How do Powerball and Mega Millions prize structures and payout options differ?
Executive summary
Powerball and Mega Millions both offer two jackpot payout choices—an annuitized advertised prize paid over decades and a smaller lump-sum cash option—and the advertised jackpot sizes, starting points and some prize tiers differ: Powerball’s advertised jackpots have started at $20 million (historically) while Mega Millions raised its starting jackpot to $50 million as of April 2025 [1] [2]. Both games publish annuity and cash estimates for specific jackpots (examples: advertised annuities vs. cash shown as $875M/ $413.5M for Mega Millions and $645M/ $307.3M for Powerball in one report) and both apply federal and state taxes to winners [3] [4].
1. How the top prize is offered: annuity vs. cash — the same choice, different numbers
Players who win the advertised jackpot on either game choose between an annuitized payment (the large advertised figure paid as an escalating annual stream) or a lump-sum cash option (a smaller immediate payout). Reporting showing specific jackpot examples lists the annuitized versus cash splits for large jackpots — e.g., an advertised Mega Millions annuity of $875 million with a cash alternative of $413.5 million and an advertised Powerball annuity of $645 million with a cash alternative of $307.3 million — illustrating the same structural choice applies to both games [3]. Tax treatment matters after selection: web analysis pages model federal withholding and remaining federal/state taxes against those cash or annuity figures [4].
2. Starting jackpots and how they grow — Mega Millions begins higher now
Mega Millions reset rules were changed so the starting advertised jackpot is higher than Powerball’s: reporting notes Mega Millions jackpots begin at $50 million (after the April 2025 increase) while Powerball jackpots historically have begun at $20 million [1] [2]. Both games grow their advertised annuity via rollover when no one wins; the pace of growth depends on ticket sales and interest-rate-related funding considerations [1].
3. Prize tiers and smaller payouts — similar, but with tier differences
Both lotteries pay multiple non-jackpot prizes for partial matches. Coverage lists Powerball prizes ranging from a small prize for matching the Powerball alone (about $4) up to $1 million for matching five white balls (except California) and then the jackpot for all six; Mega Millions likewise has several lower prize tiers (jackpot plus eight additional tiers noted in reporting) with fixed prizes for matching combinations [5] [6]. Exact tier counts and amounts differ between games, which affects the expected return from a single $2 ticket across non-jackpot prizes [6] [7].
4. Odds and expected payout — Powerball slightly better on non-jackpot return
The mathematical odds of winning the jackpot differ: Powerball’s jackpot odds are about 1 in 292.2–292.2 million, while Mega Millions’ are about 1 in 302.6 million [8] [3]. Analyses comparing expected value excluding the jackpot find Powerball yields a marginally higher expected payout on the $2 ticket (roughly $0.32 expected return for Powerball vs. $0.25 for Mega Millions in one calculation), meaning the expected loss per ticket is slightly lower on Powerball when ignoring jackpot dynamics [7].
5. Cash-versus-annuity math and how much you actually get
The cash option is typically a fraction of the advertised annuity; independent calculators and reporting show lump-sum offers can be roughly half of the annuity in some large jackpots (an example: an estimated 52% lump-sum of a nominal Mega Millions annuity in a sampled calculation) [2]. Websites that model tax impacts show lotteries and tax authorities withhold an initial 24% federal amount and state withholdings vary by jurisdiction; final federal tax liabilities may be higher depending on marginal rates [4].
6. What reporters and analysts disagree about — which game is “better”
There’s no consensus “better” game: some journalism and modeling stress Mega Millions’ higher starting jackpots and occasional larger advertised top prizes [1] [9], while economic analyses focus on odds and expected returns and conclude Powerball is marginally preferable based on non-jackpot expected payout [7]. The trade-off is straightforward: Mega Millions can offer bigger advertised starting pots and occasionally larger headlines; Powerball offers slightly better odds and a marginally better expected return per $2 ticket [1] [7] [3].
Limitations and context: available sources detail payout options, starting jackpots, prize tiers, odds and tax modeling, but they do not provide every current prize table by tier for each state or the precise formula each game’s annuity trust uses on every drawing — those specifics are covered on the official lottery sites and in state-by-state guidance (not found in current reporting).