Knowledge is power, whether you’re an experienced lottery player or a newbie trying your luck for the first time. Perhaps you wonder where your money goes when you buy a ticket and how different payout options work. Or anyone who has wondered ‘how does the lottery work?’ because they want to get better at playing, you may want to understand more about lottery odds and different payout options. We cover all these topics and more.
How do Lotteries Work?
A lottery is a type of gambling, and playing the lottery requires you to purchase a ticket that costs a fairly small amount. Securing a ticket puts you in the game to possibly win prizes, usually in the form of cash.
Your ticket contains details of a certain series of numbers that you’ve personally chosen or you’ve used a system to obtain randomly assigned numbers. A player hopes that some or all of these numbers will be the same as numbers that will be chosen (drawn) at random during the lottery’s official draw. The order in which numbers are drawn doesn’t matter – only whether the set of numbers match or not.
There’s a large jackpot available for players whose tickets contain all the necessary numbers. Smaller prizes are given to players who didn’t pick all the numbers correctly but still have a few numbers that are the same as the draw’s outcome.
Lotteries can legally operate in countries where gambling laws allow it, such as South Africa. The games are often administered by governments, or state-owned entities.
Basic Steps in Playing the Lottery
There are different lotteries, hosted by lottery operators around the world. You can play by obtaining a physical ticket or purchasing a ticket online, in which case the information is stored in a virtual player’s account.
Whether you’re wondering how to play SA Powerball at your local store or how to play Mega Millions to enjoy the thrill of engaging with an international game, the steps will resemble the following:
1. Decide where you want to play, whether it’s a lottery site like theLotter or a registered outlet in your neighbourhood.
2. Decide how many tickets you want to play.
3. Select the numbers you believe will be chosen at random on draw day.
4. Indicate these numbers on your online or physical ticket/s.
5. Pay for your ticket and get confirmation of it, as a printed receipt or proof in digital form.
6. Wait for the draw to take place and the results to be published.
7. Compare your sequence with the numbers that were drawn.
8. Claim your prize, or receive it if an automated system is in place.
How Does a Lottery Draw Work?
Any lottery draw is a process of picking completely random numbers, all coming from a specific set or sets of numbers. Different processes have been used and developed over time and today the following methods are used:
- RNG: A computer system called a Random Number Generator. This process is common with South African lotteries like Daily Lotto. The system doesn’t have any interference from humans and is strictly audited to ensure random results.
- Air mix lottery machine: The machine contains numbered balls, often similar to ping-pong balls. The balls are mixed by blowing air into the chamber. Selection is as simple as opening a certain valve through which a random ball will be released. Balls are usually released one by one and so a sequence of numbers is created.
- Gravity pick lottery machine: This machine contains a set of rubber balls, each with a number on. Paddles form part of the machine’s design and mix the balls. Selection takes place by opening a sliding door and allowing a ball to exit at random. This is done a few times during the draw to produce the winning number sequence.
In depth research has been done to ensure that the machines deliver random outcomes. Still, with lotteries that use ball machines, you’ll notice the following to assist in ensuring randomness and fair play:
- All balls are visible throughout the draw process.
- Some lotteries have multiple sets of balls, and one is chosen at random for each draw.
- Weighing of balls prevents tampering with the system.
- Strict security and auditing applies, such as keeping machines in vaults when not in use, or they’re guarded by police.
Lottery Money Explained
Lotteries bring in big money. Just in the US, 2021 ticket sales were over $190 billion (ZAR 3,400 billion+). Players often wonder where all the money goes and if they have a guarantee that it’s managed fairly. After all, some people’s motivation for playing the lottery is because the operators support good causes. We summarised the basic details.
Where does Lottery Prize Money Come from?
Ticket sales is the source of the prize money you stand to win when playing a lottery, whether it’s Lotto in South Africa, or an international game like EuroMillions. For most lotteries, the sale of tickets is the only way to generate funds.
Part of the income is allocated to a prize pool in order to have cash available to pay out prizes. This is also a reason why many of them use ticket sales as reference when calculating different prize tiers’ prizes. For example, with Lotto, six of the eight prize divisions each receive a percentage of the prize pool
What do Lotteries do with the Money They Make?
Lotteries can’t operate for personal gain, or an institution’s own benefit. The guidelines for the legally operated lotteries often stipulate that a certain amount of revenue must be given to charitable causes.
The money generated by the sale of lottery tickets need to cover various expenses the lottery operators have:
- Prizes: As much as 60% can end up back in players’ pockets, as this percentage is usually allocated to cover prize money. The lottery must ensure they have a healthy cash flow to pay any prize money within the payout time they stipulate in their terms and conditions.
- Overheads: Any project will result in overhead costs. For lottery operators this includes salaries for staff, marketing expenses, hosting of a website as well as utility costs and rental of office space. Administrative expenses and operating costs like these can often require about 10% of a lottery’s generated funds.
- Commissions: Apart from players’ prizes, many lotteries also pay commissions to outlets that sell tickets. For example, they’ll pay a once-off reward to the registered outlet that sold a winning ticket. They usually budget about 5% of income for this expense.
- Charitable causes: Each country and lottery is unique in which projects it supports. There can be specific charities that receive donations from the lottery operator, or the money is paid to the state or country. They then use it to benefit various departments, from health to education to public works.
In South Africa, 25% – 30% of lottery revenue is spent on good causes, with focus areas being:
- Sports
- Recreation
- Culture and heritage
- Arts
A National Lottery Distribution Trust Fund (NLDTF) is used to manage this money.
What Are Lottery Odds?
The term ‘Odds’ refers to what the likelihood is that something will happen. In the case of lotteries, the odds provided by the operators represent what chance you have of guessing the entire sequence of winning numbers.
Odds are usually represented in the format of ‘number:number’ and with lotteries it’s shown as 1:X. Therefore, you have one chance in ‘X’ that your ticket will match the draw results.
Odds change for each prize tier, because it’s more likely that you’ll get some of the numbers correct than it is that you’ll match all of them.
Calculating the odds of a game requires a mathematical equation using information such as:
- Whether the draw requires one or two sets of numbers.
- The number range for each set of numbers, therefore the possible numbers that can be drawn.
- How many numbers the player needs to pick for a specific prize.
If any of the factors, such as the number range, changes, the lottery’s odds will change. Lotteries such as Eurojackpot have done this in the past, making it more difficult to win, but it leads to bigger prizes if the jackpot rolls over after each draw.
How Does a Lottery Payout Work?
When you’re eligible for a lottery prize, the exact amount you’ll receive depends on the country’s gambling tax laws and the rules of the game:
- Whether it’s a fixed prize or a share of the prize pool.
- In a pari-mutuel system you’ll share a percentage of the prize pool with others in that prize category, so your exact winnings will only be calculated by the operators and made public after the draw.
- Some countries first deduct tax before the payout is made.
South Africa does not charge taxes on lottery winnings, unless it’s a player’s main source of income. However, if you win using an online platform such as Lotto Agent, check with a tax consultant whether winnings from overseas will require you to pay taxes.
When using these convenient online platforms or an operator’s own app or website, some payments will be done automatically. For big wins and whenever you purchase a ticket at a retail outlet, you usually need to make a claim in person at a vendor or lottery office.
Annuity Payments vs Lump Sum Payouts
For jackpot prizes, some lotteries, such as US Powerball allow you to pick between a lump sum payout or the annuity option. Each has its benefits:
- Annuity: You’ll receive payments each year over the course of 20 or 30 years. For countries where you pay tax on lottery winnings, this option will help you receive more of the prize money. This option can help you manage your money better, as you can’t be tempted to spend it all within a short period of time. Older players may not receive all their winnings before their deaths, but it can usually then be paid out to family members.
- Lump sum: Here you’ll receive the entire prize as one payment, but you’ll pay more taxes compared to annuity options. You immediately have the freedom to invest a large amount of cash, but it can be daunting to manage so much money efficiently.
How Do Online Lottery Sites Work?
The alternative to buying a lottery ticket at a local store is to play it from the comfort of your home by using online lottery sites. These platforms have two methods of operation:
- Buying tickets on your behalf and sending you a copy of the ticket as proof: The service has agents in various countries that purchase the physical tickets for players. Your winnings will be paid to the online lottery site by the official lottery operator. You’ll receive payment from the lottery site with whom you have an account.
- Allowing you to bet on the outcome of a certain lottery: You’re not taking part in the official lottery, but the prize money for these bets are the same as the real games.
These platforms allow players to play lotteries outside the borders of their own countries. This is how you can take part in lotteries from around the globe, whether it’s France Lotto or Spain’s El Gordo.
Source: theLotter
How to Win Different Lotteries
As mentioned, winning a prize requires your ticket to contain the right sequence of numbers for that specific lottery and a specific draw. Here’s a quick-reference summary of what it takes to win some of the popular lotteries from around the globe.
| Lottery name | Available numbers | Numbers to win jackpot |
|---|---|---|
| Lotto (Also Lotto Plus 1 and Lotto Plus 2) | 1 – 52 | 6 |
| SA Powerball (Also Powerball Plus) | 1 – 50 & 1 -20 | 6 (5 + 1) |
| SA Daily Lotto | 1 – 36 | 5 |
| Mega Millions | 1 – 70 & 1 – 25 | 6 (5 + 1) |
| US Powerball | 1 – 69 & 1 – 26 | 6 (5 + 1) |
| Eurojackpot | 1 – 50 & 1 – 12 | 7 (5 + 2) |
| EuroMillions | 1 – 50 & 1 – 12 | 7 (5 + 2) |
| El Gordo | 1 – 54 & 0 – 9 | 6 (5 + 1) |
| France Lotto | 1 – 49 & 1 – 10 | 6 (5 + 1) |
| Greece Lotto | 1 – 49 | 6 |
| Greece Powerball | 1-45 & 1-20 | 6 |
| La Primitiva | 1 – 49 & 0 – 9 | 7 (6 + 1) |
| SuperEnalotto | 1 – 90 | 6 |
| 49’s Lunchtime | 1 – 49 | Depends on bet |
| 49’s Teatime | 1 – 49 | Depends on bet |
The numbers shown here – number ranges and the required numbers for a jackpot win – are what determine your odds of being a winner. Comparing the different lotteries, it becomes apparent why some are easier to win than others, and therefore have more favourable odds.
Final Words
Understanding how lotteries work can be empowering. It enables you to possibly increase your chances of one day winning a jackpot, because you understand which ones have better odds.
Also, with the information shared above you can now make the best decisions on topics like annuity and lump sum payouts should you one day win big! With American lotteries enabling South Africans to win even over ZAR1 billion, it’s enough reason to find out even more about how to play US Powerball, right?
FAQ
South Africa’s official lottery authority, Ithuba National Lottery, offers local and international players three different games to play, weekly or daily. These include:
- Lotto (with add one games, Lotto Plus 1 and Lotto Plus 2)
- Powerball (with add on game, Powerball Plus)
- Daily Lotto
One Lotto or Powerball play costs ZAR5.00 (VAT included) with the single cost of Lotto Plus 1, Lotto Plus 2, and Powerball Plus being ZAR2.50 (VAT included.) A single Daily Lotto play costs ZAR3.00 (VAT included.)
The costs will be slightly higher if you’re playing through an online lottery site, since they also charge service fees.
The most common winning lottery numbers vary depending on which game you’re playing. The current most popular numbers for the US Powerball are 18 (ranking as the favourite), 63, 61, 36, 32, and 21. The most common winning numbers for EuroMillions are 42, 27, 23, 21, 19, and 17. The six common winning numbers for the SA Lotto are 48, 30, 23, 16, 8, and 2.
Each lottery game has its own set of rules for claiming prizes. Smaller prizes are normally paid out at registered retailers or through the post. Larger winnings may need to be claimed in person at the lottery agent’s head office. If you play using an online lottery platform, it’s important to read the vendor’s payout rules.
Most online lottery sites pay smaller wins directly into your account while larger prizes such as the jackpot may need to be collected in person. The lottery site’s customer support team will guide you through the process of claiming your bigger winnings.
Scratch cards have a row of hidden numbers behind scratchable barriers that come off easily when using a coin or your fingernail. If you’re playing online, you click on each hidden number or symbol to reveal them. If your hidden number or symbol reveals a prize, you become an instant winner! Also known as instant lottery, scratch cards use a variety of themes to make them fun.
To win the lottery, you need to pick all the winning numbers drawn. You pick the numbers from certain sets of numbers, with each lottery using their own number range or ranges. For example, to win the EuroJackpot’s main prize, you need to match five numbers drawn from a pool of 50 and two digits from a pool of 12 numerals.
Winning the jackpot has a lot to do with luck but keen lottery players do use various strategies such as picking hot or cold numbers to try and increase their chances.
Different lottery games have various payout rules for winnings. If you play the lottery using an online platform, prizes up to a certain amount are normally paid directly into your account. However, larger wins or the jackpot prize often need to be claimed at the lottery authority’s headquarters.
If you purchase a physical ticket and win a prize, you can claim it from a lottery retailer or a lottery office.
South Africans that use their banking apps to buy lottery tickets for South African games can also receive deposits into their accounts. Large prizes may still require a visit to a lottery office though.
There are numerous strategies used to pick winning lottery numbers. Checking the game’s numbers’ frequency chart could help you pick winning digits. Some players prefer to use their lucky horoscope numbers while others use numerals that come in a dream! Prediction tools like an online Lotto number predictor or consulting with a psychic are other strategies you can use to try and pick winning lottery numbers.
Some countries such as South Africa and the UK don’t levy taxes on lottery winnings. However, other countries, including the US, do charge a federal income tax of up to 37% on lottery prize money.
Familiarising yourself with the tax laws of the country you’re playing in ensures you stay above board by paying the taxable amount due on lottery winnings. And if you receive prize money in South Africa from an overseas lottery or lottery site, ask an accountant whether you need to pay any taxes.
DailyLotto is ZAR 300,000 on