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After ticket sales were tallied, the final value of the jackpot was higher than an initial estimate of $1.28 billion. The winner has the choice of a cash option

After ticket sales were tallied, the final value of the jackpot was higher than an initial estimate of $1.28 billion. The winner has the choice of a cash option worth an estimated $780.5 million if taken as a lump sum payment instead of the annuity option with 30 payments. Seems $1.34B is a marketing number and the actual number is $708.5M pre-tax (58% of marketing figure). They also encourage you take money every year for 30 years instead, probably paying out a bit extra and banking on your incapacity to calculate for inflation.

GavinMcG 4y ago
Is your salary a “marketing number” just because taxes are taken out?
- contingencies 4y ago
  What salary? Seriously though, the main difference is the headline figure vs. the nominal payout. (Almost 50% difference). Then there's tax, which in many countries (not the US) would be nearly 50% again.
  - ska 4y ago
    In some countries lottery isn't taxed at all.
    - ska 4y ago
      lottery winnings that is, too late to edit.
- gkbrk 4y ago
  In many countries, salaries for jobs are discussed as the amount you get after the taxes are taken out.
  - ska 4y ago
    How does that work? In most places I've lived and worked, the amount you get taxed is quite variable based on a ton of factors... does this mean they have flat income taxes?
- drexlspivey 4y ago
  he said $708.5 million PRE tax
  - GavinMcG 4y ago
    Ahh, you’re right—I missed the point they were making.
Otek 4y ago
> They also encourage you take money every year for 30 years instead, probably paying out a bit extra and banking on your incapacity to calculate for inflation. Knowing that most people winning lottery ends up as a bankrupts I would encourage that as well. Maybe I would even took that deal, even if I earn more than most people having that much money is very risky
jreese 4y ago
> banking on your incapacity to calculate for inflation $43M / year for 30 years sounds like a pretty good retirement in any sort of inflation short of catastrophic economic collapse.
- contingencies 4y ago
  I was suggesting they likely offer now-payout-total + maybe 20% over 30 years. But at say 5% inflation you're worse off than taking the money now and having it work for you. Their main motivation in doing so is obviously to smooth out their accounting (cheaper to service their debt over time) but if they can simultaneously discount the payout by exploiting financial illiteracy, then why not?
  - jreese 4y ago
    Having your money "work for you" requires discipline, awareness, and trust in economic stewards far beyond what the average lottery player is capable of managing. The annuities still offer life-changing sums of wealth, but also guaranteed to give you 30 years to learn how to handle that much rather than accidentally spending it all in 3 years.
  - ska 4y ago
    > but if they can simultaneously discount the payout by exploiting financial illiteracy, then why not? You're not entirely wrong - your total expected payout is better if you take the lump sum and invest wisely. However if you don't trust yourself to have good discipline and strategy and annuity version isn't entirely crazy. Your EV is lower but you can't completely screw yourself.
kgwgk 4y ago
> probably paying out a bit extra The "bit extra" it what takes you from $780m to $1.34b, isn't it?
- contingencies 4y ago
  That is not my understanding. $1.34B is apparently the total winnings of all people that round, not the winner. The winner is entitled to one of two options, either a $708.5M single payout or an undisclosed higher total as an annual payment over 30 years. There may be a very large long-tail of small winners. (Edit: Can't reply: the understanding comes from a lifetime of experience with weasels. They use the figure to describe the round, the winner is not entitled to the round total. This is an intentional marketing doublespeak on their part.)
  - kgwgk 4y ago
    Where does that understanding come from? The very first sentence reads "A ticket sold in Illinois is the sole winner of the $1.34 billion Mega Millions jackpot"
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GavinMcG 4y ago

Is your salary a “marketing number” just because taxes are taken out?

contingencies 4y ago
What salary? Seriously though, the main difference is the headline figure vs. the nominal payout. (Almost 50% difference). Then there's tax, which in many countries (not the US) would be nearly 50% again.
- ska 4y ago
  In some countries lottery isn't taxed at all.
  - ska 4y ago
    lottery winnings that is, too late to edit.
gkbrk 4y ago
In many countries, salaries for jobs are discussed as the amount you get after the taxes are taken out.
- ska 4y ago
  How does that work? In most places I've lived and worked, the amount you get taxed is quite variable based on a ton of factors... does this mean they have flat income taxes?
drexlspivey 4y ago
he said $708.5 million PRE tax
- GavinMcG 4y ago
  Ahh, you’re right—I missed the point they were making.

Otek 4y ago

> They also encourage you take money every year for 30 years instead, probably paying out a bit extra and banking on your incapacity to calculate for inflation. Knowing that most people winning lottery ends up as a bankrupts I would encourage that as well. Maybe I would even took that deal, even if I earn more than most people having that much money is very risky

jreese 4y ago

> banking on your incapacity to calculate for inflation $43M / year for 30 years sounds like a pretty good retirement in any sort of inflation short of catastrophic economic collapse.

contingencies 4y ago
I was suggesting they likely offer now-payout-total + maybe 20% over 30 years. But at say 5% inflation you're worse off than taking the money now and having it work for you. Their main motivation in doing so is obviously to smooth out their accounting (cheaper to service their debt over time) but if they can simultaneously discount the payout by exploiting financial illiteracy, then why not?
- jreese 4y ago
  Having your money "work for you" requires discipline, awareness, and trust in economic stewards far beyond what the average lottery player is capable of managing. The annuities still offer life-changing sums of wealth, but also guaranteed to give you 30 years to learn how to handle that much rather than accidentally spending it all in 3 years.
- ska 4y ago
  > but if they can simultaneously discount the payout by exploiting financial illiteracy, then why not? You're not entirely wrong - your total expected payout is better if you take the lump sum and invest wisely. However if you don't trust yourself to have good discipline and strategy and annuity version isn't entirely crazy. Your EV is lower but you can't completely screw yourself.

kgwgk 4y ago

> probably paying out a bit extra The "bit extra" it what takes you from $780m to $1.34b, isn't it?

contingencies 4y ago
That is not my understanding. $1.34B is apparently the total winnings of all people that round, not the winner. The winner is entitled to one of two options, either a $708.5M single payout or an undisclosed higher total as an annual payment over 30 years. There may be a very large long-tail of small winners. (Edit: Can't reply: the understanding comes from a lifetime of experience with weasels. They use the figure to describe the round, the winner is not entitled to the round total. This is an intentional marketing doublespeak on their part.)
- kgwgk 4y ago
  Where does that understanding come from? The very first sentence reads "A ticket sold in Illinois is the sole winner of the $1.34 billion Mega Millions jackpot"
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