💵 Who’s Playing The $1.15 Billion Dollar Mega Millions Jackpot Tonight?

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Still the same newsletter that brings you the business behind the news with a healthy dose of sarcasm, but now bite-sized.

In today’s newsletter we discuss the Mega Millions’s $1.15 billion dollar lotto fever takes over, Beyoncé makes streaming history, Kim Kardashian’s company Skimms could IPO in 2025, Adam Sandler’s ‘Happy Gilmore 2’ teaser trailer drops,the “Juan Soto wealth effect” is real, and a handful of U.S. states are creating their own Bitcoin reserves.

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WHAT WE’RE READING

💰 Someone could win the $1.15 billion dollar Mega Millions jackpot tonight!

The Mega Millions jackpot for tonight, Friday, December 27 is estimated to be worth $1.15 billion dollars. That is if they choose to receive the annuity payment spread out over the next 30 years, but almost no one ever chooses that.

Give me the stats

Out of the last 100 Powerball winners, only 4 have chosen to receive the annuity payment for the next 30 years. That means 96% of lottery winners have chosen to receive a lump sum.

What’s the logic?

Most people believe they can make more money from investing the cash prize over the next 30 years than if they take the annuity payment, and they aren’t wrong.

The annuity pays out 5% more each year for the entire 30 years to compensate for the rate of inflation. For the year 2024, the Dow Jones Industrial Average is up 14.11 percent.

In the last 34 years, the Dow Jones Industrial Average index (in EUR) had a compound annual growth rate of 11.58%

Downside of accepting all that cash

You know what I’m going to say - family, friends, and people you don’t even know coming out of the woodwork with their hands out looking for a share of your prize.

According to the Certified Financial Planner Board of Standards, nearly one-third of lottery winners eventually go bankrupt within three to five years of winning.

Can you imagine blowing through $1 billion dollars in just a few years after “helping out” all those long-lost relatives that show up on your front step?

What would I do?

I’ve put a lot of thought into this every time I go to the gym or log a long run or swim. My mind can’t help but turn to the “what if” of the lottery.

First, I wouldn’t tell a soul outside of my immediate family that I won the lottery, and I’d choose to accept the lottery prize anonymously, which most states allow.

Second, I personally would choose the cash option, set aside a few million dollars to spend over the first few years in ways that wouldn’t arouse any suspicion from friends and family.

And third, I’d invest nearly the entire amount in dividend paying real estate ETFs like Blackstone Mortgage Trust Inc (BXMT), which has a 10.45% annual dividend yield, or the Arbor Realty Trust Inc (ABR), which has a 12.50% annual dividend yield. If you invested a lump sum cash prize in this ETF then you’d be looking at doubling your money in less than 6 years from the compound interest alone.

Top 5 Highest Lottery Jackpots

Curious what option some of the biggest lottery winners have chosen?

Here’s what payment option the top 5 highest-paying lottery winners in the world chose:

1. $2.04 Billion - Powerball (November 2022)
   This is the largest lottery jackpot ever won by a single ticket. They lived in California, and they chose the lump-sum payment of $997.6 million before taxes.

2. $1.765 Billion - Powerball (October 2023)
   This was the second-largest Powerball jackpot and the second-largest US lottery jackpot overall. They also lived in California, and chose the lump-sum cash payment.

3. $1.602 Billion - Mega Millions (August 2023)
   This is the largest Mega Millions jackpot to date and the third-largest US lottery jackpot overall. They lived in Florida, and chose the lump-sum cash payment.

4. $1.586 Billion - Powerball (January 2016)
   For this one there were 3 winners from California, Florida, and Tennessee, and they each chose the lump-sum cash payment. Each of the winners received a lump-sum payment of approximately $327.8 million.

5. $1.537 Billion - Mega Millions (October 2018)
   This winning ticket was won by someone in South Carolina who chose to remain anonymous, and chose the lump-sum cash payment.

🐴 Business

Beyoncé rode into the streaming history books with Netflix’s Christmas day halftime show during the Ravens-Texans game, which averaged 24.3 million viewers in the United States, according to Nielsen.

🏌️‍♀️ Entertainment

Netflix dropped a teaser trailer for the new 'Happy Gilmore 2' with Adam Sandler, which sported a guest appearance by Travis Kelce. I. Can’t. Wait!

💰 Kim Kardashian

Kim Kardashian has been in the business news lately with rumors her company Skimms could be preparing to IPO in 2025 at a whopping $4 billion dollar valuation, but her co-founder Jens Grede threw cold water on that. Our money is still on an IPO before the end of 2025.

At the same time, it seems Kim Kardashian has taken a step back from actively managing the private equity firm SKKY that she co-founded in 2022 with former Carlyle Group dealmaker Jay Sammons. No word yet on why, but the private equity firm set out to raise $1 billion dollars, but fell way short in only raising $121 million dollars. They’ve also only completed one deal to acquire a minority stake in the hot sauce maker Truff.

⚾ Sports

The rise in athlete salaries has attracted wealth management firms like Morgan Stanley, UBS and Goldman Sachs. They’re calling it the “Juan Soto wealth effect”, named after Juan Soto who recently signed a 15-year, $765 million dollar contract with the New York Mets.

🇺🇸 Crypto

The United State federal government isn’t the only one thinking about creating a strategic Bitcoin reserve. A handful of U.S. states, including Texas, Ohio, and Pennsylvania, have come out publicly with their desire to create state-level Bitcoin reserves too. Bitcoin to the moon!

So much news, so little time. Until next time I’m signing out.

— Chris Thompson

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