Powerball winner with $1.7 billion jackpot could get lowest payout in 20 years - 44 payouts

The winner of the latest Powerball drawing, who won $1.7 billion, will receive only 44% of the amount claimed. When it comes to receiving cash winnings, lottery winners can choose from two options: receiving the immediate amount or 30-year annual payments invested in government bonds.

The advertised jackpot is actually a projection of the total amount over a 30-year period, and the lottery fund only has the amount of money on hand to pay out. In the latest case, won by one man in Kern County, California, the lucky ticket holder will receive an immediate payout of about $774.1 million, which is less than half of the advertised jackpot. The 1.7' figure'billion dollars above the full payout amount due to the currently high interest on investments. The high difference between the two options represents the lowest immediate payout percentage since 2003. While experts consistently advise winners to choose the installment option because it offers the full jackpot and serves as a stable source of income for the next 30 years, it remains unpopular among winners. Despite the fact that the lump sum payment averages about 52% of the jackpot, all but five of the 239 big winners since 2003 choose this option.

Leon LaBrecque, chief executive officer of Sequoia Financial Group, says one of the reasons people are turning down the installment option is''the possibility of death during those 30 years. If the winner dies before all installments are received, their heirs will have to pay inheritance tax of up to 40 percent on each installment. 'Heirs will have to pay inheritance tax even if the installments have not yet been received,' he warns. Regardless of which option is chosen, it is subject to federal income tax, and the online service can withhold at least 24 percent of the winnings. Fortunately for Wednesday's winner, whose identity has not yet been released, California has no tax on lottery winnings, so only the federal government will be eligible to claim the money. However, the winner's identity will not remain anonymous, as the state requires that all winners of amounts over 250''000 dollars divulged their identity.

In the last year, California has truly proven to be the Golden State - especially when it comes to the lottery. The biggest jackpot winner of all time, Edwin Castro, won the largest Powerball jackpot in history - $2.04 billion - in November 2022. However, he did not become a billionaire overnight as he chose the immediate amount, which was $997.6 million. The other winning ticket for $1.08 billion dollars,''The eighth largest prize in history was purchased in California in July, but it was mysteriously never claimed by anyone. The government is now seeing multiple wins as billion-dollar jackpots have become increasingly common, which only makes the lottery even harder to win. Lottery expert Victor Matheson, a professor of economics at the College of the Holy Cross, says growing jackpots are attracting more sales. That decreases the odds of winning but increases the jackpot amount. Winners with growing jackpots still keep hoping they'll be next, despite betting against them. "Because the lottery is all about expectation," Matheson told CNBC.