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Powerball jackpot winners have the option of receiving their prize as a single lump sum payment or as a graduated annuity paid in 30 installments over 29 years. Each annuity payment is 4% higher than in the previous year to adjust for inflation over the length of the Powerball annuity.

The advertised estimated Powerball jackpot represents the total payments that would be paid out to a jackpot winner should they accept the 30-installment option. This estimate is based on the current funds accumulated in the jackpot prize pool rolled over from prior drawings, expected sales for the current sales cycle, and current market interest rates for the securities that would be used to fund the annuity. The estimated Jackpot is usually

32.5% of the (non-Powerplay) revenue of every ticket sold is submitted by MUSL members to accumulate into a prize pool to fund the jackpot prize for each drawing. If no ticket wins the Powerball jackpot in a particular drawing, the prize pool carries over to the next drawing and continues to accumulate until someone wins. This prize pool is exactly the cash value that would be paid to a Powerball jackpot winner if they elect to take the lump sum. If the winner chooses the annuity option current market rates are used to calculate the graduated payment schedule and the initial installment is paid. The remaining funds in the prize pool then invested to generate the income required to fund the remaining installments. If there are multiple tickets sold with the winning combination for a drawing, the jackpot prize pool will be equally divided for each of the winning tickets.

MUSL and its members accept all investment risk and are contractually obligated and liable to the winner to make all scheduled payments to jackpot winners. If a jackpot winning ticket fails to be redeemed, the funds in the prize pool will be returned to members in proportion to the amounts they contributed to the prize pool. Different Powerball jurisdictions have different laws regulating how unclaimed funds must be used.

When the Powerball jackpot is won, the next jackpot is guaranteed to be at least $20 million (annuity). When the top prize is not won, the next jackpot is guaranteed to be at least $5 million higher than the prior drawing. The lump sum prize is guaranteed to be at least the current value of the annuity prize. If revenue from ticket sales fails to accumulate enough into the prize pool to equal the current value of the guaranteed annuity, MUSL members must contribute additional funds to the jackpot pool to cover the shortage. The most likely situation in which there would be a shortage in the jackpot pool is there are jackpot winners in consecutive drawings. Usually by the third drawing in a rollover series the jackpot pool is increased by more than the minimum $5 million.

When the Powerball jackpot reaches a new record, the annuity jackpot amount is capped at $25 million more than the prior drawing. If revenue from ticket sales for that drawing exceed the amount required to fund the $25 million increase to the annuity jackpot, the excess accumulates into a bonus prize pool. This is shared and paid in a lump sum to all tickets that match 5+0 if during the same drawing at least one ticket wins the jackpot. Otherwise, the amount accumulated in the bonus pool rolls over to the following drawing's bonus pool until the jackpot prize pool is won. If, unexpectedly, the bonus prize pool is to be awarded but there are no 5+0 tickets, the bonus prize pool is to be divided among all 4+1 winners. The bonus prize is in addition to the regular prize earned by the 5+0 or 4+1 ticket. Bonus prize pool funds for winning tickets that expire unclaimed are returned to the members in proportion they contributed to the prize pool for those drawings.

Generally, Powerball jackpot winners do not have to choose cash or annuity until after claiming (then they usually have 60 days to do so). However, in Florida and Missouri, the 60-day "clock" starts with the drawing, so a jackpot winner who wishes to take the cash option needs to make immediate plans to claim their prize. (In Idaho, winners have only 30 days after claiming to make the choice.) Powerball winners, including the jackpot, must claim their prizes within a period ranging from 90 days to one year, depending on the rules of the MUSL member where the ticket was bought.