(NEXSTAR) – Last year, a woman believed she had won $1 million after discovering her Mega Millions ticket matched five numbers while playing for the record-setting $1.337 billion jackpot. While that would have been true in any other state, because she lives in California, her prize actually ended up being $4.2 million.
But how?
California, though one of 45 states that participate in Powerball and Mega Millions, is the only state that has pari-mutuel prize amounts for non-jackpot prizes.
In both lottery games, there are nine ways to win with a ticket, ranging from a few dollars to the jackpot prize. With the exception of the jackpot, which grows after each drawing it goes unclaimed, the prizes are fixed dollar amounts – except in California.
For Mega Millions, matching the five white ball numbers and missing the gold Mega Ball results in a $1 million prize. That’s what Sara Bailey told the California Lottery she believed she won last year.
“My first reaction was yelling out loud that we had won a million dollars,” Bailey said after claiming her prize in October. “After the excitement settled down a bit, I did some digging into the prize and realized we actually probably won a lot more.”
She found that another California lottery player who matched five numbers landed a $2.9 million prize. But, because Bailey had purchased her ticket while thousands of Californians were also vying for the nearly $1.4 billion Mega Millions jackpot, she knew her prize would be much larger than $2.9 million.
Because of California’s pari-mutuel prize amounts, which causes otherwise fixed prizes to vary based on ticket sales and the number of winners, Bailey’s prize was able to quadruple.
Ultimately, it was the California State Supreme Court that decided lottery prizes should be pari-mutuel. As Carolyn Becker, deputy director of public affairs and communications for the California Lottery, explains, in the 1990s, the high court determined that as part of the Lottery Act, a valid lottery game in the state “is one in which the lottery operator…has no stake in the outcome of the game or vested interest in how many winners or losers there are.”
“So it became clearer from a legal perspective that California’s prizes needed to be pari-mutuel,” Becker says. This means the money in the pot for each prize tier is split among the winners.
Sound familiar? That’s because it is – if there are multiple winners of the Mega Millions or Powerball jackpots, the funds are split evenly among them. When California’s Steve Tran matched all six winning numbers for the $648 million Mega Millions jackpot in 2013, so did a ticket sold in Stone Mountain, Georgia. Both winners received $324 million.
Like the jackpot, lower-level prizes are also able to grow in California thanks to their pari-mutuel status.
As the current Mega Millions jackpot has been growing, Becker says there have been six instances of a California player hitting five numbers to win the second-tier prize. In one case, the winner scored $2.2 million, and for another, it was $1.5 million – both larger than the fixed rate of $1 million a player in any other jurisdiction would land.
“Over time, the pari-mutuel prize for that secondary price level does, mathematically, even out to where it is, on average, $1 million, just like the other states,” Becker says. “But, for any given player, it might be more or might be less.”
While there can be a wide range in the size of the larger prizes, Becker says there is less variability among the lower-level prizes because “they’re won so much more often.” Regardless of how many winners there are, they will all still receive a portion of the prize pool dedicated to each prize tier.
So even if you don’t land the Mega Millions jackpot – which has now grown to $1.1 billion – you still have a chance at a prize larger than a player in any other state may receive.
The next Mega Millions drawing will be at 8 p.m. PT Tuesday.
