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: 1) MUSL obtains bids from brokers for zero-coupon bonds that match the various maturities needed to pay out winnings for several years (The first year is not included in the annuity, it's paid immediately to the winner). Upon receiving and accepting the bids, the annuitized jackpot amount is set and the initial payment to the winner is calculated. 2) MUSL totals the amount received from sales and awards the all-cash jackpot. The exact amount of the all-cash jackpot can only be estimated and is usually about half the amount of the estimated annuity jackpot. Regardless of the method chosen by the winner, the same amount of funds are available to the winning jackpot.
Since Nov. 2, 1997, Powerball has offered the option of paying the jackpot out in a lump sum or the traditional annuity payment. Mega Millions and Hot Lotto also allows players the option of a lump-sum payout or traditional annuity payment. Pick 3, Pick 4 and Iowa's $100,000 Cash Game 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.