An annuity is paid out over several years whereas a lump-sum payout is a single cash payment. When a jackpot is won, each state participating in the game forwards its share of the proceeds to make the jackpot payment. The shares are sent to the Multi-State Lottery Association (MUSL), based in Urbandale, Iowa. Once the money used to fund the jackpot is received, MUSL has two options:
Powerball and Mega Millions both offer the option of paying the jackpot out in a lump sum or the traditional annuity payment. Beginning in May 2013, Hot Lotto changed from offering an annuity prize option to a prize paid as a lump-sum payment with all state and federal withholding taxes paid for the winner. All or Nothing, Pick 3 and Pick 4 only offer cash payouts. Some scratch games also offer the annuity option, but that list changes over time.
This depends on the individual's specific circumstances and needs. The lottery suggests the winner contact a trusted financial or legal adviser prior to making this decision. The winner has 60 days from the date the prize is claimed to decide.
Once the money is won, it always belongs to the winner. Iowa law provides that if the winner should die, the money would go to the winner's estate. The lottery will make future payments as determined by the estate or the court.
The Iowa Lottery offers a big jackpot game like Powerball because it appeals to many customers. The lottery's sales history shows sales grow as the jackpot grows. Regular players play a bit more and new players get into the game. By capping the jackpot, the lottery would never get the attention of those players who like to play for really big money.
It's very rare that an Iowa Lottery jackpot is not claimed; in fact, it has happened only once - back in 1987. Unclaimed Powerball, Mega Millions and Hot Lotto jackpots go back to the states in the proportion of sales for that draw. Unclaimed prizes, other than the jackpot, go into prize pools for future games, so players in Iowa have another chance at the cash. Every year, many smaller prizes do go unclaimed, so check your tickets!
Players can keep playing even after they've won a jackpot.
In Powerball, Mega Millions and Hot Lotto, about two weeks after a player brings in the winning ticket, the lottery can cut the winner the first check. (It takes that amount of time for the rest of the states in the game to send money to the winning state.) For all other games, players can get their money the same day they bring their winning ticket to the lottery. Generally about 45 minutes after players walk in the door, they walk out with a check!
Prize winners who live in Iowa may be able to assign winnings through the court system. The lottery will make payments according to court order.