The lottery’s hidden secret: Billions in unclaimed prizes

It's official: Two lucky lotto players will be celebrating their new riches on Sunday.

Two tickets matching the winning Powerball jackpot numbers were sold in New York and Iowa, and are each worth $343.9 million, or $198.1 million in cash (making the combined prize $687.8 million, or a $396.2 million one-time cash option). The jackpot was the fourth largest in U.S. lottery history.

The winning numbers drawn Saturday were: 8, 12, 13, 19, 27. The Powerball was 4. This comes just days after a single winner took home the $1.537 billion Mega Millions jackpot.

Even if you didn't win a lottery jackpot this week, you may still want to check your ticket since billions of dollars in prizes go unclaimed each year.

Americans forego about $2 billion in total unclaimed prize money annually, the founder of mobile lottery app told FOX Business. And the higher the drawing, the higher the likelihood there will be multiple, smaller unclaimed prizes.

In 2016 alone, in California unclaimed winnings registered at more than $24 million, according to state gaming officials. While winners in Michigan raked in more than $2 billion in claimed prizes during fiscal 2017, lotto players in the state missed out on winnings worth $27.6 million. Meanwhile, in the state of New York, unclaimed lottery winnings for fiscal 2016 through fiscal 2017 were $74 million. In the year prior, they were more than $103 million.

Sometimes jackpot winners never claim their prizes. In 2002, a Mega Millions windfall worth $63 million went unclaimed in New York.

What happens to the unclaimed prize amounts varies from state to state. For example, in Michigan, the money goes to the state’s School Aid Fund, the Michigan lottery’s beneficiary. In California, the money also goes toward supporting the state’s public school system. In other cases, states will put the unclaimed money back into the prize pool to increase payouts for future games, according to the National Association of State and Provincial Lotteries.

The amount of time allotted for claiming a winning prize varies among states, however it typically ranges from six months to one year.

The IRS will automatically take 24 percent in federal withholding taxes from the winnings, and in some states winners will owe even more.

This story has been updated.