Powerball

Alabama, Alaska, Hawaii, Nevada, and Utah do not have state lotteries.

Powerball's predecessor began in 1988;[10] the multi-state game was known as Lotto America. The game, and name, were changed to Powerball on April 19, 1992; its first drawing was held April 22.

Dr. Edward J. Stanek was president of the Iowa Lottery, and along with Steve Caputo, invented the Powerball game.[11]

When it was launched in 1992 Powerball became the first game to use two drums. Using two drums to draw numbers from, offers more manipulation by simultaneously allowing low jackpot odds, numerous prize levels and high overall odds of winning (as explained later, a 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 used by The Big Game (now Mega Millions) in the US, Australia's Powerball, Thunderball in the UK, Eurojackpot and EuroMillions.

Through 2008, Powerball drawings usually were held at Screenscape Studios in West Des Moines, Iowa. The drawings' host was longtime Iowa radio personality Mike Pace, who had hosted MUSL drawings since Lotto America began in 1988. In 1996, Powerball went "on the road" for the first time, holding five remote drawings at the Summer Olympics in Atlanta. A few weeks later, Georgia became the only jurisdiction to leave Powerball (Maine, which joined MUSL in 1990, left when Powerball began). In August 1996, Georgia joined the then-new The Big Game, then the other major U.S. lottery group. It planned to sell tickets for both games for the rest of 1996; but within days Georgia was 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.[12]

In 1998, Florida was given permission by its government to participate in a multi-state game. It was set to offer Powerball; but in early 1999, new governor Jeb Bush prevented Florida from joining since he believed Powerball would hurt the existing Florida Lottery games. In 2008, Governor Charlie Crist finally allowed Florida to join 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 five by paying an extra $1 per game. A wheel was introduced to select the Power Play multiplier for each drawing (the next year, the 1x was removed from the Power Play wheel.)

With the start of Powerball sales in Florida on January 4, 2009 (with its first drawing on January 7), the matrices changed to 5/59 + 1/39 (adding four white ball numbers and dropping three red balls). This changed the jackpot probability from 1:146 million to 1:195 million; the overall probability became 1:35.

Based on statistical projections, the average jackpot win increased from $95 million to $141 million. Over 3.5 million additional prizes were expected to be won yearly due to the change in probability. The starting jackpot increased to $20 million, with minimum rollovers of $5 million. The jackpot contribution increased from 30.3% to 32.5% of total sales. The Power Play option was modified; second prize, usually $200,000, was given an automatic 5x multiplier, making the 5+0 prize $1 million cash. The bonus second prize if the jackpot exceeded its previous record by $25 million, triggered only twice, was eliminated with the 2012 format change.

The conditions for Florida joining Powerball included a move of the live drawings from Iowa to Universal Studios in Orlando. The three hosts rotating announcing duties from Universal Studios were Tracy Wiu, Elizabeth Hart and Scott Adams (MUSL headquarters remained in Iowa, where its other draws are held). The wheel that was used to determine the Power Play multiplier was retired when the drawings moved to Florida; a random number generator (RNG) was used until the 2012 format change.

Arkansas became the 33rd MUSL member on October 31, 2009,[13] the last to join before the 2010 cross-sell expansion. The Ohio Lottery added Powerball on April 16, 2010, it joined Mega Millions (along with New York) years earlier, when The Big Game added Mega Millions to its name.

In March 2009, it was reported that New Jersey, already a Mega Millions member, sought permission to join Powerball. Shortly after, discussions were revealed about allowing each US lottery to offer both games. On October 13, the Mega Millions consortium and MUSL reached an agreement in principle to cross-sell Mega Millions and Powerball.[14] In November, MUSL signed an agreement to start streaming Powerball drawings online.[15][16]

On January 31, 2010, the date of the cross-sell expansion, Mega Millions and MUSL each added lotteries; eight Powerball members added Mega Millions by May. The Montana Lottery joined Mega Millions on March 1, 2010. Nebraska added Mega Millions on March 20, 2010, Oregon followed 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 U.S. Virgin Islands joined Mega Millions in October 2010.

Before the agreement, the only places that sold both Mega Millions and Powerball tickets were retailers straddling a border; one retailer on the Sharon, Pennsylvania/Masury, Ohio border sold both Mega Millions (via the Ohio Lottery) and Powerball (Pennsylvania) before the agreement and continued to be the only retailer to sell tickets for both lotteries.[17]

Illinois joining Powerball on the expansion date, it became the second multi-jurisdictional lottery game (after Mega Millions, which Illinois already participated in) whose drawings were carried nationally. Both games' drawings were simulcast via Chicago cable superstation WGN-TV through its national WGN America feed. WGN-TV aired Illinois Lottery drawings nationally from 1992 to 2015 after acquiring broadcast rights from Chicago's Fox owned-and-operated station WFLD in 1988, which took the rights from WGN-TV in 1987. Powerball drawings were aired on WGN-TV and WGN America on Wednesday and Saturday immediately following the station's 9:00 p.m. (Central Time) newscast with the Mega Millions drawings being aired Tue and Fri evenings after the newscast. WGN served as a default carrier of Mega Millions or Powerball where no local television station carries either multi-jurisdictional lottery's drawings.

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 in annuity payments; it was sold in Morris Plains. On May 28, 2010, North Carolina became the first previous MUSL 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 (when 2010 began) to provide a jackpot-winning ticket for its newer game. The ticket was worth a $261 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 a jackpot was shared through lotteries which sold competing games before the cross-selling expansion, as Montana sold only Powerball before the expansion date.

On January 15, 2012, the price of each basic Powerball play doubled to $2, while PowerPlay games became $3; the minimum jackpot doubled to $40 million.[18] A non-jackpot play matching the five white balls won $1 million. The red balls decreased from 39 to 35.[19] The drawings were moved from Universal Studios Orlando to the Florida Lottery's studios in Tallahassee. Sam Arlen began his tenure as host in 2012,[20] with Laura W. Johnson served as Arlen’s co-host.[21]

These changes were made to increase the frequency of nine-figure jackpots; a Powerball spokesperson believed a $500 million jackpot was feasible (it became a reality within the year,[22]) and that the first $1 billion jackpot in US history would occur by 2012 (though it didn't occur until 4 years later.)[23] Less than three months after the Powerball changes, Mega Millions' jackpot reached $656,000,000 despite remaining a $1-per-play game.[24] The random Power Play multiplier was retired for a set, fixed dollar amount payout.[25] The $25 million rollover "cap" (creating larger 5+0 prizes) was eliminated.

California joined on April 8, 2013; it has never offered the Power Play option, as all payouts in California Lottery drawing games, by law, are parimutuel. Mega Millions, which became available in California in 2005, offers its Megaplier in its other 45 jurisdictions.

On January 22, 2014, the variable Power Play option returned (2x-5x) for multiplying non-jackpot prizes.[25]

In October 2014, Puerto Rico joined Powerball; the first mainly Spanish-speaking jurisdiction offering the game; as of 2016 it had not joined Mega Millions.

On October 4, 2015, the Powerball format changed again; the white-ball pool increased from 59 to 69 while the Powerball pool decreased from 35 to 26. While this improved the chance of winning any prize to 1 in 24, it also lengthened the jackpot odds to 1 in 292,201,338.[26] The 4+1 prize became $50,000; the 10x PowerPlay became available in drawings with a jackpot of under $150 million.[27] Three months later, the format produced a $1.5 billion jackpot, double the previous record, after 20 consecutive rollovers.[26][28]

On April 2, 2020, the Powerball starting jackpot amount was temporarily reset from $40 million to $20 million with the annuity option, with at least a $2 million rollover for each drawing without a jackpot winner, due to the COVID-19 pandemic in the United States. This was done to enforce social distancing and discourage crowding of selling venues for large jackpots, and to account for lower interest rates.[29]

On March 10, 2021, following Powerball's move to expand its operations in Australia later that year and in the United Kingdom in 2022, the Idaho Legislature voted overwhelmingly to end the state's participation in the lottery after more than 30 years. State lawmakers cited fears of outside revenue being generated from the foreign involvement as reasons behind the vote. The removal would have taken place when non-US jurisdictions were allowed to join in August 2021, but was rendered moot when the expansion was put on hold.[30]

On May 23, 2021, Powerball announced that starting on August 23, 2021, draws would occur on Monday, in addition to Wednesday and Saturday. Due to technical difficulties that occurred before the start of the new draw schedule, the first ever Monday draw did not occur on its usual time meaning that the first Monday draw did not happen as planned for the group that operates the game.[31][32] Michele Lyles became the third regular hostess of the Powerball drawings serving alongside Arlen and Johnson. Beginning in 2022, Randy Trainor serves as a substitute host if neither Arlen, Johnson or Lyles are available.

The scheduled November 7, 2022, drawing of the record-breaking $2.04B jackpot was delayed due the incomplete security protocols regarding ticket sales at an unnamed lottery until the next day[33][34][35] at 8:59 a.m. EST. [36][37] Prior to the November 7 delay, there had been delays on April 9[38] and October 19th[39][40] and on March 16th, 2022. Days after the drawing was completed for the $2.04 Billion Powerball Jackpot, The Minnesota Lottery announced later that week that it had been responsible for the delay. Lottery officials there said there was a technical problem with the communication system that prevented the drawing from happening.[41][42]

The minimum Powerball bet is $2. In each game, players select five numbers from a set of 69 white balls and one number from 26 red Powerballs; the red ball number can be the same as one of the white balls. The drawing order of the five white balls is irrelevant; all tickets show the white ball numbers in ascending order. Players cannot use the drawn Powerball to match one of their white numbers, or vice versa. Players can select their own numbers, or have the terminal pseudorandomly select the numbers (the name for this varies by state, but most are called some variation of "quick pick", "easy pick", etc.).

In each drawing, winning numbers are selected using two ball machines: one containing the white balls and the other containing the red Powerballs. Five white balls are drawn from the first machine and the red ball from the second machine. Games matching at least three white balls or the red Powerball win.

Two identical machines are used for each drawing, randomly selected from four sets. The model of machine used is the Halogen, manufactured by Smartplay International of Edgewater Park, New Jersey. There are eight ball sets (four of each color); 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 Florida Lottery was considering switching to a random number generator in 2019 for its in-state drawings; it is unknown whether Powerball was affected.) If the onsite location is unavailable, as was the case during Hurricane Michael, a backup machine is located at MUSL headquarters in Iowa.[43] The drawings are supervised by Carol & Company, CPA.

The double matrices and probabilities in the game's history:

†Power Play was introduced in 2001.
‡10× available if jackpot is under $150 million.[27]

While Mega Millions and Powerball each have similar jackpot odds despite having a different double matrix (Mega Millions is 5/70 + 1/25), since Powerball is $2 per play, it now takes $584,402,676 (not counting Power Play side bets) on average to produce a jackpot-winning ticket.

For an additional $1 per game, a player may activate the Power Play option. Activating it multiplies lower-tier winnings (base prize $50,000 or less) by up to 5, or 10 when the jackpot is under $150 million. Power Play is drawn separately from the 6 numbers. The 5+0 prize is automatically doubled to $2 million if Power Play is activated.[45]

The dilemma for players is whether to maximize the chance at the jackpot or increase lower-tier winnings. If a player selects a fixed amount of money to spend on tickets at a certain time, the player will give up one guess of the winning set of numbers every two times this player activates Power Play in respect of one of the purchased tickets.

Power Play, when it began in 2001, was drawn with a special wheel. In 2006 and 2007, MUSL replaced one of the 5× spaces on the Power Play wheel with a 10×. During each month-long promotion, MUSL guaranteed that there would be at least one drawing with a 10× multiplier. The promotion returned in 2008; the ball landed in the 10× space twice. After being absent in 2009, the 10× multiplier returned in May 2010 (after the Power Play drawing was changed to RNG.) The promotion was extended for the only time, as the 10× multiplier was not drawn until June 12, 2010. The second prize 5× guarantee continued; the 10× applied to all non-jackpot prizes, as in previous promotions.

Power Play's success has led to similar multipliers in other games, most notably Megaplier, available through all Mega Millions members except California. The 2012 Powerball changes resulted in all eight lower-tier levels having "fixed" Power Play prizes.[46]

On January 19, 2014, PowerPlay was modified; it used 30 balls with the following distribution:

• 2x(15)
• 3x(9)
• 4x/5x: 3 each

On October 4, 2015, PowerPlay changed again, using 42 or 43† balls as follows:

• 2x(24)
• 3x(13)
• 4x(3)
• 5x(2)
• 10x(1)†

† 10x available when jackpot is under $150 million.

A Double Play option is available in 13 states and Puerto Rico.[lower-alpha 1] For an additional $1, players may reuse their Powerball numbers in a second drawing with a different prize structure held approximately 30 minutes after the main drawing. A Powerball ticket with the Double Play option costs $3; if both the Power Play and Double Play options are chosen the total cost is $4.[47]

Payouts as of October 7, 2015:[51]

Overall odds of winning a prize are 1 in 24.87.

Former prizes/odds (January 19, 2014 – October 3, 2015):

Overall odds of winning were 1 in 31.85.

All non-jackpot prizes are fixed amounts (except in California); they may be reduced and paid on a parimutuel basis, with each member paying differing amounts for the same prize tier, if the liability exceeds the funds in the prize pool for any game member.[54]

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 members) or as a graduated annuity paid in 30 yearly installments. The pre-tax amount of the first annuity payment is approximately 1.505% of the jackpot amount. Each annuity payment is 5% higher than in the previous year to adjust for inflation.[55]

The advertised estimated jackpot represents the total payments that would be paid to jackpot winner(s) should they accept the annuity 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.[6] 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 members have different rules regulating how unclaimed funds are used.[6]

When the Powerball jackpot is won, the next jackpot is guaranteed to be $20 million (annuity). If a jackpot is not won, the minimum rollover is $10 million. 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 scenario where this can occur is if the jackpot is won in consecutive drawings.

Because of the COVID-19 pandemic in the United States and resulting drop in ticket sales plus the falling interest rates on which annuity prizes were based, Powerball administrators reduced the minimum starting jackpot to $20 million, and the minimum increase to $2 million when the previous jackpot is not won.[56]

A winning ticket must be claimed in the jurisdiction in which it was purchased, regardless of residence. The minimum age to play Powerball is 18, except in Nebraska (19), and Arizona, Iowa, Louisiana and Mississippi (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). Exceptions include 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. 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, while 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 1999.) All Powerball prizes must be claimed within a period ranging from 90 days to a year, depending on where the ticket was bought.

Powerball winnings in California are subject to federal income tax only. Conversely, Powerball winnings in Puerto Rico are not subject to federal income tax, only local tax. There is no state income tax in Florida, South Dakota, Texas, Washington and Wyoming, and only on interest and dividends in New Hampshire and Tennessee. In all other states, winnings are subject to both federal income tax and that state's income tax, provided the winning ticket was purchased in the winner's home state. Winnings from tickets purchased outside of one's home state may be subject to the income tax laws of both states (with possible credit based on the two jurisdictions), though this depends on the states in question.

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 there.

Since the secondary prizes are defined in fixed amounts (except in California), 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.[57] Because the secondary prize pools are calculated independently, it is possible lower-tier prizes will differ among the game members.

The Powerball drawing on March 30, 2005, produced 110 second-prize winners. The total payout to these winners was $19.4 million, with 89 winners receiving $100,000 each, while the other 21 winners received $500,000 each as they were Power Play selections.[77]

MUSL officials initially suspected fraud or a reporting error. However, all 110 winners had played numbers from fortune cookies made by Wonton Food Inc. of Long Island City, New York. The factory had printed the numbers "22, 28, 32, 33, 39, 40" on thousands of fortunes. The "40" in the fortune did not match the Powerball number, 42. No employees of Wonton Food played those numbers. At the time, the closest game member was Connecticut.[78] Because the ticket holders had won as result of a coincidence rather than foul play, the payouts were made.[79]

Had the fortune cookie given 42 as the Powerball number, these winners would have shared the $25 million jackpot: each $227,272 annuity or $122,727 cash (before withholdings).[80] The fortune on the cookie read: "All the preparation you've done will finally be paying off."[78]