“All anyone ever talks about is the annuity prize,” said Victor Matheson, professor of economics and accounting at the College of the Holy Cross in Massachusetts. On Tuesday, Powerball adjusted the total jackpot from $1.9 billion to $2.04 billion.īut the thing is, the real prize is far more likely to be a much smaller lump sum, the “cash value” – which was $929.1 million prior to Powerball’s update – that never gets any attention. Those payments come from an annuity purchased by the lottery sponsors, and the payments factor in an average rate of return. That’s because the size of the advertised $2.04 billion top prize is the amount winners would get, which involves taking 30 equal payments spread out over the next 29 years. One of the reasons for the record $2.04 billion jackpot for the Powerball drawing, which was announced Tuesday morning, is something you wouldn’t expect - the recent run of steep interest rate hikes from the Federal Reserve.
