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. Powerball is drawn Wednesdays and Saturdays. Effective January 7, 2009, the game's drawings moved to Florida, as Powerball is now available there. Powerball is available in 30 states, the District of Columbia, and the U.S. Virgin Islands, compared to its rival, Mega Millions, played in 12 states.

Powerball's predecessor began in 1988; it was known as Lotto*America. The game, and name, were officially changed to Powerball on April 19, 1992.

In March 2009, it was reported that there are discussions aimed at allowing individual U.S. lotteries to sell both Mega Millions and Powerball. New Jersey, a Mega Millions state, announced on March 10 that it would seek permission to join MUSL for the purpose of adding Powerball to its game portfolio. In April 2009, both houses of the Washington legislature passed a bill that would allow Powerball sales 90 days after the governor's signature.

Background

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). There are currently 32 members: 30 state members; the District of Columbia; and the United States Virgin Islands. Florida was the most recent state to join the Powerball on January 4, 2009. One member, Maine, left MUSL during the transition from Lotto*America to Powerball, after which MUSL had 14 states and the District of Columbia. Maine would not offer the current game until 2004.

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.

The matrix has been changed periodically. On March 4, 2001, an optional multiplier wheel (called "PowerPlay") was added. (The wheel was retired in 2009; PowerPlay is drawn by computer; see below.)

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.

Until December 31, 2008, Powerball drawings were hosted by longtime Iowa radio personality Mike Pace, who had hosted MUSL drawings since the organization began. He is not part of the Florida drawings. (There was one more drawing under the previous format, on January 3, 2009, hosted by Polly Carver-Kimm, before the draw venue moved to Florida.)

Playing the game

Beginning with the drawing on January 7, 2009, Powerball is played as follows: a player pays $1 and picks five numbers from 1 to 59 (white balls) and one additional number from 1 to 39 (the red Powerball number.) For an additional $1, the player may activate the optional PowerPlay feature, which applies a random multiplier drawn by random number generator, 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 7, 2009	59	39	2–5, (automatic 5× second prize)

A promotion from March 2 through March 29, 2006, replaced one of the four 5× slots on the PowerPlay wheel with 10x. The 10× multiplier was drawn once, on March 11, 2006. The 10× multiplier returned in April 2007; again, it came up one time. The 10× space returned for a third time on April 2, 2008, with the ball finding the 10× space twice for the first time in a 10× promotional period. Each year, MUSL guarantees that the 10× "space" will be picked 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.

Beginning with the first Florida drawing on January 7, 2009, the PowerPlay multiplier was drawn with a random number generator (RNG), although the winning numbers continue to be drawn with numbered balls from two drawing machines.

Payout is according to the following:

Matches	Payoff	Current probability of winning
Zero numbers, plus Powerball	$ 3	1 in 62
1 number, plus Powerball	$ 4	1 in 123
2 numbers, plus Powerball	$ 7	1 in 787
3 numbers, no Powerball	$ 7	1 in 359
3 numbers, plus Powerball	$ 100	1 in 13,644
4 numbers, no Powerball	$ 100	1 in 19,030
4 numbers, plus Powerball	$ 10,000	1 in 723,145
All 5 numbers, no Powerball	$ 200,000	1 in 5,183,133
All 5 numbers, plus Powerball	Jackpot	1 in 195,249,054

Overall probability of winning a prize is 1 in 35.

Jackpot winners have the option of receiving an annuity prize or a single lump sum cash payment. The minimum jackpot prize is a $20 million annuity disbursed in 30 payments over 29 years. When the jackpot rolls over, it increases by at least $5 million (e.g. $25 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 $20 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 Florida and Missouri, the 60-day clock starts with the drawing, so a 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.

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 cash 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.

The largest Powerball jackpots occur when there are at least 15 consecutive rollovers (even with a $100 million or higher jackpot it usually is not won.) By contrast, on rare occasions (most likely with a low jackpot), there is a drawing without a second-prize winner, PowerPlay option or not. Because of the latter, the 2009 version of the game (under normal conditions) guarantees that a second-prize ticket with PowerPlay will be worth $1 million cash.

Powerball drawings are held every Wednesday and Saturday; through the January 3, 2009 drawing, the regular venue was Screenscape Studios in West Des Moines, Iowa, normally at 9:59 p.m. Central time. Beginning January 7, 2009, most drawings will be held at Universal Studios in Orlando, Florida. (Drawings are occasionally scheduled at remote locations, such as Mike Pace's final hosting duties on December 31, 2008, from the U.S. Virgin Islands.) The results of drawings are not official until they are audited by the accounting firm LWBJ, LLP.

Machines used

Two identical machines are used for each drawing, randomly selected from a total of four machines. There are eight numbered sets of balls (four white, four red); one set of each color to be used for the drawing are also selected. The balls are mixed by a turntable at the bottom of the machine that propels the balls around the chamber. When the machine selects a ball, the turntable slows to catch it, sends it up the shaft, and then down the rail to the display.

Originally, the PowerPlay add-on feature almost always used a ball rolling around in a wheel. With the relocation of the drawings to Florida, the PowerPlay wheel has been replaced by a random number generator (RNG).

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 $200 million, a player's winning expectation is $0.68 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 0.68 means that the player will lose about 32 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 $1.19 before tax. If the jackpot is $20M, a player's winning expectation becomes $0.22. The break even point is for the jackpot to be $323M, 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	Winnings per Dollar Spent
$20M	$15M	$0.22
$50M	$25M	$0.30
$100M	$50M	$0.43
$200M	$100M	$0.68
$300M	$150M	$0.94
$323M	$161.5M	$1.00
$350M	$175M	$1.07
$400M	$200M	$1.19

It should be noted, however, that since the jackpot is shared in the case of multiple winning tickets, the high interest (and ticket sales) created by large jackpots reduces the expected value of the jackpot, and thus the real-world expected return under these conditions are lower than those stated on the table.

The information above is out of date and incorrect- the odds of winning the powerball as of 2009 are 1 in 195,249,054. That means that you should have a positive expected value anytime the powerball jackpot goes above that $195 million mark (it would actually be lower when the lesser prizes are factored in). So when the jackpot is above $195 million the cash value of every dollar spent in the lottery would be greater than $1, i.e. a positive expected value.

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 (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 summer 2004.

The minimum age to play Powerball is 18, except in Nebraska, where it is 19, and in Arizona, Iowa, and Louisiana, where it is 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 Florida or 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).

Georgia, in August 1996, joined the then-new The Big Game (now Mega Millions), the other major US lottery group. That state planned to sell tickets for both games for the remainder of that year; however, within a few days, Georgia was forcibly removed from MUSL, and has never returned. (New Jersey, in March 2009, announced it would seek permission to sell Powerball tickets alongside Mega Millions.)

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 lottery games.

California never had any intention of offering Powerball; however, it joined MUSL after a planned "international" lottery game didn't get off the ground. It joined Mega Millions in 2005.

Game change in January 2009; Florida hosts drawings

With the start of Powerball sales in Florida on January 4, 2009 (with its first participating drawing January 7), the matrices changed to 5/59 + 1/39 (adding four white ball numbers and dropping three red balls). This change has worsened the jackpot probability from 1:146 million to 1:195 million, the overall probability dropped to 1:35.

Based on statistical projections, the average jackpot won increases 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 has increased to $20 million. The jackpot contribution has increased from 30.3% to 32.5% of total sales.

The PowerPlay option, available for an extra $1 charge per play, continues to multiply lower-tier prizes by either 2×, 3×, 4× or 5× with an equal chance of each multiplier, except that the Match 5+0 prize of $200,000 automatically has a multiplier of 5× for PowerPlay wagers, making the Match 5+0 prize $1 million, paid in a 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, continue.

The conditions for Florida joining Powerball included a relocation of the live drawings from Screenscape Studios in Urbandale, Iowa, to Universal Studios in Orlando, Florida. (Other MUSL games continue to be drawn in Iowa.)

The wheel that was used to determine the PowerPlay multiplier has been retired; a random number generator (RNG) is used for the Florida drawings.

Powerball becoming a worldwide lottery game?

MUSL has begun preliminary discussions with European lotteries, such as United Kingdom's Camelot, regarding a potential global lottery game that would feature jackpots of ₤250 million. One possibility is Powerball combining with EuroMillions. The proposed game would begin in 2011.

Licensed products

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

Windows Sidebar Gadgets

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.

In November 2007, the Lottery Post website 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.

External links

• Official Powerball site