Mega Millions and Powerball lotteries generate millions of dollars for education, research and other state-based needs. They also create overnight millionaires who have the option of receiving their winnings through an annuity or a lump-sum payment.
The lottery in the U.S. has a long and controversial history. Since the early days of guessing numbers and awarding jackpots, society has either favored or condemned this type of gambling. At times, it’s been illegal and immoral. However, public opinion of the lottery has dramatically shifted to a more positive view.
Lotteries are a fixture in the lives of many Americans. Co-workers pool their money to try their luck. Gas stations, grocery stores and liquor stores make playing the games quick and easy. The lottery buzz is not restricted to just ticket-selling locations and billboards. The media flock to celebrate and publicize the latest stories of jackpot winners.
The money from lotteries is a resource that states use toward civic endeavors, like education and research, to improve the lives of the general public and not just the winners.
It’s a booming business, from scratch-offs and instant wins to keno and numbers games. Powerball and Mega Millions offer the biggest jackpots with multimillion-dollar annuities for the major winners.
The odds of winning the Powerball are 1 in 175,223,510. Yet despite those improbable odds, somebody wins the popular multistate lottery all the time. The winners’ stories range from dreams coming true to the sad fate of mishandled money. Whatever the story, the long list of lucky lottery winners is constantly growing.
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While the Colonists participated in lotteries, they were divided in their attitude toward it. Some saw it as an affront to Puritan values, while others saw it as a tool to raise money for developing the colonies. Eventually, playing the lottery became a civic responsibility — a way to raise funds for churches, libraries, war efforts and other public works.
Unfortunately, scandals surrounding lotteries stood as a major deterrent in lottery evolution. In 1823, a Congress-run lottery for the beautification of Washington, D.C., ended with the organizers pocketing the proceeds, while the winner was left with nothing. In the following years, there were cases of fraud and bribery, leading dozens of states to ban lotteries.
A resurgence in lottery playing started with illegal lotteries, then a few lotteries were legalized as an alternative to raising taxes. In 1964, the state of New Hampshire sponsored the first state lottery.
Over the years, other states followed suit, and as of 2014, there were 43 states that participate and 2 provinces. Individual state-run lotteries exist, but the multijurisdictional games (those played in multiple states and provinces) dominate the industry, allowing winners to walk away with nine-figure jackpots, rather than six- or seven-figure winnings. Powerball and Mega Millions are the two major multijurisdictional lotteries.
Many state treasuries make more than $100 million annually on ticket sales. Massachusetts, Georgia and New York lead the nation in ticket sales. This money often goes toward education or other needs like veterans benefits or multiple sclerosis research. The state or province decides where proceeds go.
Lottery regulations vary from state to state. For example, some states require the names of lottery winners to be published, while others allow anonymity. State taxes also vary, and only eight states do not impose an additional tax on lottery winners. All winners pay federal income taxes.
Lottery winners can choose to accept their winnings as a lump-sum payout or series of payments in an annuity. Winners who choose the lump sum will pay income tax on the full amount. Those who choose an annuity will pay taxes over time, as they receive payments. If income tax rates increase, those who have annuities may pay more in the future. Also, if you can invest winnings from a lump sum and make an annual return of more than 4 percent, then this may be a better investment than taking annuity payments.
One quick trip to a gas station, liquor store, supermarket or convenience store could be a life-changing event.
California resident B. Raymond Buxton announced on April 1 that he had won the $425.3 million Powerball jackpot. It’s the largest prize in California history. His publicist said Buxton waited until April Fool’s Day — more than a month after the Feb. 19 drawing — to claim his prize because he has a sense of humor. He purchased the winning ticket at Dixon Landing Chevron station in Milpitas, about 10 miles north of San Jose. He bought the ticket after stopping to buy a Subway sandwich inside the gas station. He chose a lump-sum payment of $242 million.
On March 19, 2014, two winners hit a $400 million jackpot. It was the third largest Mega Millions jackpot, and the winning tickets were sold at a Florida gas station and a Maryland liquor store. The winners split the jackpot and could choose an annuity for $200 million or an estimated pretax lump-sum payment of $112 million.
A sole San Francisco lottery player on Feb. 19, 2014 won the entire $425 million Powerball prize — the sixth highest jackpot in U.S. lottery history. The Powerball ticket was purchased at a Chevron store. The winner’s identity was not disclosed.
Gloria C. Mackenzie, an 84-yr-old from Zephyrhills, Fla., claimed a $590 million jackpot from a May 18, 2013, Powerball drawing. She purchased the ticket at a Publix Supermarket and shared her winnings with her son. It was the largest jackpot in Powerball history.
There have been larger jackpots in recent years, but many were split between two or more ticket holders.
|$1.5 billion||Jan. 13, 2016||John Robinson (Tennessee), David Kaltschmidt and Maureen Smith (Florida), Jared Price (California)|
|$590.5 million||May 18, 2013||Gloria C. Mackenzie (Florida)|
|$587.5 million||Nov. 28, 2012||Matthew Good (Arizona), Cindy and Mark Hill (Missouri)|
|$564.1 million||Feb. 11, 2015||Marie Holmes (Pennsylvania), Anonymous (Puerto Rico)|
|$448.4 million||Aug. 7, 2013||Paul White (Minnesota), Ocean’s 16 (New Jersey), Mario Scarnici (New Jersey)|
|$425.3 million||Apr. 1, 2014||B. Raymond Buxton (California)|
|$400 million||Sept. 18, 2013||Anonymous (South Carolina)|
|$365 million||Feb. 18, 2006||ConAgra Foods Coworkers (Nebraska)|
|$340 million||Oct. 19, 2005||Chaney and West families (Oregon)|
|$338.3 million||Mar. 23, 2013||Pedro Quezada (New Jersey)|
The first Powerball drawing was April 22, 1992.
The Multi-State Lottery Association (MUSL), a nonprofit government benefit association formed in 1987, coordinates the Powerball and Mega Millions games. MUSL’s first game was Lotto America. Today, the group has 34 member lotteries.
Every Wednesday and Saturday night in Tallahassee, Fla., Powerball numbers are drawn from two spinning drums. For an extra $1, the game comes with a Power Play feature, allowing winners to increase their prizes.
MUSL launched the Big Game lottery in 1996 and later renamed it Mega Millions, holding the first drawing under the new name in May 2002.
The drawings are held on Tuesday and Friday nights in Atlanta, with jackpots starting at $15 million. Non-jackpot winnings can be increased by purchasing a Megaplier ticket. When there is no top winner, the jackpot grows for the next round.
|$656 million||Mar. 30, 2012||Anonymous (Kansas), Merle and Patricia Butler (Illinois), the Three Amigos (Maryland)|
|$648 million||Dec. 17, 2013||Steve Tran (California), Ira Curry (Georgia)|
|$400 million||Mar. 19, 2014||TBA (Florida), Anonymous (Maryland)|
|$390 million||Mar. 6, 2007||Eddie Nabors (Georgia), Elaine and Harold Messner (New Jersey)|
|$380 million||Jan. 4, 2011||Jim and Carolyn McCullar (Washington), Holly Lahti (Idaho)|
|$336 million||Aug. 28, 2009||Kevyn Ogawa (California), James Groves (New York)|
|$330 million||Aug. 31, 2007||John and Sandy Belawsky (New Jersey), Bernard and Tucker Adcock (Virginia), SB Alchemy Holdings, Ltd. (Texas), Ellwood Bartlett (Maryland)|
|$319 million||Mar. 25, 2011||Albany 7 (New York)|
|$315 million||Nov. 15, 2005||Bob Guerzon, Jennifer Habib, Brenda Heller, Kate Juergens, Joyce Onori, Mariza Cuya and Kathleen Jones (California)|
|$294 million||Jul. 2, 2004||RMS 2004 Trust (Massachusetts)|