As the Powerball lottery ballooned to over $1 billion this week — shattering the record high of $800 million Saturday and $656 million back in 2012 — many are hoping that it is their ticket to paradise.
It’s the stuff of dreams, but it all boils down to math. From the huge prize to the enormous odds against winning it, tonight’s drawing is a numbers game that gives players good reason to brush up on their algebra, maybe as they stand in line to buy a ticket.
A look at some of the statistics: For those who match all five white balls and the red Powerball, the key numbers are the $1.4 billion jackpot, paid out over 30 years or as an immediate $868 million in cash, a cut of 38 percent. Those figures are before federal and state taxes, which will eat up roughly half of the cash-option prize.
Although the chances of winning are very slim, that has not stopped countless people from descending upon local convenience stories to buy their tickets.
The Multi-State Lottery Association puts the chances of winning the grand prize at 1 in 292.2 million. Or the implications of having to share Wednesday’s record-high pot if there are multiple winners.
No one has won the Powerball jackpot since early November, which is why the prize has grown so large. The bigger prize entices more people to buy tickets, and that drives up the jackpot. The increased ticket sales also make it more likely there will be a winner, simply because all those extra tickets mean more number combinations are covered.
Lottery winnings are taxed as ordinary income. The U.S. government automatically withholds 25 percent of such large prizes if the winner is a citizen or resident with a Social Security number. For someone choosing the lump sum, that reduces take-home winnings by $217 million. Residents who don’t have a Social Security number, or fail to provide one, will have 28 percent withheld and foreigners, 30 percent.
Winners will have to pony up the remaining 14.6 percent in federal taxes come tax time in April 2017. That’s a bill of roughly $126.7 million you don’t want to forget about amid early splurges.
The luckiest Powerball winner would be someone who is a resident of Tennessee, one of seven states that participate in Powerball but do not have a personal income tax.
People like the idea of winning, but they don’t like the idea of paying the tax. The best way to minimize your tax hit would be to sit down with a tax planner after you win but before you claim the prize money publicly, to figure out a plan based on what you want to do with the money.
Most businesses in the Elizabethton area that sell lottery tickets were reporting brisk sales Tuesday. At Hyder’s Sunshine Market on the Bristol Highway, the store clerk reported sales as “brisk.” “We are selling a lot of them,” said the clerk, who did not want to be identified.
The manager at J&W Market in Elizabethton said sales this week had been unreal. “There have been a lot of different people coming in and buying a ticket,” he said.
Asked if he had bought a ticket, the manager admitted he had, hoping that he just might be a winner. What would he do with the jackpot should he win? “I really don’t know. To have that much money would be overwhelming. I would hope to share it with family,” he said.
Sales were also brisk at the Food City Gas N’ Go in Elizabethton. Almost everyone that came into the store was spending a couple of dollars on a lottery ticket. “What the heck. It’s just $2. But should I win, it would be a lot of bucks,” one customer said. “I sure could make a lot of people happy.”
Another customer waiting to buy a ticket said should he win he’d probably change his phone number and put an extra lock on the front door. “This day and time, it probably wouldn’t be safe to win that kind of money, but I’d take a chance at it,” he said with a smile. “That’s why I have a shotgun,” he said, not willing to give his name. “Just call me a risk taker,” he said.
To all those who purchased a lottery ticket, here’s hoping you’re a winner!