Powerball

This article is about the U.S. lottery game. For the Australian version, see Powerball (Australia). For other uses, see Powerball (disambiguation).

File:Powerballlogo.png

Powerball logo

Powerball is an American lottery game sold through U.S. lotteries as a shared jackpot pool game. It is coordinated by the Multi-State Lottery Association (MUSL), a non-profit association formed by an agreement with member lotteries. There are currently 31 members - 29 state members, the District of Columbia, and the United States Virgin Islands. (Florida will join Powerball in January 2009; details listed below.) MUSL manages the finances for each game, develops new games, conducts the drawings and provides other services and other games to its member lotteries, including Hot Lotto, Wild Card 2 (smaller games played similar to Powerball), 2by2, and Cashola, (a progressive jackpot video lottery (slot) game).

Powerball was the first game to use two drums as its core game. Using two drums offers more flexibility in game design, allowing for the possibility of both high jackpot odds and low odds for other prize levels. The two-drum concept was suggested by Steve Caputo of the Oregon Lottery. The two-drum concept has since been copied by Mega Millions (formerly The Big Game) in the U.S., Australia's Powerball, Thunderball in the United Kingdom, and EuroMillions.

Powerball's predecessor game began in 1988[2] as Lotto*America; the game, and name, were officially changed to Powerball on April 19, 1992. (MUSL then consisted of 14 states and Washington, D.C.; Maine was a 16th member, but it left MUSL during the transition from L*A to Powerball; Maine would not offer the game until 2004.). The matrix has been changed periodically. On March 4, 2001, an optional multiplier wheel (called "PowerPlay") was added. On November 2, 1997, the annuity period was changed from 20 to 25 years, and the cash option was added. The annuity currently consists of 30 graduated payments (increasing annually) over a period of 29 years. Powerball is drawn Wednesdays and Saturdays near Des Moines, Iowa; the game's drawings will move permanently to Florida in 2009 with Powerball becoming available there.

The most recent successful claim for a nine-figure Powerball jackpot winner ($100 million or higher annuity value) was for a ticket bought in Waseca, Rice County, Minnesota, for the May 3, 2008 drawing, worth approximately $180.1 million (annuity value); the ticket holders, married grandparents, chose the $88.0 million cash option. They are the winner of the largest prize in Minnesota lottery history, and held the 20th jackpot-winning Powerball ticket from that state. Previously, the most recent successful claim of a $100 million or higher prize was for a ticket bought in Westover, West Virginia, at a video lottery establishment known as "Paula's", which was the sole winner of the March 15, 2008 drawing, and which had an approximate annuity value of $276.3 million. The winning group of eight women, all of whom work at a tax collector's office in Monongalia County, West Virginia, chose to take the cash option of $139 million instead.

The most recent Powerball jackpot ticket was purchased in New Mexico for the September 27, 2008 drawing; assuming the ticket is claimed, the ticket holder(s) will then have 60 days in which to choose either the (approximately) $206.9 million annuity (payable in 30 annual payments, increasing by 4 percent yearly until 2037), or, a cash prize of about $102.9 million; no further details as of September 29.

Among notable nine-figure wins prior to this was on a ticket that was purchased in Richmond, Indiana; that community had also produced the then-U.S. record $295.7 million (annuity) winning ticket for Powerball (July 29, 1998.) The businesses in Richmond, Indiana (both of the Speedway convenience-store chain) that have provided two of the largest Powerball winners are situated about three miles (five kilometers) apart.

On July 2, 2008, an $85 million Powerball jackpot was won in Oklahoma; the smaller MUSL game Hot Lotto also was won there, marking the first time both games produced at least one jackpot winner each on the same night in the same MUSL jurisdiction. (Earlier in the day, MUSL announced the Powerball drawings will move to Florida, while Hot Lotto and the other MUSL numbers games will continue to be drawn in Iowa.)

Powerball drawings are hosted by longtime Iowa radio personality Mike Pace (normally shown on the Powerball set in a tuxedo), who has hosted MUSL drawings since the organization began. He will not be part of the Florida drawings, and, as such, he will become eligible to play Powerball.

Playing the game

Through the drawing of December 31, 2008, Powerball is played as follows: a player pays $1 and picks five numbers from 1 to 55 (white balls) and one additional number from 1 to 42 (the red Powerball number.) For an additional $1, the player may activate the optional PowerPlay feature, which applies a random multiplier, using a special wheel spun by the emcee, to all prizes except the jackpot. Depending on the PowerPlay number, players may multiply non-jackpot prizes by 2 to 5 (or, during a yearly promotion, 10x.)

Starting date	Pick 5 out of	Pick 1 out of	PowerPlay multipliers
April 19, 1992	45	45	none
November 2, 1997	49	42	none
March 4, 2001	49	42	1–5
October 6, 2002	53	42	2–5
August 28, 2005	55	42	2–5
January 3, 2009	59	39	2-5, (5x second prize)

A promotion from March 2 through March 29, 2006, replaced one of the four 5x slots on the PowerPlay wheel with 10x. The 10x multiplier was drawn once, on March 11, 2006. The 10x multiplier returned in April 2007; again, it came up one time. The 10x space returned for a third time on April 2, 2008, with the ball finding the 10x space twice for the first time in a 10x promotional period. Each year, MUSL guarantees that the ball will land in the 10x space at least once, extending the promotion into a second month, and beyond that, if necessary.

PowerPlay's success has led to similar multipliers in some other games, such as the tripler in MUSL's smaller Hot Lotto, called "Sizzler" (Triple Sizzler in North Dakota), and Megaplier (exclusive to Texas) for Mega Millions.

Payout is according to the following:

Matches	Payoff	Current probability of winning	Probability (January 2009)
Zero numbers, plus Powerball	$ 3	1 in 69 [3]	1 in 62
1 number, plus Powerball	$ 4	1 in 127	1 in 123
2 numbers, plus Powerball	$ 7	1 in 745	1 in 787
3 numbers, no Powerball	$ 7	1 in 291	1 in 359
3 numbers, plus Powerball	$ 100	1 in 11,927	1 in 13,644
4 numbers, no Powerball	$ 100	1 in 14,254	1 in 19,030
4 numbers, plus Powerball	$ 10,000	1 in 584,432	1 in 723,145
All 5 numbers, no Powerball	$ 200,000	1 in 3,563,609	1 in 5,138,133
All 5 numbers, plus Powerball	Jackpot	1 in 146,107,962	1 in 195,249,054

Overall probability of winning a prize are 1 in 36.61. In January 2009, overall probability becomes 1 in about 35.

Jackpot winners have the option of receiving an annuity prize or a single lump sum cash payment. The minimum jackpot prize is a $15 million annuity disbursed in 30 payments over 29 years. When the jackpot rolls over, it increases by at least $5 million (e.g. $20 million after one roll.) The lump sum payment is typically approximately half the annuity value. The 30 annuity payments are not equal but based on an increasing rate schedule. For example, the first annual gross annuity payment on the base $15 million jackpot would be approximately $267,000 while the final payment would be approximately $834,000.

Generally, Powerball jackpot winners do not have to choose cash or annuity until after claiming (then they usually have 60 days to do so.) However, in Missouri, the 60-day "clock" starts with the drawing, so a Missouri Lottery Powerball jackpot winner who wishes to take the cash option needs to make immediate plans to claim their prize. (In Idaho, winners have only 30 days after claiming to make the choice.) Powerball winners, including the jackpot, must claim their prizes within a period ranging from 90 days to one year, depending on the rules of the MUSL member where the ticket was bought. (Future participant Florida has similar rules to Missouri in this respect.)

When the cash option began in November 1997, all Powerball players had to choose, when buying a ticket, whether they wished to receive a jackpot prize in lump sum or (at the time) 25 annual payments. About a year later, a new Federal law no longer required the cash/annuity choice to be made in advance. The MUSL members phased in the new regulations.

Powerball drawings are held every Wednesday and Saturday at MUSL's studio in West Des Moines, Iowa, normally at 9:59 p.m. Central time. Drawings are occasionally scheduled at remote locations. The results of drawings are not official until they are audited by the accounting firm LWBJ, LLP.

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Winning expectation

Because the quoted jackpot amount is paid as an annuity over 29 years, its immediate cash value to the winner is close to, but less than, half the advertised amount of the prize. The actual ratio depends on projected interest rates and other factors. MUSL starts with the cash value, built from a percentage of sales (currently 30%) and then calculates the advertised Jackpot amount from that value based on the average costs of the three best securities bids.

When the actual Jackpot is $200M, a player's winning expectation is -14% if no one else is playing. This is the best scenario for the player because the winning will not be diluted in sharing. The expectation of -14% means that the player will lose about 14 cents on a $1 ticket, on average. The player will lose more in reality because others are also playing.

The player's expectation gets better when the jackpot becomes higher. If the jackpot is $400M, a player's winning expectation becomes 54% before tax. If the jackpot is $30M, a player's winning expectation becomes -72%. The break even point is for the jackpot to be $242M, in which case the player loses no more than the tax paid. All these numbers are based on the best scenario in which no other players are sharing the prize.

With the jackpot at various levels, if a player pays $1, the net expectation is shown in the following table:

Jackpot (approximate)	Cash Value	Winning Expectation
$30M	$15M	$-0.72
$50M	$25M	$-0.66
$100M	$50M	$-0.48
$150M	$75M	$-0.31
$200M	$100M	$-0.14
$242M	$121M	$0
$300M	$150M	$0.20
$350M	$175M	$0.37
$400M	$200M	$0.54

Most recent matrix change (2005)

On August 28, 2005, the game was modified to provide larger jackpots and faster jackpot pool growth. The main pool of numbers was increased from 53 to 55 and jackpots now begin at $15 million rather than $10 million. The Powerball number pool remains 42.

Probability of winning the jackpot are 1:146.1 million. Overall probability of winning a prize are 1:36.61.

Powerball's most recent change resulted in the increase of some lower-tier prizes, including the doubling of second prize (to $200,000 without PowerPlay) and third prize (to $10,000.)

The double matrix will change again in January 2009 to accommodate the addition of Florida to the game; it will replace Pennsylvania as the most populated MUSL member.

Largest payoffs

On February 18, 2006, the jackpot worth $365 million was won by a single ticket sold in Nebraska. That single ticket was shared by eight meat plant workers. This is the largest Powerball prize (per ticket).

A grand prize won on October 19, 2005 worth $340 million was awarded to the West family of Jacksonville, Oregon. The family won less than two months after the rules were changed to promote larger payouts. Steve West, who purchased the ticket, put in $20 for tickets, along with another $20 from his in-laws. The family planned to split the prize among themselves.

Prior to the $340 million winner, Jack Whittaker of West Virginia was the claimant to the biggest jackpot. He won $314 million on Christmas Day, 2002.

On August 25, 2007, a jackpot worth $314 million was won by a retired auto worker from Ohio.

Fortune cookie payout

The Powerball drawing of the March 30, 2005 game produced an unprecedented 110 second-place winners, all of whom picked the first five numbers correctly, but not the Powerball number. The total came out to $19.4 million in unexpected payouts; 89 tickets won $100,000, and the other 21 tickets won $500,000 due to the Power Play multiplier option.

Powerball officials initially suspected a reporting error or fraud, but it turned out that all the winners received their numbers from fortune cookies made by Wonton Food Inc., a fortune cookie factory in Long Island City, Queens, New York. The factory had printed the five regular numbers (22, 28, 32, 33, and 39) on thousands of fortunes. The sixth number in the fortune, 40, did not match the Powerball number, 42. None of the employees of Wonton Food played those numbers.

Participating states and territories

• Arizona (joined MUSL in 1994)
• Colorado (2001)
• Connecticut (1995)
• Delaware (1991)
• District of Columbia (1988)
• Florida (January 1, 2009)
• Idaho (1990)
• Indiana (1990)
• Iowa (1988)
• Kansas (1988)
• Kentucky (1991)
• Louisiana (1995)
• Maine (2004; see note below)
• Minnesota (1990)
• Missouri (1988)
• Montana (1989)
• Nebraska (1994)
• New Hampshire (1995)
• New Mexico (1996)
• North Carolina (2006)
• North Dakota (2004)
• Oklahoma (2006)
• Oregon (1988)
• Pennsylvania (2002)
• Rhode Island (1988)
• South Carolina (2002)
• South Dakota (1990)
• Tennessee (2004)
• U.S. Virgin Islands (2002)
• Vermont (2003)
• West Virginia (1988)
• Wisconsin (1989)

Powerball jurisdictions that joined MUSL before April 1992 also participated in Lotto*America.

Maine joined MUSL in 1990, dropping out when Powerball began; it did not rejoin MUSL until 2004.

The minimum age to play Powerball is 18, except in Nebraska (19); Arizona, Iowa, and Louisiana (21).

Powerball winnings are exempt from state income taxes in Delaware, Pennsylvania, South Dakota, and the District of Columbia. There is no state income tax in South Dakota, and only on interest and dividends in New Hampshire and Tennessee. . Winnings from tickets purchased across state lines may be subject to tax from the state of purchase (with possible credit for taxes paid to one's own state or vice versa). (Florida, joining in January 2009, also does not levy state income tax.)

Georgia left Powerball in 1996 to join The Big Game (now Mega Millions), the other major US lottery group.

In 1998, Florida was given permission by the state government to join a multi-state game. It was set to offer Powerball; however, in early 1999, the new governor, Jeb Bush, prevented Florida from joining, since he believed Powerball would hurt the state's existing lottery games. Until it joins Powerball in January 2009, Florida is the only lottery state that does not participate in either Powerball or Mega Millions.

California never had any intention of offering Powerball; however, it joined MUSL since there was a planned "international" lottery game; but it never got off the ground. It currently participates in Mega Millions.

Game Change in January 2009; Drawings Moving to Florida

With the start of Powerball sales in Florida, planned for January 1, 2009 (with its first participating drawing January 3, 2009), the matrixes will change to 5/59 + 1/39 (adding four white ball numbers and dropping three red ball numbers). This change will boost the jackpot probability to 1:195 million while dropping the overall probability to 1:35. Based on statistical projections, the average jackpot won will increase from $95 million to $141 million. Over 3.5 million additional prizes are expected to be won yearly (based on the same sales level) due to the drop in overall probability. The starting jackpot will be increased from $15 million to $20 million. The jackpot contribution is being increased from 30.3% to 32.5% of total sales. The PowerPlay option, available for an extra $1 charge per play, will continue to multiply lower-tier prizes by either 2X, 3X, 4X or 5X with an equal chance of each multiplier, except that the Match 5+0 prize of $200,000 will automatically have a multiplier of 5X for PowerPlay wagers making the Match 5+0 prize $1 million, paid in a cash lump sum. The special rules allowing for a Match 5+0 bonus second prize if the jackpot exceeds its previous record by $25 million, triggered only twice, will be retained.

Licensed products

In 2006 WMS Gaming released a range of slot machines under the Powerball brand name.

Vista Sidebar Gadget

In 2007 the Oregon Lottery released a new Windows Vista Sidebar gadget which relays the winning numbers for Powerball in live time. The gadget also provides large jackpot announcements. Oregon Lottery

In November 2007, Lottery Post released the Lottery Results Gadget for Windows Vista, providing near real-time winning numbers for Powerball, in addition to results for every other lottery game offered in each state. Likewise, new jackpots are pushed to the Windows Sidebar gadget after they are announced.

References

• April Witt (January 30, 2005). "Rich Man, Poor Man". The Washington Post Magazine, page 14.
• Jennifer 8. Lee (May 11, 2005). "Who Needs Giacomo? Bet on the Fortune Cookie". The New York Times. [4]
• Press release detailing March 30, 2005 payout.
• usamega.com Powerball Jackpot Analysis

External links

• Official Powerball site
• MUSL/Powerball history page