Helm told KENS 5, the amount of the cash option is determined solely by ticket sales.
"Before every drawing for Powerball Mega millions, groups of lottery directors get together. They go over sales and the interest rates leading up to the drawing. So with those figures, they determine the cash value and the annuitized amount," Helm said.
Helm says the cash value is the amount of money required to be in the jackpot prize pool on the day of the drawing to fund the estimated annuity price.
On the Usamega.com website for this past Oct. 4th drawing, the estimated annuitized jackpot was $1.2 billion, with a cash option of $551,700,000 million, which is about 46 percent of the annuitized amount. Two years ago, also on October 4th, the annuitized jackpot was $699,800,000 with a cash option of $496,000,000, a much higher 70 percent of the annuitized amount.
So yes, it is true. The cash option for the Powerball and Megamillions has decreased over the past couple of years.
Helm also told KENS 5 federal interest rates have an impact on that figure. So, because interest rates have increased during this current economic climate, the cash value amounts on average have been smaller than what they would have been a couple of years ago.