When the lottery jackpot reaches a staggering number, people can’t help but dream about winning. They might envision buying a luxury home or a trip around the world, or they could pay off all their debts and start a fresh financial chapter. But the truth is, the chances of winning a lottery jackpot are much smaller than they’re willing to admit. And this reality works in the lottery’s favor, economics professor Victor Matheson tells NPR.
The odds of winning the jackpot in Powerball are roughly one in 302.6 million. That’s a very long shot, but it’s enough to entice people to buy tickets.
Lottery winners can choose whether to take a lump-sum payment or an annuity that will pay them one installment each year for 29 years. When they play for the jackpot, their ticket enters a prize pool alongside those from other players. Those prizes are invested to generate the revenue that will fund future payments.
Many of the biggest jackpots have been used to fund bad decisions, from a West Virginia man’s ill-fated plan to run away with his daughter to Jeffrey Dampier’s kidnapping and murder after he won a comparatively tame $20 million prize in 2007. But not every winner’s story ends badly. Those who do wisely after hitting the jackpot should consider how their new wealth will impact their investment goals, strategies, and risk tolerance. They also should avoid impulsive spending and spend time planning for the future.