Lump sum or annuity
Nobody actually receives the number on the billboard. Here's what the two options really mean.
The advertised jackpot is the annuity
When you see a billion-dollar jackpot, that figure is thirty payments spread over twenty-nine years, added up.
The money isn't sitting in an account somewhere. It's what the lottery works out it can pay you over three decades by investing the prize pool it actually holds.
The cash option is the real pool
Take the lump sum and you get the money the lottery really has, which has historically run at around half the advertised figure.
The gap moves with interest rates. When rates are high it narrows, because the annuity costs less to fund up front. When rates are low it widens.
Neither figure is what lands in your account, because tax comes off first. Federal withholding starts at 24% on a prize this size and the final federal bill is higher. Then there's state tax, which runs from nothing to over 10% depending on where you bought the ticket.
There's a real case for each
The lump sum puts you in control. You can invest it, and if you beat what the annuity implies, you come out ahead.
The annuity protects you from your own decisions and from everyone who will ask you for money. It spreads the tax over three decades instead of landing it all in one year, and you can't lose it in a single bad call.
Which one wins depends on interest rates, your tax situation, your age, and how you'd honestly behave with a very large sum. We're not financial advisers and this isn't advice. It's the arithmetic worth having before you sit down with one, and if you're in this position, please do sit down with one before you claim.
Why we never print a jackpot figure next to your ticket
If your ticket matches the jackpot tier, we'll tell you it matched. We won't put a number on it.
Three things sit between the advertised figure and your bank balance: how many other tickets matched, which option you take, and what tax applies where you live. Any number we printed would be wrong in at least one of those directions.
Every other checker prints one anyway. That's the difference.
To work a figure through federal and state tax, cash or annuity, use the lottery tax calculator.