The Powerball lottery is one of the most popular lottery games in the United States. Every Wednesday and Saturday night, millions of Americans tune in to find out the latest Powerball winning numbers and see if they have won a life-changing jackpot. With prizes frequently climbing into the hundreds of millions of dollars, it’s no wonder that Powerball creates so much excitement. But how much is a Powerball number actually worth?
How the Powerball Lottery Works
In order to understand what a Powerball number is worth, it helps to first understand how the game works. Powerball is coordinated by the Multi-State Lottery Association and is currently offered in 45 states, along with Washington D.C., Puerto Rico and the U.S. Virgin Islands.
To play Powerball, a player selects five main numbers between 1 and 69, and then chooses one Powerball number between 1 and 26. Numbers can be picked manually or by using a quick pick option that randomly generates the numbers.
To win the jackpot, a player must match all five main numbers and the Powerball. Lower tier prizes are awarded for matching some of the numbers. For the Powerball number to come into play, the ticket must match either two, three, four or five of the main numbers.
Powerball drawings are held every Wednesday and Saturday evening, typically at 10:59 p.m. Eastern Time. Tickets can be purchased up until 9:59 p.m. on the night of the draw.
Sales cut-off times may vary slightly by jurisdiction. All 48 participating lotteries collectively hold one Powerball drawing, with the winning numbers applying to all ticket holders, regardless of where the ticket was purchased.
Powerball Prize Payouts
The value of a Powerball number depends on how many numbers on the ticket match the drawn winning numbers. Here is an overview of the Powerball prize structure:
- Match 5 numbers + Powerball: Grand prize jackpot
- Match 5 numbers only: $1 million fixed prize
- Match 4 numbers + Powerball: $50,000
- Match 4 numbers only: $100
- Match 3 numbers + Powerball: $100
- Match 3 numbers only: $7
- Match 2 numbers + Powerball: $7
- Match 1 number + Powerball: $4
- Match Powerball only: $4
As shown, matching more numbers leads to larger prizes. Matching all five main numbers and the Powerball wins the multi-million dollar jackpot, while matching just the Powerball by itself nets a $4 prize. The odds of winning any prize are 1 in 24.9.
How Jackpot Size Impacts Value
The grand prize jackpot starts at $40 million and continues growing until a ticket matches all six numbers. Jackpots can roll for months before someone hits the top prize. The current record Powerball jackpot is $1.586 billion shared by three tickets in January 2016.
As the jackpot grows, the value of matching all six numbers increases. This is because the jackpot is paid out as an annuity over 29 years, but most winners opt for the cash value lump sum. The cash value is determined by the sales and interest rates at the time of the win.
For example, a solo winner of a $100 million jackpot who takes the cash option would receive around $60 million after taxes. But for a $500 million jackpot, the cash value might be $300 million, significantly boosting how much those matched numbers are worth.
Changes to Powerball
Over the years, the Multi-State Lottery Association has adjusted the Powerball game rules and odds to make large jackpots bigger but less common. Major changes included:
- 1992 – Powerball introduced as the first game with a starting jackpot of $2 million
- 1997 – Power Play option added for multiplying non-jackpot prizes
- 2012 – Powerball matrix changed from 5/55 + 1/42 to 5/69 + 1/42
- 2015 – 10X Power Play multiplier introduced
- 2015 – Matrix expanded to 5/69 + 1/26
By increasing the pool of main numbers from 55 to 69 while reducing the Powerball pool from 42 to 26, the chances of winning the jackpot dropped substantially. But now jackpots can grow bigger faster before there’s a winner. This has led to more giant jackpots in recent years.
Taxes on Powerball Prizes
Winners of Powerball prizes don’t get to keep every penny. Both federal and state taxes apply to lottery winnings:
- Federal tax: All prizes above $5,000 are taxed at the federal level. The current federal tax rate on lottery winnings is 24%. State and local taxes may also apply.
- Withholding: For jackpots over $5,000, 24% federal tax is immediately withheld. More tax is withheld from lump sum payments. State taxes may also be withheld.
- State tax: State tax rates on lottery winnings range from 0% to 8%, depending on where you purchased the winning ticket. Some locations have no state tax on lottery winnings.
For a Powerball jackpot cash value worth $300 million, about $72 million would be immediately withheld for federal taxes, leaving $228 million before further state taxes are applied. Tax rates make a significant difference in how much winners get to keep.
Factors That Affect Value
Several factors impact how much a winning Powerball number is actually worth in cash:
- Jackpot size – Larger jackpots mean bigger cash value payouts. A solo winner gets more money from a $500 million jackpot than a $100 million one.
- Number of winners – If multiple players match all the numbers, the jackpot is split evenly among them. More winners mean less money per person.
- Cash or annuity – Opting for immediate cash reduces the payout amount versus receiving annual annuity installments over 29 years.
- Tax rates – Federal and state taxes combine to take 24% to over 40% of Powerball prizes over $5,000, significantly reducing the net payout.
- Ticket sales – The more ticket sales, the higher the jackpots and cash values generally become.
These factors interact in complex ways to determine the actual financial value of a winning Powerball number combination.
Expected Value of Powerball Tickets
One way to estimate the potential value of a Powerball ticket is to calculate its expected value. Expected value is the average net amount a particular outcome is worth over the long run.
To calculate the expected value of a Powerball ticket, you multiply the odds of each prize level by its payout, deduct taxes, and sum the results. Applying this formula yields an average value of around $0.65 per $2 Powerball ticket. This suggests that over time, a Powerball player can expect to get back about $0.33 in prizes for every $1 spent on tickets.
However, the overwhelming majority of tickets win nothing, while a very tiny fraction win massive jackpots. For any single ticket, the most likely outcome is always a total loss, while jackpot probabilities are miniscule.
Powerball Expected Value Calculation
| Prize Level | Odds | Payout | Taxes | Net Payout | Expected Value |
|---|---|---|---|---|---|
| Match 5 + PB | 1 in 292,201,338 | $100,000,000 | -$24,000,000 | $76,000,000 | $0.260 |
| Match 5 only | 1 in 11,688,053 | $1,000,000 | -$240,000 | $760,000 | $0.065 |
| Match 4 + PB | 1 in 913,129 | $50,000 | -$12,000 | $38,000 | $0.042 |
| Match 4 only | 1 in 36,525 | $100 | -$0 | $100 | $0.003 |
| Match 3 + PB | 1 in 14,494 | $100 | -$0 | $100 | $0.007 |
| Match 3 only | 1 in 579 | $7 | -$0 | $7 | $0.012 |
| Match 2 + PB | 1 in 701 | $7 | -$0 | $7 | $0.010 |
| Match 1 + PB | 1 in 92 | $4 | -$0 | $4 | $0.044 |
| Match PB only | 1 in 38 | $4 | -$0 | $4 | $0.106 |
| TOTAL | $0.65 |
In this example, the estimated expected value per $2 Powerball ticket is $0.65, or about 33% of the purchase price. Keep in mind that the actual expected value fluctuates based on that drawing’s jackpot amount and number of ticket sales.
An Extremely Unlikely Outcome
Hitting the Powerball jackpot is incredibly difficult. The odds of a single ticket matching all six numbers are only 1 in 292 million. To put that in perspective:
- You are over 4,000x more likely to be struck by lightning in your lifetime (1 in 70,000 chance).
- You are 291x more likely to be killed by a shark (1 in 3.7 million chance).
- You are 22x more likely to become president of the United States (1 in 13 million chance).
While winning Powerball can’t be ruled out completely, your probability of winning even $4 on a given ticket is only around 1 in 24. In other words, the most likely outcome by far is that your Powerball ticket is worth $0.
Strategies for Increasing Your Odds
While Powerball is entirely based on random number selection, there are some strategies players use to try to tip the odds ever so slightly in their favor:
- Buy more tickets – The more number combinations you play, the better your chances. But this gets expensive quickly.
- Join a pool – Group lottery tickets split costs and any prizes.
- Avoid popular numbers – Pick less common numbers to reduce shared wins.
- Mix odd and even – Balancing odd and even digits may improve probability slightly.
- Buy consecutive numbers – Selecting consecutive numbers limits the available combinations.
Even using these approaches, your chances of winning Powerball remain microscopically low. For entertainment purposes, spending a small amount on Powerball tickets is fine, but it should never be seen as a legitimate investment strategy.
Other U.S. Lottery Games
Powerball has the largest jackpots, but there are also these other big American lottery games:
Mega Millions
- Played in 45 states plus D.C.
- Tickets are $2 each
- Pick 5 numbers from 1 to 70, then 1 number from 1 to 25
- Drawings held Tuesdays and Fridays
- Starting jackpots of at least $20 million
- Largest jackpot was $1.537 billion in 2018
SuperLotto Plus
- Offered only in California
- Tickets cost $1 each
- Select 5 numbers between 1 and 47, plus 1 “Mega number” between 1 and 27
- Drawings take place Wednesdays and Saturdays
- Minimum jackpot is $7 million
- Record jackpot of $193 million in 2003
Florida Lotto
- Available only in Florida
- Play costs $1 per ticket
- Choose 6 numbers ranging from 1 to 53
- Drawings held Wednesdays and Saturdays
- Minimum starting jackpot of $2 million
- Highest jackpot was $106.5 million in 2010
Conclusion
In the end, a Powerball number combination is worth a guaranteed $4 prize if it matches just the Powerball, up to hundreds of millions for matching all six numbers. While Powerball can produce enormous jackpots, players should keep in mind the extremely low probabilities involved. A ticket costing $2 will most likely end up worthless, with just a 0.0000003% chance of hitting the jackpot. But for many, the excitement of huge potential prizes makes playing Powerball fun and entertaining if done responsibly.
