California Lottery players continue to seemingly win the biggest jackpots. The trend continued Wednesday night when a ticket sold in the Golden State overcame Powerball’s one in 292.2 million odds to win a more than $1 billion prize.
The Powerball jackpot hadn’t been hit since April 19. The top prize subsequently rolled over 38 times to climb upwards of $1 billion for Wednesday night’s historic drawing.
Powerball officials confirmed Thursday morning that a single ticket had matched the winning numbers of 7, 10, 11, 13, 24, and red Powerball 24 to claim the $1.08 billion prize. The advertised jackpot is the amount the player(s) would win should the winner opt for the 30-year annuitized payout. The one-time cash value is worth $558.1 million. Both amounts are before federal taxes.
Congratulations to our newest Powerball jackpot winner and the California Lottery!” said Drew Svitko, Powerball Product Group chair and the executive director of the Pennsylvania Lottery.
Svitko added that Powerball has given millions of lottery players the hopes and dreams of striking it rich for over 30 years.
“In doing so, Powerball has raised billions of dollars for good causes supported by lotteries. A portion of every Powerball ticket sold during this jackpot run will go toward furthering that legacy of supporting public programs and services in your community,” Svitko said.
California Dreamin’
California is home to about nine million more people than any other state, so it makes sense that more lottery winners come from the Golden State than any other lottery market. But luck has certainly been on California lottery players’ side regarding recent major jackpots.
Wednesday night’s $1.08 billion Powerball jackpot was the sixth-largest jackpot in U.S. history. California lottery players have now won three of the six largest prizes.
A player in California also won the record $2.04 billion Powerball jackpot hit last November. And a player in California was one of the three lucky winners of the $1.586 billion Powerball jackpot that was won in January 2016.
During Wednesday night’s draw, two other Powerball tickets sold in California matched the five white balls, but not the red Powerball, to claim the second-best prize of $1 million each.
California lottery players benefit from not having their prizes subject to state taxes. California is one of only nine states that doesn’t consider lottery prizes as taxable income.
Wednesday night’s $1.08 billion prize, should the winner opt for the annuitized payout, would equate to 30 payments of approximately $22.7 million after the federal 37% tax. If the winner opts for the one-time cash option, they’ll receive about $351.6 million after the feds take about $206.4 million of the loot.
Inflation Considerations
Higher interest rates are helping propel Powerball and Mega Millions’ advertised annuitized jackpots. With the annuitized pools based on bonds backed by the U.S. Treasury, the pools are growing faster than they otherwise would.
For example, the $1.05 billion Mega Millions jackpot hit by a lucky player in Michigan in early 2021 featured a substantially higher cash option of $776.6 million. Since federal interest rates were near zero at the time, the annuitized jackpot was only about $274 million richer than the actual cash pool.
The Federal Reserve interest rate this week is about 5%. The heightened rates will likely cause lottery winners of annuitized jackpots to look closer at the 30-year payment plan. In recent years, nearly all major winners have chosen the cash option.
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