This Tuesday evening, October 23, the multi-state lottery draw game Mega Millions will hold a drawing for a record-breaking $1.6 billion jackpot.
This monumental event was purely by design, the successful culmination of Mega Millions’ plans when they changed the game rules last October. The adjustments to the lottery matrix moderately decreased the odds of winning the top prize while doubling the ticket cost and nearly tripling the default jackpot, all with an aim to have more massive payouts less often.
The changes could not have worked better. So far this year there have only been four jackpots awarded, and three of those were worth roughly half a billion dollars. The smallest was a paltry $142 million (barely worth getting excited about, you’d probably only be able to afford one of the smaller islands and a very modest submarine).
Now Mega Millions is about to award its largest win of all time, dwarfing their previous record of $656 million in 2012 and narrowly beating the $1.59 billion Powerball jackpot in 2016. Of course, this is all assuming that a winner is drawn, or else we’ll be seeing even more ridiculous numbers later this weekend.
Incidentally, the current Powerball jackpot is up to $620 million for the October 24 drawing, which would seem extremely impressive at any other time. That’s $2.2 billion on the line this week from just two lottery games.
How much is at really stake?
The Mega Millions jackpot will be worth $904 million if the winner or winners take the cash lump-sum option. For a winner in Michigan, the state must by law withhold 25% of that for federal taxes and 4.25% for state taxes, resulting in a final massive check of about $651 million (not counting any other tax liability next spring).
That is enough money to purchase ten Gulfstream jets, or just finally pay off your student loan and still have enough left over to build a superyacht and produce the next Star Wars movie.
If the winner should take the annuity option, they will receive $1.13 billion graduated over 30 years. That would be a $17 million payment in the first year, expanding to about $70 million for the final payment.
Generally speaking most lottery winners seem to prefer the cash option, allowing them immediate access to the money so they can spend or invest it now instead of getting roughly double the amount much later. Especially given that you may not live for thirty more years, and inflation will continue during that time. On the other hand, many lottery winners plan poorly and are quickly parted from their winnings, so there is something to be said for annuities.
The Powerball jackpot would have a cash value of about $255 million, or $439 million for the annuity option (starting at $6.6 million the first year, rising to $27 million in 29 more years.)
The chance of a Michigan jackpot winner
Prior to the rule changes, Michigan residents took or split 17 of the 173 Mega Millions jackpots that had been awarded. The frequency of a Michigan winner was oddly consistent before and the number of markets participating drastically expanded in 2010.
Of course most of these would now be considered “small” jackpot winners, in the $10-100 million range. The most recent was last October right before the odds were changed, a couple from Waterford split a $42 million prize with another pair of winners from Rhode Island.
Michigan has a thriving online lottery that may partially account for increased participation in multi-state games. Michigan’s population is 10th nationally, and in recent activity is the 6th highest purchaser of Mega Millions tickets per capita.
The state has been responsible for about 3.9% of ticket sales in the last several drawings, making it more likely than the average to hold the next winner – while still lagging far behind the likes of California and New York which combined account for about 25% of the tickets.
Still, that’s about a 1 in 25 chance of a Michigander taking the massive prize, assuming of course there is only a single winner. Mega Millions jackpots are rarely split three or more ways, but given the number of tickets sold this week having two winners is a reasonable likelihood.
Of course for any individual ticket the odds of winning are still about 1 in 302 million (1 in 292 million for Powerball). But it should be remembered that the same changes to the rules that made the jackpots a littler harder also made a smaller million dollar win slightly more likely. Michigan lottery players win these prizes much more frequently, at least nine times this year so far including one this week.