(a) Prizes for the Lotto game shall be calculated as follows:

1. (1) The prize money allocated from the prize pool to the first prize category, plus any money brought forward from a previous drawing and any money added from the Lotto prize fund reserve or any other available source pursuant to a guaranteed first prize amount announcement, will be divided equally by the number of game panels qualifying for a first prize.
2. (2) The prize money allocated from the prize pool to the second prize category, plus any money brought forward from a previous draw, will be divided equally by the number of game panels qualifying for a second prize, less any adjustment required by paragraph (5) of this subdivision.
3. (3) The prize money allocated from the prize pool to the third prize category will be divided equally by the number of game panels qualifying for a third prize, less any adjustment required by paragraph (5) of this subdivision.
4. (4) The prize money allocated from the prize pool to the fourth prize category will be divided equally by the number of game panels qualifying for a fourth prize, less any adjustment required by paragraph (5) of this subdivision.
5. (5) A prize in a minimum amount of $1 shall be awarded to the fifth prize category. If there are insufficient prize monies to award a minimum of $1 to all fifth prize winners, then the second, third, and fourth prize allocations shall contribute equally to provide sufficient monies to pay a minimum $1 fifth prize.

(b) Each first prize payment shall be subject to the following provisions of this subdivision.

1. (1) If, pursuant to paragraph (a)(1) of this section, the calculated share for each game panel qualifying for a first prize in a particular Lotto drawing would provide annual payments of $10,000 or more, a winner shall receive an initial payment in an amount as similar as possible to the first annuity payment. After providing for such a first payment, the commission, as authorized by the comptroller, shall invest the remaining first prize money in securities authorized by the State Finance Law for the investment of State funds at current rates payable over a period of years. From the returns of principal and earnings on such investment, the commission shall pay annual prize installments to each first prize winner. Such annual prize installments shall be payable for a term of years to be determined by the commission. The number of years in the term payment schedule may be changed by the commission from time to time. Any such change will be publicly announced by the commission. Such announcement may be made in a news release, an advertisement, on the commission website, or in such other form as the commission, in the commission’s discretion, may prescribe to maximize public awareness. Lotto players may elect whether a first prize shall be payable in installments over a term of years in accordance with the foregoing provisions of this paragraph or, alternatively, whether a first prize shall be payable in a lump sum. If a prize is awarded in a lump sum as a result of a player having elected that option, the amount of the lump sum payment shall be equal to the first prize discounted to present value based upon market rates on the business day following the drawing, divided by the number of game panels qualifying for a first prize. A jackpot prize shall be paid, at the election of a player made no later than 60 days after the player becomes entitled to the prize, with either an annuity or lump sum payment. If the payment election is not made by a player within 60 days after the player becomes entitled to the prize, then the prize shall be paid as an annuity prize. An election to take a lump sum payment may be made at the time of the prize claim or within 60 days after the winner becomes entitled to the prize. An election made after the winner becomes entitled to the prize is final and cannot be revoked, withdrawn or otherwise changed without the approval of the commission.

2. (2) If, pursuant to paragraph (a)(1) of this section, the calculated share for each game panel qualifying for a first prize in a particular Lotto drawing would provide annual payments of less than $10,000, a winner shall receive the entire prize in a single payment. Such payment shall be equal to the first prize discounted to present value based upon market rates on the business day following the drawing, divided by the number of game panels qualifying for a first prize.

   (c)

3. (1) If in any Lotto drawing, there is no game panel eligible for a first prize, the amount allocated from the prize pool to the first prize category, plus any amount brought forward from a previous drawing, shall be added to the first prize category for the next drawing.
4. (2) If the commission has announced a guaranteed first prize amount for any Lotto drawing, and if the amount allocated from the winning pool to the first prize category, plus any amount brought forward from a previous drawing, is insufficient to pay the guaranteed first prize, then the amount necessary to fulfill the guarantee shall be added from the Lotto prize fund reserve or any other available source to the first prize category. If, however, there is no game panel qualifying for the first prize category in such drawing, no amount from the Lotto prize fund reserve shall be brought forward to the first prize category for the next drawing. If the commission has announced a guaranteed first prize amount for any Lotto drawing, and if the amount allocated from the winning pool to the first prize category, plus any amount brought forward from a previous drawing, exceeds the amount necessary to pay the guaranteed first prize, then the excess may be allocated to the Lotto prize fund reserve established pursuant to subdivision (c) of section 5008.7 of this Part.
5. (3) If in any Lotto drawing, there is no game panel qualifying for the second prize category, the amount allocated from the winning pool to the second prize category, plus any amount brought forward from a previous drawing, shall be added to the second prize category for the next drawing.