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Lottery jackpot not the only way to win: Hundreds of millions unclaimed every year

Jeff Roberson / AP

Scott Hoormann holds two Mega Millions lottery tickets he purchased at Energy Express Monday, Dec. 16, 2013, in St. Louis.

More than a half a billion dollars went missing last year — in glove compartments, washing machines, desk drawers and sometimes even literally in the trash.

That's because big lottery jackpots that go unclaimed or come close to expiring get plenty of attention, but people fail to cash out on millions in smaller prizes every year — especially casual players who only jump in when the jackpot swells as big as Tuesday’s Mega Millions drawing, which was hovering around $640 million.

NBC News reached out to the 43 states that participate in Mega Millions and Powerball to find out just how much money is left unclaimed at the end of the year.

More than 30 states responded, and the results were staggering.

In 2013, there was more than $500 million in unclaimed lottery prizes from scratch-off games, Lotto and daily games. While the number fluctuates each year, it can sometimes total more than big Mega Millions and Powerball individual jackpots.

And 2013 was an unusually low year, according to several state lottery officials.

“Everybody must need their money this year,” said Danielle Frizzi-Babb, a spokeswoman for the Ohio state lottery. This year, Ohio’s unclaimed prizes totaled $16.2 million, but Frizzi-Babb said it’s usually higher.

When a jackpot gets as big as Tuesday’s people get so excited about the jackpot that they forget there are smaller but substantial prizes to be had. If see that the jackpot number wasn’t hit, or see that someone won in a different state, they often just  scrap their ticket.

“When you have a number that’s that large, everyone gets focused on the jackpot and they do lose sight of the fact that there are second, third, fourth place prizes,” said Christy Calicchia, a spokeswoman for the New York state lottery.

For example according to the Mega Millions website, the second prize, for someone who matched just five numbers, is $1 million, with odds of 1 in 18,492,204. Matching four numbers gets you $500, and matching three numbers plus the mega ball wins $50. With odds of 1-in-10,720, that's not so bad compared to the one-in-258,890,850 chance of hitting the jackpot.

But many big money seekers don't even realize they can cash in with less than a perfect ticket.

“There are some people who really only play when the jackpot is high,” Calicchia said.

According to Monday’s projections, ticket sales on Tuesday would be more than double than last week when the jackpot was a relatively measly $344 million, said Paula Otto, the Mega Millions' lead director.

And all of those people that lottery experts call “occasional players” might not know that even if they don’t win the jackpot, they could still be holding a $5 million ticket if they “megaplied” by adding an extra dollar when they bought their ticket, Otto said.

“We used to do a little tracking of unclaimed prizes years ago, but have given up,” said Charles Strutt, executive director of the Multi-State Lottery Association. Now, individual states maintain their own records.  

Each state keeps track of unclaimed prizes differently, although many use the money to fund statewide projects and education. In Kentucky, the unclaimed winnings are earmarked for the Kentucky Educational Excellence Scholarship Fund, a merit-based scholarship for students attending college.

Of the states that responded, Montana had the least amount of forgotten prizes with $931,218 for the 2012-2013 fiscal year.

In Virginia, $12 million went unclaimed in the 2012-2013 fiscal year, and people have overlooked $235 million since the state lottery's inception 1988, Mullen said. About $65 million in total lotto sales went unclaimed in New York this year, Calicchia said.

Arizona was one of the lowest state totals with just over $5 million in unclaimed prizes, but one of the tickets was a $1 million Powerball ticket.

In California, $22 million went unclaimed last year, said Russell Lopez, deputy director of communications for the California State Lottery. 

Lopez said California's number is much lower than New York's.

"We actually try to find our winners,” Lopez said. “That last month that it’s going to expire, we start publicizing." Pennsylvania has a similar system, as tickets worth more than $50,000 are publicized by the state’s lottery via local newspapers and social media.

Jay Fink of the Oklahoma state lottery remembers a couple with a winning $1 million ticket. They came into the office and the man reached into his pocket to pull out the ticket and it wasn't there. "His wife had told him to keep it somewhere safe and when they got here, it was gone," Fink said. While there were a few hours of chaos, the couple went back home and found the ticket, leaving the office a second time as millionaires.

States are explicit about how long people have to claim their prizes — varying from 180 to 365 days — and where the unclaimed money goes after tickets expire.

In some states, the forgotten money goes to fund education projects, while in other states, like New York, the money goes back into the prize pool or to fund one-time drawings and games.

Some states reapply the unclaimed money into pools because in reality, “lotteries love to give prizes away,” Strutt said. “It is far better for the game if more players can report themselves as winners,” he added.

“We don’t want a prize to go unclaimed,” Mullen echoed.

Each lottery expert agreed that players need to remember to check their tickets on Wednesday morning and be aware of the rules of the game — and its lesser prizes.

Otto reminded that players should also be sure not to misplace or destroy their tickets in frustration after not winning the big jackpot.

“No ticket, no money,” she warned.