Annuity – A method of payment, which consists of a fixed amount of payments over a number of years. Many lotteries, such as Powerball and Mega Millions, will offer to pay their jackpot all at once in a lump sum distribution, or in an annuity, which generally adds up to more money in the long run, as interest is factored into the amount of money paid.

In addition, taxes are not collected on the money until it is paid to the winner, so the bulk of the prize has the opportunity to compound tax-free. Powerball annuities are paid out in 30 payments over 29 years, and rise each year according to a percentage in the rules of the game.

Jackpot – The grand prize of a lottery. In multi-state games such as Powerball and Mega Millions, this prize can range anywhere from $5 million to hundreds of millions of dollars. Jackpots typically rise each time a drawing takes place in which there were no winners. The amount of the increase is usually tied to ticket sales for the previous drawing.

Lump Sum – Winners who take a lump sum payout get all of their money up front, as opposed to an annuity, which is a series of fixed payments. Lump sum payouts generally total much less than the advertised jackpot amount for that particular drawing, as lotteries publicize the total of the annuity amounts, which include interest that is compounded over the life of the annuity.

Mega Number – Also known as a Powerball, Hot Ball, or Wild Card, this number is one that is chosen separately in the multi-state lotteries. Generally, players will choose a series of numbers, and then a final Mega Number, which is picked from a different reservoir during the actual drawing. Players must match all of their numbers plus this last number to win the grand prize. Those who match all numbers except the Mega Number are considered second prize winners.

Odds – The chance that one’s ticket will win a certain prize. In Powerball, the odds of winning the grand prize jackpot are 1 in 146,107,962, as there are that many unordered number combinations that one can end up with when choosing 5 numbers between 1 and 55, and one number between 1 and 42. The odds of winning the $3 prize by matching only the Powerball number are 1 in 68.96. One would think that the odds would be 1 in 42, as there are only 42 numbers to choose from when selecting this number, but in some of the cases that the Powerball number is matched, other numbers are matched as well, and the player would win a prize other than the $3 one.

Pari-mutuel – A betting system in which the amount of the prize is based upon the betting revenues taken in for that particular drawing. For example, all Lotto South prizes are pari-mutuel, in that they are not fixed amounts. According to past results, matching three numbers typically will net the ticket-holder $4 or $5, matching four numbers will earn the player anywhere from $50 to $100, and a ticket with five matching numbers will usually bring a prize of $600 to $1300. However, it all depends on how many tickets were sold for the game. In addition, all Mega Millions prizes except the jackpot won in California are pari-mutuel.

Power Play – Also known as a “multiplier”, this is an option that Powerball players can choose for an extra fee, which would multiply any winnings (except the jackpot) by the corresponding number chosen by lottery administrators each drawing. This number can be 2, 3, 4 or 5, and is randomly drawn each time. In Texas, Mega Millions players also have this option. For an additional $1, players can “Megaply” by adding the option to their ticket. Megaply numbers can be 2, 3, or 4.