Powerball

Powerball is an American lottery game sold in 44 jurisdictions as a shared jackpot game. It is coordinated by the Multi-State Lottery Association (MUSL), a non-profit organization formed by an agreement with lotteries. Powerball is a game whose advertised jackpot starts at $20 million (annuity) and can roll into the hundreds of millions over many drawings. The jackpot is paid as a 30-payment annuity; players may choose cash instead. Powerball drawings are held Wednesdays and Saturdays at 10:59 p.m. Eastern time. The game currently uses a 5/59 (white balls) + 1/39 (Powerballs) matrix to select its winning numbers. Each selection of six numbers costs players $1 for the base game; for an extra $1, they can multiply a non-jackpot prize by up to 5 (10 during promotional periods) with the Power Play multiplier. The official cutoff time for ticket sales is one hour before drawings; some jurisdictions cut sales earlier. The drawings usually are held at Universal Studios in Orlando, Florida. Some drawings have been held away from headquarters, often to promote the game's expansion to a new jurisdiction. The results of drawings are not official until they are audited by the accounting firm LWBJ, LLP.

Powerball produced the third largest prize awarded for one set of numbers drawn in a US lottery game; on February 18, 2006, one ticket won the $365 million jackpot. The eight people sharing the ticket chose the cash option, splitting $177,270,519.67 before withholdings. (Mega Millions produced the two biggest jackpots in American history.)

The 2010 expansion of Mega Millions and Powerball

On October 13, 2009, MUSL and the Mega Millions consortium signed an agreement to allow US lotteries to sell both games, no longer requiring exclusivity. The expansion occurred on January 31, 2010, as 10 Mega Millions members began selling Powerball tickets for their first drawing on February 3, 2010; simultaneously, 23 Powerball members began offering Mega Millions tickets for their first drawing on February 2, 2010. On March 1, 2010, Montana (by joining Mega Millions) was the first jurisdiction to join the other game after the cross-selling expansion. Later that month, Nebraska, followed by Oregon, also joined Mega Millions; Arizona followed suit on April 18, 2010, and Maine joined Mega Millions on May 9, 2010. Colorado and South Dakota joined Mega Millions on May 16, 2010. The most recent MUSL-only member joining Mega Millions is the US Virgin Islands, in October 2010. (Ohio joined Powerball on April 16, 2010.) Powerball is played in 44 jurisdictions, with Mega Millions available in 43; currently, 42 sell tickets for both games.

Current and future participating members

US jurisdictions with Powerball (red), Mega Millions (blue), or both (pink) as of June 2011. Note: the District of Columbia and the US Virgin Islands offer both games.

Powerball replaced Lotto*America in April 1992; Mega Millions replaced The Big Game in May 2002 (see below for the evolution of its name.)

Mega Millions and Powerball

Jurisdiction Powerball Mega Millions

Arizona 1994 April 18, 2010

Arkansas October 31, 2009 January 31, 2010

Connecticut 1995 January 31, 2010

Colorado 2001 May 16, 2010

Delaware 1991 January 31, 2010

Georgia January 31, 2010 1996

Idaho 1990 January 31, 2010

Illinois January 31, 2010 1996

Indiana 1990 January 31, 2010

Iowa 1988 January 31, 2010

Kansas 1989 January 31, 2010

Kentucky 1991 January 31, 2010

Maine 2004 May 9, 2010

Maryland January 31, 2010 1996

Massachusetts January 31, 2010 1996

Michigan January 31, 2010 1996

Minnesota 1990 January 31, 2010

Missouri 1988 January 31, 2010

Montana 1989 March 1, 2010

Nebraska 1994 March 20, 2010

New Hampshire 1995 January 31, 2010

New Jersey January 31, 2010 1999

New Mexico 1996 January 31, 2010

New York January 31, 2010 2002

North Carolina 2006 January 31, 2010

North Dakota 2004 January 31, 2010

Ohio April 16, 2010 2002

Oklahoma 2006 January 31, 2010

Oregon 1988 March 28, 2010

Pennsylvania 2002 January 31, 2010

Rhode Island 1988 January 31, 2010

South Carolina 2002 January 31, 2010

South Dakota 1990 May 16, 2010

Tennessee 2004 January 31, 2010

Texas January 31, 2010 2003

US Virgin Islands October 2010 2002

Vermont 2003 January 31, 2010

Virginia January 31, 2010 1996

Washington January 31, 2010 2002

West Virginia 1988 January 31, 2010

Wisconsin 1989 January 31, 2010

[edit]Powerball only

Jurisdiction Powerball Mega Millions

Florida 2009 no current plans

Louisiana 1995 Joining November 16, 2011

[edit]Mega Millions only

Jurisdiction Powerball Mega Millions

California no current plans 2005

Alabama, Alaska, Hawaii, Mississippi, Nevada, Utah, and Wyoming do not sell government-run lottery tickets. Although Puerto Rico has a lottery, it does not participate in either Mega Millions or Powerball; it currently does not plan to join either game.

Background and history

Lotto*America

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

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

Powerball begins

When it was launched Powerball became the first game to use two drums as its core game. Using two drums offers more flexibility in game design, allowing for the simultaneous possibility of high jackpot odds, numerous prize levels, and low overall odds of winning. (As explained later, a Powerball ticket can win by matching only one number.) 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. (Unlike most two-drum games, Euromillions selects two numbers, called "Lucky Stars", from the second drum; jackpot winners must make a total of seven matches).

Through 2008, Powerball drawings usually were held at Screenscape Studios in West Des Moines, Iowa. The drawings' master of ceremonies was longtime Iowa radio personality Mike Pace, who had hosted MUSL drawings since the organization began in the late 1980s. In 1996 Powerball went "on the road" for the first time, holding five remote drawings at the Summer Olympics in Atlanta. Ironically, weeks later, the Georgia Lottery became the only lottery to leave Powerball (Maine, which joined MUSL in 1990, left when Powerball began). In August 1996, Georgia joined the then-new The Big Game (now Mega Millions), then the other major US lottery group. It planned to sell tickets for both games for the remainder of that year; however, within a few days, Georgia was forcibly removed from MUSL, not to return until the 2010 cross-sell expansion.

On November 2, 1997, the annuity was changed from 20 to 25 yearly payments; the cash option was added. Currently, the annuity consists of 30 graduated payments (increasing 4% annually) over a period of 29 years.

In 1998 Florida was given permission by its government to participate in a multi-jurisdictional 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 existing Florida Lottery games. In 2008 Gov. Charlie Crist reversed the policy and Florida joined MUSL on January 4, 2009.

On March 7, 2001, an optional multiplier (called Power Play) was added, allowing players to multiply non-jackpot winnings by up to 5 after paying an extra $1 per play. A wheel was introduced to select the Power Play multiplier for each drawing.

On October 9, 2002, the 1x was removed from the Power Play wheel.

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 decreased 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 increased to $20 million, with each rollover adding at least $5 million. The jackpot contribution has increased from 30.3% to 32.5% of total sales.

The Power Play option continues to multiply lower-tier prizes by either 2, 3, 4 or 5 with an equal chance of each multiplier, except that the second prize, $200,000, automatically has a multiplier of 5 for Power Play wagers, making the 5+0 prize $1 million, paid in a lump sum.

The rules allowing for a 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 West Des Moines, Iowa, to Universal Studios in Orlando, Florida. The three hosts rotating announcing duties from Universal Studios are Tracy Wiu, Elizabeth Hart, and Scott Adams. (MUSL headquarters remain in Iowa; its other draw games continue to be drawn there.)

The wheel that was used to determine the Power Play multiplier was retired when the drawings moved to Florida; a random number generator (RNG) now is used.

The Arkansas Scholarship Lottery became the 33rd MUSL member on October 31, 2009, the last to join before the 2010 cross-sell expansion. The Ohio Lottery added Powerball on April 16, 2010, leaving just California with Mega Millions only.

Cross-sell expansion of 2010

In March 2009, it was reported that New Jersey, already a Mega Millions member, sought permission to join Powerball. Shortly after New Jersey announced its desire to sell both games, discussions were revealed about allowing each US lottery to sell tickets for both games. On October 13, 2009, the Mega Millions consortium and MUSL reached an agreement in principle to cross-sell Mega Millions and Powerball in U.S. lottery jurisdictions. In November 2009, MUSL signed an agreement to start streaming the live Powerball drawings online.

On January 31, 2010, Powerball sales expanded to 43 jurisdictions with the addition of 10 Mega Millions members (see list.) On the same day, 23 Powerball members began selling tickets for Mega Millions, then leaving only 10 jurisdictions with just Powerball. Of these, 8 added Mega Millions by May 2010. The Montana Lottery joined Mega Millions on March 1, 2010. Nebraska added Mega Millions on March 20, 2010; Oregon followed suit on March 28, 2010; Arizona joined Mega Millions on April 18, 2010; Maine added Mega Millions on May 9, 2010; Colorado and South Dakota joined Mega Millions on May 16, 2010. The most recent MUSL lottery joining Mega Millions was the US Virgin Islands, in October 2010. The Ohio Lottery joined Powerball on April 16, 2010 for the drawing the next day; only California offers Mega Millions, but not also Powerball.

On March 13, 2010, New Jersey became the first previous Mega Millions-only member (just before the cross-selling expansion) to produce a jackpot-winning Powerball ticket. It was worth over $211 million annuity; it was sold in Morris Plains.

On May 28, 2010, North Carolina became the first previous Powerball-only member (just before the cross-selling expansion) to produce a jackpot-winning Mega Millions ticket; that jackpot was $12 million (annuity).

On June 2, 2010, Ohio won a Powerball jackpot; it became the first lottery selling either Mega Millions or Powerball (not both) on January 31, 2010 to provide a jackpot-winning ticket for its newer game. The ticket was worth $261.6 million annuity; it was sold in Sunbury. Ohio's second Powerball jackpot-winning ticket, sold for the June 23, 2010 drawing, was part of another first; since Montana also provided a jackpot winner for that drawing, it was the first time two lotteries shared a jackpot where the two lotteries sold competing games before the cross-selling expansion, as Montana sold only Powerball before the expansion date.

As a result of Illinois joining Powerball, the game became the second multi-jurisdictional game (after Mega Millions, which Illinois already participated in) whose drawings are carried nationally, instead of in participating jurisdictions. Both games' drawings are simulcast via cable superstation WGN-TV in Chicago through its national WGN America feed. WGN-TV has aired Illinois Lottery drawings nationally since 1992 after acquiring broadcast rights from Fox owned-and-operated station WFLD (channel 32) in 1988, which took the rights from WGN-TV in 1987. Powerball drawings are aired on WGN-TV and WGN America Wednesdays and Saturdays immediately following the station's 9 p.m. (Central time) newscast with the Mega Millions drawings being aired Tuesdays and Fridays after the newscast (though both drawings air a minute later than on some television stations that carry either drawing).

2012 changes

Beginning January 15, 2012, each basic Powerball play will cost $2; with Power Play, $3. The minimum jackpot will be $40 million. Any non-jackpot play matching the 5 white balls will win $1 million. There will be 35 Powerballs instead of 39. 

Playing the game

Basic game

The minimum Powerball bet is $1. In each game, players select 5 numbers from a set of 59 white balls, and 1 number from 39 red Powerballs. Players can select their own numbers, and/or they can have the lottery terminal randomly select numbers (called "quick pick", "easy pick", etc. depending on the jurisdiction). In each drawing, winning numbers are selected using two ball machines; one contains white balls numbered 1 through 59; the other contains the red Powerballs numbered 1 through 39. Five balls are drawn from the first machine, and one from the second machine; these are the winning numbers. Games matching at least three white balls and/or the red Powerball win.

The drawing order of the five white balls is irrelevant; all tickets show the five white ball numbers in ascending order. Players do not have to match the white numbers in draw order, but they cannot use the drawn Powerball number to match one of their white numbers, or vice versa. Occasionally, a drawing occurs where a white ball matches the red ball.

Two identical machines are used for each drawing, randomly selected from four machines. The model of machine used is the Halogen, manufactured by Smartplay International of Edgewater Park, New Jersey. There are eight ball sets (four white, four red); one set of each color is randomly selected before a drawing. 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.

The double matrix has varied:

Starting date Pick 5 of Pick 1 of Jackpot odds Power Play multipliers

April 22, 1992 45 45 1:54,979,154 none

November 5, 1997 49 42 1:80,089,127 none

March 7, 2001 49 42 1:80,089,127 1x, 2x, 3x, 4x, 5x

October 9, 2002 53 42 1:120,526,770 2x, 3x, 4x, 5x

August 28, 2005 55 42 1:146,107,962 2x, 3x, 4x, 5x

January 7, 2009 59 39 1:195,249,053 2x, 3x, 4x, 5x

Power Play

For an additional $1 per game, a player may activate the Power Play option, which applies a multiplier (drawn by random number generator (RNG) just before the Powerball drawing) to all prize levels except the jackpot and second prize. Depending on the multiplier, winners multiply the appropriate prize level by 2 to 5. The multiplier for the 5+0 second prize always is 5x.

The dilemma for players is whether to maximize the chance at the jackpot, or "half" the chance at the jackpot in exchange for an increase in lower-level prize(s). The average Power Play multiplier is about 3.5, since 5+0 is guaranteed to be 5x).

In 2006 and 2007, MUSL replaced one of the 5x spaces on the then-Power Play wheel with a 10x. During each month-long promotion, MUSL guaranteed that there would be at least one drawing where the 10x multiplier would be drawn. The promotion returned in 2008; the ball landed in the 10x space twice. After skipping 2009, the 10x multiplier returned in May 2010 (after the Power Play drawing was changed to the current RNG.) The promotion was extended for the first time, as the 10x multiplier was not drawn until June 12. The second prize 5x guarantee continued as usual; the 10x applied to all non-jackpot prizes, as in previous promotions.

Power Play's success has led to similar multipliers in other games, such as the tripler in MUSL's smaller Hot Lotto, called Sizzler; and Megaplier, available in all Mega Millions jurisdictions except California.

Payout and odds

Payouts (on a $1 play) are:

Matches Prize Odds of winning

Powerball only $3 1 in 61.74

1 number, plus Powerball $4 1 in 123.48

2 numbers, plus Powerball $7 1 in 787.17

3 numbers, no Powerball $7 1 in 359.06

3 numbers, plus Powerball $100 1 in 13,644.24

4 numbers, no Powerball $100 1 in 19,030.12

4 numbers, plus Powerball $10,000 1 in 723,144.64

All 5 numbers, no Powerball $200,000 1 in 5,138,133

All 5 numbers, plus Powerball Jackpot 1 in 195,249,054

Overall odds of winning a prize is 1 in 35.11. All non-jackpot prizes are fixed amounts; they may be reduced and paid on a parimutuel basis if the liability exceeds the funds in the prize pool for that drawing.

Some may notice that the odds of matching only the Powerball (1-39) are 1:62, instead of 1:39. This is because there is a chance of matching at least one white ball in addition to the Powerball. Additionally, some may calculate the jackpot odds at 1:17 billion versus the actual 1:~131.24 million. This is because the five white balls win in any order.

To put these odds in perspective, in the US in 2008 there were 1.03 deaths per 100 million vehicle miles traveled. A person living one mile from a retailer selling Powerball tickets is four times as likely to die in an accident traveling to and from that store, than winning the jackpot on a $1 play. (Jackpot odds = 1 in 127.9 million; chance of death from vehicle accident=2 miles*1.03 deaths/100 million miles); 1 jackpot= 2*1.03*127.9 million/100 million=0.69 deaths.

Jackpot accumulation and payment options

Jackpot winners have the option of receiving their prize in cash (in two installments; one from the winning jurisdiction, then the combined funds from the other 43 members) or as a graduated annuity paid in 30 yearly installments. Each annuity payment is 4% higher than in the previous year to adjust for inflation.

The advertised estimated jackpot represents the total payments that would be paid to a jackpot winner should they accept the 30-installment option. This estimate is based on the funds accumulated in the jackpot pool rolled over from prior drawings, expected sales for the next drawing, and market interest rates for the securities that would be used to fund the annuity. The estimated jackpot usually is 32.5% of the (non-Power Play) revenue of each base ($1) play, submitted by game members to accumulate into a prize pool to fund the jackpot. If the jackpot is not won in a particular drawing, the prize pool carries over to the next drawing, accumulating until there is a jackpot winner. This prize pool is the cash that is paid to a jackpot winner if they choose cash. If the winner chooses the annuity, current market rates are used to calculate the graduated payment schedule and the initial installment is paid. The remaining funds in the prize pool are invested to generate the income required to fund the remaining installments. If there are multiple jackpot winners for a drawing, the jackpot prize pool is divided equally for all such plays.

MUSL and its members accept all investment risk and are contractually obligated and liable to the winner to make all scheduled payments to annuity winners. If a jackpot ticket is not claimed, the funds in the prize pool are returned to members in proportion to the amount they contributed to the prize pool. The 44 jurisdictions have different rules regulating how unclaimed funds are used.

When the Powerball jackpot is won, the next jackpot is guaranteed to be $20 million (annuity). If a jackpot is not won, the next jackpot is guaranteed to be $5 million higher than the prior drawing. The cash in the jackpot pool is guaranteed to be the current value of the annuity. If revenue from ticket sales falls below expectations, game members must contribute additional funds to the jackpot pool to cover the shortage; the most likely situation is if the jackpot is won in consecutive drawings.

When the Powerball jackpot reaches a new record for the game, the annuity jackpot is capped at $25 million more than the prior drawing. If ticket sales are enough where the jackpot would be increased by more than $25 million, the excess accumulates into a bonus prize pool, which is shared by "5+0" plays in the next drawing where the jackpot is won; these prizes are paid in cash. If the bonus pool is to be awarded but there are no 5+0 plays, the pool is divided among 4+1 winners. The bonus prize is in addition to the regular prize (or Power Play prize) won by the 5+0 (or 4+1) ticket. Bonus pool funds for expired tickets are returned to the members in proportion they contributed to the prize pool.

Claiming prizes

Although players may purchase tickets in other jurisdictions, all prize claims must be made in the jurisdiction that sold the ticket.

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.

Generally, Powerball players do not have to choose cash or annuity unless they win a jackpot (then they usually have 60 days to choose.) There are exceptions: 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 choose.) New Jersey and Texas require the cash/annuity choice to be made when playing; in New Jersey, an annuity ticket can be changed to cash after winning; however, in Texas, the choice is binding. (When the cash option was introduced in 1997, all Powerball players had to make the choice when playing; this regulation was phased out by early 1999.) All Powerball prize winners, must claim within a period ranging from 90 days to 1 year, depending on the rules of the jurisdiction where the ticket was bought.

Powerball winnings are exempt from local and state income taxes in Delaware, Pennsylvania, South Dakota, and the District of Columbia. There is no state income tax in Florida, South Dakota, Texas, or Washington, and only on interest and dividends in Tennessee and New Hampshire; however, New Hampshire began collecting a 10% tax on lottery winnings in July 2009. Winnings from tickets purchased in another jurisdiction may be subject to its income tax laws (with possible credit for taxes paid to one's own jurisdiction, or vice versa).

Secondary prizes

Unlike the jackpot pool, other prizes are the responsibility and liability of each participating lottery. All revenue for Powerball ticket sales not used for jackpots is retained by each member; none of this revenue is shared with other lotteries. Members are liable only for the payment of secondary prizes sold in their jurisdiction.

Since the secondary prizes are defined in fixed amounts, on rare occasions, if the liability for a given prize level exceed the funds in the prize pool for that level the amount of the prize may be reduced and the prize pool be distributed on a parimutuel basis and result in a prize lower than the fixed amounts given in the prize tables.Because the secondary prize pools are calculated independently, it is possible prizes may be lower in one jurisdiction, yet remain at their advertised level in the other Powerball jurisdictions.

Winning expectation

Because the quoted jackpot amount is paid as an annuity over 26 years, its immediate cash value relative to the annuity fluctuates. The actual ratio depends on projected interest rates and other factors. MUSL starts with the cash value, built from a percentage of sales (currently over 32%) and then calculates the advertised jackpot amount from that value based on the average costs of the three best securities bids.

The most common strategy that is employed by players is to play Powerball only when the jackpot is over $100 million, so that the long-term winning expectation would approach $1 in prizes for each $1 bet. This analysis is similar to one when a poker player calculates pot odds to determine if the expected return would be high enough to justify placing an additional bet in hope of overcoming the odds their hand could win the pot.

If an advertised jackpot is $200 million, the average expected return on a $1 bet for that drawing is $0.78, compared to $0.52 when the jackpot is at $20 million. Break-even is reached for a jackpot of about $323 million. Assuming a Powerball ticket is bought only if the jackpot exceeds $323 million, the expectation is to win more than the amount bet over the long term (before taxes.) However, this strategy does not guarantee a positive return for three reasons: (1) these calculations do not account for the possibility of multiple tickets matching the winning numbers in a given drawing, with the jackpot shared equally among winners. Additionally, as the jackpot increases, more tickets are sold for each drawing, increasing the likelihood that a split jackpot will occur; (2) taxes on winnings will diminish the winner's returns unless the player was able to concentrate their gambling losses in that tax year; (3) the jackpot has to be won to realize these returns.