Dear K.G., It's important to understand what happens when a Lotto Texas jackpot is won. If the jackpot winner has chosen 25 Annual Payments, Texas Lottery officials provide the Texas Treasury Operations Division of the State Comptroller's Office with the jackpot amount. The State Comptroller then calls for and accepts bids from Wall Street investment firms. The winning bid is awarded to the investment firm that will provide the jackpot amount, paid over 25 years, at the lowest cost to the State. According to the State Lottery Act, the funds must be invested in such a way as to ensure the payment of the prize.
All interest earned on the investment is a part of the prize.
A similar process is followed if the jackpot winner has chosen Cash Value Option. Lottery officials still provide the 25-year jackpot amount to the Treasury Operations Division, which still calls for competitive bids from Wall Street investment firms. However, the investment is not actually purchased. It is equal to approximately half of the estimated jackpot. The precise portion of the estimated jackpot varies due to changing interest rates.