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What Are Pari-Mutuel Prizes?

In most participating states, all prizes except for the jackpot are fixed amounts, meaning that they stay the same for every draw. The jackpot, however, is calculated on a pari-mutuel basis, meaning that the amount each winner receives changes depending on how many tickets were sold for that particular draw and how many other winners there are at the same level.

For example, roughly $1 from the sale of every Powerball ticket is added to the prize pool for the draw it is bought for, and up to 68 percent of the total prize pool goes towards the jackpot. This means that if 10 million tickets are sold, around $6.8 million would be added to the value of the jackpot; if 15 million tickets are sold, $10 million would go to the jackpot. The number of tickets sold can therefore have a huge effect on how much money is on offer to players.

Then there is the matter of splitting the jackpot between all winners at that level. Let’s say it stands at $100 million. If just one ticket holder matches all the numbers in that draw, they would take home the entire amount. If there were two winning tickets, it would be split in half, so each winner would receive $50 million. Four winners would each get $25 million, while 10 winners would each receive $10 million, and so on.

In most states, the jackpot prize is the only one to be calculated this way. All other prizes are fixed, and are guaranteed to each player. So if one player matches five numbers, they win $1 million; if ten players match five, they all win $1 million each.

The only exception to this rule is California, which states that all lottery prizes must be calculated on a pari-mutuel basis.

California's Prize Structure

The pari-mutuel calculations used in California are exactly the same as those described above, except that they are applied to all prizes, not just the jackpot. Each prize category receives a certain percentage of the overall prize pool, and then that money is split between all of the winners in each category. In addition, some of the money goes into a prize reserve fund, which is used to ensure prizes can be paid out and to contribute to special draws and events in the future.