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The Powerball jackpot has ballooned to an estimated $786 million, putting one of the game’s biggest prizes ever up for grabs Wednesday night.
The jackpot now ranks as the ninth-largest in Powerball history. The winner who takes the cash option would receive an estimated $341.6 million before taxes. The alternative is an annuity paid through 30 graduated payments over 29 years.
"The last time we saw a Powerball jackpot of this size was on Christmas Eve, with a $1.817 billion prize on the line," Stephen Durrell, the Powerball product group chair and Kansas Lottery executive director, said in a statement.
The jackpot has been growing since May 2, when tickets sold in Florida and Texas split a $20 million prize. There have now been 40 straight drawings without a jackpot winner.
For the person holding the winning ticket, the first move should be protecting privacy, according to Jeffery Degner, a research fellow in economics and economic freedom at the American Institute for Economic Research.
"If you live in a state that allows you to remain anonymous, remain anonymous," Degner told FOX Business. "Keep your mouth shut."
Degner warned that making a massive windfall public can quickly attract long-lost friends, relatives and strangers looking for money.
"When askers do eventually come, you should develop the habit of saying ‘no’ early and often," he said.
The winner should also consider quickly hiring a tax attorney and certified public accountant because taxes can take a big bite out of the prize, according to Degner.
"Don't be surprised by the taxes because the lottery is going to withhold about 24% on the initial payment," he said, noting that more could be due when taxes are filed.
Choosing between the lump sum and annuity is less clear-cut.
Powerball’s annuity includes one immediate payment followed by 29 annual payments that rise by 5% each year. Degner said those increases could help protect against inflation.
Meanwhile, the lump sum gives the winner immediate access to the money and the ability to invest it.
"When it's all said and done, they actually are fairly close in the total return," he said.
Degner urged winners to avoid major purchases and financial commitments during the first few months and warned against "lifestyle creep."
Paying off high-interest debt should also be a priority. However, winners should be cautious about paying off debts for friends or relatives, Degner said.
Powerball tickets cost $2 and are sold in 45 states; Washington, D.C.; Puerto Rico; the U.S. Virgin Islands; and the United Kingdom.
The odds of winning any Powerball prize are 1 in 24.9. The odds of hitting the jackpot are 1 in 292.2 million.
For the eventual winner, Degner said the focus should be on preserving the money.
"It’s tax strategy first, lifestyle later," he said.
