Why lottery jackpots like Powerball keep topping $1 billion
If you’re seeing more more lottery winners surpass the $1 billion mark, you’re absolutely right.
The jackpot of Saturday’s Powerball drawing has risen up to $1.6 billion, making it the biggest ever, and the second billion-dollar jackpot for 2022, following the fact that no players claimed the biggest prize of the drawing on Wednesday. It’s the fifth time a U.S. lottery prize has hit 10 numbers since 2016 when the first billion-dollar prize jackpot was made public.
The increase in popularity is due to design, say experts — and the odds of you actually having a chance to win a jackpot are longer than ever.
Consider this: If nobody wins a given lottery draw, the winnings is carried over to the next draw, increasing the size of the jackpot. Make that lottery harder to win and you can almost guarantee bigger jackpots regularly, incentivizing even more people to purchase lottery tickets.
The Powerball’s organizers have made their lottery more difficult to win for years The lottery’s organizers have made it harder to win for decades, according to Victor Matheson, an economics professor at the College of the Holy Cross who studies lotteries.
The most significant change occurred in 2015 where the lottery added additional numbers to almost halve chances of hitting the jackpot. Before that, your chances of winning a Powerball lottery were 1 in 175 million, Matheson claims. Now, the odds are 1-in- 292.2 million.
“They’ve been running Powerball or its predecessor for [34 years], and they’ve gradually been making it harder and harder to win.” Matheson tells CNBC Make It.
How lottery organizers can grow huge jackpots in the amount of billions of dollars
Making the game more difficult isn’t just the one strategy organizers use to juice the jackpots.
The non-profit Multi-State Lottery Association (MUSL), which runs a group of lotteries, including Powerball is now shifting more of its profits from ticket sales toward the jackpot instead of smaller jackpots, Matheson says — in spite of the fact that smaller prizes have become more accessible to win.
MUSL has also been steadily expanding Powerball’s footprint. Powerball tickets are now available within the 45 U.S. states, including 14 states that were added since.
The majority of this expansion comes from MUSL’s 2009 agreement with the group of states who run Mega Millions. Mega Millions lottery. Prior to that, both lotteries operated exclusively in separate states and the agreement set the way for larger prize pools for Powerball and Mega Millions.
Mega Millions followed Powerball’s path in 2017, raising ticket prices and increasing the number of numbers to grow jackpot sizes. Mega Millions has also seen its odds increase because of this the odds of winning are 1 in 302.6 million, down from 1 in 259 million.
Recently, higher rates of interest are helping lottery operators provide larger jackpots.
The size of a lottery’s jackpot is based on the amount a winner could be awarded if they opt to pay out an annuity for a period for 30 years. A higher interest rate during a drawing means a higher total payout from that annuity fund, as MUSL’s website points out.
By contrast, a lump-sum cash option in a lottery is directly supported by ticket sales. The lump sum for the current Powerball jackpot is $782.4 million. This would result in an annuity fund which will eventually pay out $1.6 billion over three decades depending on current rates of interest.
Earlier this week in the week when the Powerball jackpot stood at $1.2 billion, and an option to pay in lump sums of nearly $600 million, Matheson pointed out there was “same amount of cash, even if you were playing with the lowest interest rates back during the Covid recession [in 2020] would have probably only bought about $800 million of sold value at the time.”
Will the jackpots continue to increase in size — and what does this mean to you?
Today’s lottery players have found an ideal spot “having an chance of approximately similar to the number of people being served,” Matheson says. Powerball’s odds are 1 out of 292 million. The combined population in the states which tickets are sold is more than the same number of people.
The result is a lottery that produces eye-popping jackpot numbers but is only won “frequently enough to not despair,” Matheson says. “Because it’s about selling hopes.”
This also means that organizers don’t have a reason to continue making lotteries harder to take home, unless the jackpots increase. Larger jackpots could mean more expensive tickets or expansions to other states. In addition, just five U.S. states don’t already sell 파워볼사이트 as well as Mega Millions tickets.
Their combined population is relatively small, too: roughly 13.5 millions people.
The positive news for those who play the lottery is that when MUSL modified its structure to make it more difficult to achieve and also make smaller prizes much easier to win — in an attempt to temper people’s disappointment at not taking home millions, Matheson says.
The reality is that a cash payout of $4 on a lottery ticket worth $2 isn’t the greatest reward, which is the reason lottery organizers are willing to shift more of their earnings towards bigger jackpots.
“That’s why every person plays this game to win big,” Matheson says. “You’re not writing stories about the person who won $4.”