# How to Win the Powerball

So you want to win the powerball, huh, well get in line. But there are some tips that can help increase your chances of winning the Powerball.

First, if you’re going to play the Powerball you need to understand the odds because they are very important.  As an example, when the Powerball reaches a jackpot of \$100 Million dollars that means that they will pay you \$3.3 million per year for 30 years.  Each year you will need to pay taxes on that \$3.3 million.  But most people opt to take the lump sum prize payout.  The lump sum prize payout is less than the jackpot because they pay you the “Present Value” of \$100 Million dollars which is actually much less than \$100 Million dollars.  In fact, the present value will be roughly half of the jackpot.  So you can opt to take a lump sum payout of somewhere in the neighborhood of \$60 Million for your powerball winnings.  If you are confused by present value, consider this, pretend it is 20 years ago and you have \$1.  With that dollar you could probably buy a few packs of gum.  Today with \$1 you could buy at most one pack of gum.  So a dollar today is worth more in buying power than a dollar many years in the future.  The Powerball jackpot payout will be roughly 60% of the jackpot.

Ok, so we’ve determined you receive about half of the Powerball jackpot when you take the lump sum payment.  But now you have to pay taxes on your winnings.  You will pay somewhere in the neighborhood of 40% between federal and state taxes on your winnings.  So that \$60 million will further be reduced by a \$24 million tax payment that the Powerball will withhold to give the government.

In the end, you hit the \$100 million jackpot and you walk away with \$36 million free and clear.  So when you win the Powerball jackpot you can expect a little over 1/3 of the jackpot amount to go into your pocket.

Now, consider that the odds to win the Powerball are 1 in 200 million.  For you to have even odds the jackpot would need to be \$600 million (because remember in the end you walk away with only 1/3 of the jackpot which would be \$200 million in this case).  So anytime you are playing the powerball and the jackpot is less than \$600 million you are betting into very bad odds (which is all the time).