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Powerball

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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 on January 4, 2009.[1] 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.[citation needed]

The most recent successful claim for a nine-figure Powerball jackpot winner ($100 million or higher annuity value) was for a ticket purchased in New Mexico for the September 27, 2008 drawing. The nine people claiming the ticket (eight were part of married couples) won approximately $206.9 million (annuity value); the group chose the cash value of about $102.9 million.

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 4, 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 ball will land in the 10× 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[3] Probability (January 2009)
Zero numbers, plus Powerball $ 3 1 in 69 [2] 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 MissouriLottery 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.

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 (usually 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) will guarantee that a second-prize ticket with PowerPlay will be worth $1 million cash.

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.

Machines used

Two machines are used for each drawing, randomly selected from a total of four machines. There are eight ball sets (four white and four red) and the two balls 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, then when the machine selects a ball, the turntable slows to catch a ball, sends it up the shaft, and then down the rail to the display.

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. [4]

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 on January 4, 2009 to accommodate the addition of Florida to the game; it will replace Pennsylvania as the most populated MUSL member. The Powerball jackpot will then be more difficult to win (1:195 million) than in the current Mega Millions game (1:176 million).

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.

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

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. .[5] 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 4, 2009 (with its first participating drawing January 7, 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 2×, 3×, 4× or 5× with an equal chance of each multiplier, except that the Match 5+0 prize of $200,000 will automatically have a multiplier of 5× 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

  1. ^ "Florida Lottery Joins Powerball". {{cite web}}: Unknown parameter |accessmonthday= ignored (help); Unknown parameter |accessyear= ignored (|access-date= suggested) (help) Florida Lottery press release, July 2, 2008.
  2. ^ Hoosier Lottery History
  3. ^ "Powerball - Prizes and Probability". Retrieved 2006-02-16.
  4. ^ [1] Powerball website.
  5. ^ The World Almanac and Book of Facts 2007 ISBN 0886879957 p.391
Preceded by
The Big Game (now Mega Millions)
 World's largest lottery jackpot
February 18, 2006 – March 6, 2007 		Succeeded by
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