January 8, 2016 11:00 am
Updated: January 13, 2016 1:13 pm

What Canadians need to know about the U.S. Powerball lottery

WATCH ABOVE: Canadians are flocking to the US to buy Powerball tickets for Wednesday's big draw. Kelly Greig reports.

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Thousands of Canadians are looking to get their hands on U.S. Powerball lottery tickets any way they can as Wednesday night’s jackpot has reached an astonishing US$1.5-billion.

Organizers say the Powerball is now the largest jackpot in history and for Canadians it’s more than $2 billion.

As Powerball fever sweeps across North America here’s what you need to know.

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Can you buy a ticket online?

While many Canadians are crossing the border to buy tickets you can also buy tickets online.

Thelotter.com, among other websites, offers to purchase lottery tickets in the U.S on behalf of Canadians, other foreigners, or Americans who don’t want to make the trip or stand in line at a retailer.

READ MORE: Win the U.S. Powerball lottery? Here’s some advice to help manage those millions

Last week the company put out a news release offering their services to Canadians.

“Thousands upon thousands of Canadians are buying tickets online for the biggest lottery jackpot draw in world history,” said theLotter.com in a news release Jan. 7.

Currently there are no rules or federal laws that prohibit third parties reselling tickets that are purchased over the counter at a licensed lottery retailer. However, Powerball warns on its websites against buying tickets online.

“There are no regulations of websites that claim to sell tickets or to sell you a ‘service’ to buy and hold tickets for you,” Powerball says on its website. “Many lotteries believe that they would [violate] state and federal laws [if] they paid on those tickets purchased (if actually purchased) by an unlicensed reseller.”

Do you have to be a U.S. to win?

A legally purchased Powerball ticket has a chance at winning, regardless of whether the person is an American citizen.

“If you legally purchase a Powerball ticket, you can play the game and you can collect prizes. You do not have to be a citizen or a resident to play the game. You can be a tourist,” Powerball says on its website.

However, a Canadian who buys a Powerball ticket in the U.S., takes it back to Canada and then tries to bring it back into the U.S. to claim a prize, could violate an obscure law prohibiting  importing “immoral articles.”

What are my chances of winning?

Those who dream of winning the lottery are up against enormous odds. Chances of having the winning Powerball ticket are one in 292.2 million, according to the Multi-State Lottery Association, which runs the game.

As a comparison, the odds of being struck by lightning are one in 1.19 million, meaning it’s about 246 times more likely than winning the Powerball jackpot.

What are the tax implications?

While the Canadian taxman won’t take a chunk of the massive prize, there are very complicated American taxes to consider.

Lottery winnings are free from income tax in Canada but the Internal Revenue Service will claim a large withholding tax.

“For U.S. residents the federal tax rate for lottery winnings is 25 per cent of the gross winnings,” said Texas Lottery spokesperson Kelly Cripe in an email. “For non-U.S. residents the federal tax rate for lottery winnings is 30 per cent of the gross winnings.”

Further state taxes could be applicable based on the state where a winning ticket was purchased, Cripe said. Washington, for example, has no state taxes on lottery prizes while New York has the highest state lottery tax at 8.82 per cent, which applies to both residents and non-residents who bought tickets in the state.

Sabina Mexis, a Toronto tax lawyer, says Canadians for the most part won’t be able to get that money back.

READ MORE: How a U.S. law could prevent Canadians from collecting on a Powerball win

“There are limited ways to get the taxes back … for the most part you probably won’t be able to get the withholding taxes back,” she said. “If you have gambling losses that are provable then you can apply those losses against the tax and you can get a refund for some of the withholding tax.”

When does the draw take place?

The Powerball has continued to grow as no one matched the numbers from Saturday’s draw, which were 16, 19, 32, 34 and 57, and the Powerball was 13.

The previous record jackpot of any lottery game in U.S. history was a $656-million Mega Millions jackpot won in March 2012.

Draws are held at 10:59 p.m. ET on Wednesday and Saturday. Sales close times one hour to two hours before the draw, depending on the state.

Editor’s Note: This article has been updated as of Jan. 13 2016

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