The latest Mega Millions and Powerball jackpots are making headlines, but what do the odds really look like? The answer is a lot worse than you might think. You’re almost 300 times more likely to get hit by lightning than win the lottery, even if you buy hundreds of tickets. That’s why jackpot prizes grow so quickly.
A big part of the reason is that state-sponsored lottery games use a percentage of revenue to pay for prizes and other costs, and the rest goes to retailers and other providers who sell tickets. As a result, the prize pool grows each drawing until someone wins. When nobody wins, the jackpot starts at $1 million and keeps growing until somebody matches all six numbers.
While those odds are shockingly low, they haven’t stopped people from buying tickets. In fact, ticket sales have grown every year for both the Powerball and Mega Millions since they started in 1990. The prize pools have also grown each year since those games started in 1992, but the overall chances of winning have declined.
Despite those dismal odds, there are some things you can do to increase your chances of winning. First, make sure you play regularly. That means playing at least once a week and buying multiple tickets each time you do. And don’t buy a single-ticket “quick pick.” That’s just a computerized selection of random numbers that doesn’t give you the best chance of winning. Instead, buy two plays for $1 each, and select a set of six numbers between 1 and 49 on a playslip or let the system Quick Pick your numbers for you.
If you do happen to win, the next step is to decide how to receive your prize. Most states offer jackpot winners a choice between a lump sum and an annuity that spreads payments over several years, typically 20 or 30. The annuity option offers a higher initial payout and is tax-efficient, but it will eventually run out. Fortunately, most winners choose the lump sum, which is usually less than half of the prize.
Another decision to make is whether to invest the money. New York, for instance, pays jackpot winners the value of what they would have received if they had chosen the annuity option, and then allows them to choose between investing the money themselves or getting a one-time lump sum. Many winners opt for the latter because they figure that they can invest their winnings better than the 5-percent interest that an annuity would pay them.
It’s important for anyone who wins a large jackpot to put together a team of professionals, including an attorney, accountant and financial planner. These experts can help them weigh the payout options and understand the risks and benefits of each. They can also help them keep their winnings in check by ensuring they don’t spend more than they can afford. And finally, they can help them keep their privacy in order to avoid scammers and long-lost friends who suddenly want to make a play for their inheritance.
