Powerball drawing: Saturday’s $1.6 billion jackpot worth half in cash

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The truth about that $1 6 billion Powerball jackpot

, author of Data: ; Chart: Erin Davis/Axios VisualsYou won't walk away with today. In fact, the estimated prize pool — the amount you'd actually win, before taxes, assuming you don't have to share the jackpot with anybody else — is less than half that amount, at $782 million. Why it matters: are good at whipping up excitement — so the lottery has always exaggerated the amount of money winners stand to get. Thanks to the bond market, the size of the exaggeration right now is bigger than it has been in well over a decade.The headline jackpot this week is $1.6 billion. That figure includes the $782 million in the prize pot, plus more than $800 million in future interest payments that the winner almost certainly won't choose to receive. How it works: In theory, lottery winners can choose an "annuity option" instead of just taking the amount of money in the prize pool. The annuity option is an annual payout over 30 years, with the sum paid out rising by 5% each year. The headline jackpot size is not the amount in the prize pool but rather the size of all those 30 payments, added together. No one has chosen the annuity option since 2014. And if it takes 30 years to pile up your $1.6 billion, by the time you're done, its purchasing power will be noticeably less than $1.6 billion. By the numbers: The jackpot exaggeration ratio — the amount by which the headline jackpot size exaggerates the actual amount of money in the prize pool — has spiked from 1.2 in April 2020 to more than 2 today.That's because in order to create the annuity, the money in the prize pool is divvied up into a series of Treasury bond investments. As the interest rate on Treasury bonds rises, the future value of those bonds goes up. The bottom line: By raising interest rates, Fed chair Jay Powell has also increased the size of lottery jackpots — and therefore has also increased the amount of public participation in the lottery. Go deeper:

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