Record Powerball Jackpot Result of Changes to Boost Sales

Powerball JackpotDES MOINES, Iowa (AP) - The historic Powerball jackpot boosted to $500 million on Tuesday was all part of a plan lottery officials put in place early this year to build jackpots faster, drive sales and generate more money for states that run the game.

Their plan appears to be working.

Powerball tickets doubled in price in January to $2, and while the number of tickets sold initially dropped, sales revenue has increased by about 35 percent over 2011.

Sales for Powerball reached a record $3.96 billion in fiscal 2012 and are expected to reach $5 billion this year, said Chuck Strutt, executive director of the Des Moines, Iowa-based Multi-State Lottery Association, the group that runs the Powerball game.

There has been no Powerball winner since Oct. 6, and the jackpot already has reached a record level for the game. It was first posted at $425 million but revised upward to $500 million when brisk sales increased the payout. It's the second highest jackpot in lottery history, behind only the $656 million Mega Millions prize in March.

It took nine weeks for the Mega Millions jackpot to get that high, before three winners - from Kansas, Illinois and Maryland - hit the right numbers, each collecting $218.6 million for their share of the split.

With soaring jackpots come soaring sales, and for the states playing the game, that means higher revenue.

"The purpose for the lottery is to generate revenue for the respective states and their beneficiary programs," said Norm Lingle, chairman of the Powerball Game Group. "High jackpots certainly help the lottery achieve those goals."

Of the $2 cost of a Powerball ticket, $1 goes to the prizes and the other dollar is kept by the state lottery organization, said Lingle, who also is executive director of the South Dakota Lottery. After administrative overhead is paid, the remaining amount goes to that state's beneficiary programs.

Some states designate specific expenditures such as education, while others deposit the money in their general fund to help supplement tax revenue.

The federal government keeps 25 percent of the jackpot for federal taxes.

Most states withhold between 5 percent and 7 percent. There's no withholding in states without a state income tax such as Delaware, Pennsylvania, South Dakota, and Texas. A New York City winner would pay more than 12 percent since the state takes 8.97 percent and the city keeps 3.6 percent.

Powerball and Mega Millions games are seeing jackpots grow faster and higher in part because the states that play both games agreed in 2010 to sell to one another.

Both games are now played in 42 states, Washington, D.C., and the Virgin Islands. The larger pool of players means jackpots roll over to higher numbers faster, which tends to increase the buzz about the jackpots which increases sales. It all can result in higher jackpots sooner.

"It really happened with both of these games became national games," said Terry Rich, CEO of the Iowa Lottery.

Still, just seven of the top 25 jackpots occurred after January 2010 when the cross-selling began. That just points to the unpredictability of games of chance like lotteries. It still comes down to the luck of the numbers, Rich said.

It has been proven that once the jackpot reaches a certain threshold more players buy.

The Quick Shop in Ottumwa, Iowa, is one of the state's highest-volume lottery ticket sellers due to its location across the street from a John Deere farm implement factory.

"It's picking up by the minute," said store owner Mark Ebelsheiser. "We're selling probably 60 to 70 percent more than normal. When it gets up this high they really come out and get them."

Bob Allison, a retired Indian Hills Community College instructor and administrator, buys tickets weekly for a group of people at the college in Ottumwa. On Tuesday he and two golfing and fishing buddies went in together to buy additional tickets. Allison said he usually buys a few additional tickets when the jackpot gets so high.

He said he'd make a lot of people very happy if he won.

"My kids would probably retire quick," said the father of three daughters.

Between $20 and $30 million in tickets were sold between Wednesday and Saturday drawings for most of October. Once the jackpot hit $100 million on Oct. 27, nearly $38 million worth of tickets were sold by Oct. 31. As the jackpot grew to more than $200 million on Nov. 17, sales surged by nearly $70 million by the next Wednesday. Then the jackpot reached over $300 million on Nov. 24 and ticket sales over the next four days surpassed $140 million.

"Somewhere around $100 million those occasional players seem to come back into the stores in droves," said Rich, the Iowa Lottery CEO. The lottery also notices a significant increase in workers and other groups joining together in pools to combine resources to buy numbers, he said.

Trina Small, manager at the convenience store in Bondurant, Iowa, where a couple bought a $202 million ticket on Sept. 26, said sales have been heavy. She said Monday night Powerball sales were at about $800, at least $200 more than normal. She expects Tuesday and Wednesday sales to be even more.

"It's kind of like Black Friday all over again," she said.

Small doesn't usually play the lottery herself but said she may buy a chance at the record jackpot. She's just trying to decide if her chances are better buying it elsewhere since a jackpot ticket was sold at her store just two months ago - the old adage about lightning striking twice.

"The odds are against you anyway but I'm pretty sure they're more against you getting one from this store," she joked.

Powerball has posted sales exceeding $714 million in the current jackpot run since early October and it's possible more than $1 billion in tickets will have been sold by the end of Wednesday when the next drawing is held.

A single winner choosing the cash option would take home more than $327 million before taxes.

Strutt said the chance of getting a winner this Wednesday is approaching 60 percent.

Increase your money and finance knowledge from home

Advice for Recent College Grads

Prepare yourself for the "real world".

View Course »

Building Credit from Scratch

Start building

View Course »

Add a Comment

*0 / 3000 Character Maximum


Filter by:

If you think Joan`s story is impossible,, last munth my son also recieved a check for $7875 just sitting there a fourteen hour week from there apartment and their roomate's aunt`s neighbour has done this for 7-months and recieved a check for over $7875 part time on there pc. applie the advice on this site _+_+_+ WWW.BIT40.COM _+_+_+

November 30 2012 at 2:26 PM Report abuse +1 rate up rate down Reply

Power Ball or any lottery game is like playing the Slots at the casino, Its all computerized.

November 29 2012 at 2:03 AM Report abuse rate up rate down Reply
1 reply to bonnie's comment

You don't say

November 29 2012 at 7:32 AM Report abuse rate up rate down Reply

"Of the $2 cost of a Powerball ticket, $1 goes to the prizes and the other dollar is kept by the state lottery organization, said Lingle, who also is executive director of the South Dakota Lottery. After administrative overhead is paid, the remaining amount goes to that state's beneficiary programs".

I wonder how much the administration makes in salaries? How much is left out of each dollar for "beneficiary " programs? Many states programs are for schools but from what I've read about education cuts and teacher layoffs and over crowded classrooms, it couldn't be much. I'd like to think some of my $2.00 is going someplace useful besides the administrations pocket.

November 28 2012 at 10:22 PM Report abuse rate up rate down Reply

The odds are 1 in less than 8 million. If 8 million people would buy just 1 ticket that is all quick-pick there would be at least 1 winner. That also means that with the quick-picks, someone would win every time the lottery is drawn.

November 28 2012 at 3:09 PM Report abuse rate up rate down Reply
2 replies to circustwo's comment

the odds of winning the jackpot are 1 in 175,223,510. A lot worse than 1 in 8 million.

November 28 2012 at 3:57 PM Report abuse rate up rate down Reply

you assume that with quick-picks there would be no duplicates. if the random number generator is not set to avoid duplicates, there could be no winners.

November 29 2012 at 2:51 AM Report abuse rate up rate down Reply


November 28 2012 at 2:59 PM Report abuse rate up rate down Reply
JadeLady4Real 1x

It only takes one $2 ticket to win.....I bought 5 tickets and know that my money will be in someone's pocket and it won't be mine. Why ?? Because I would do the right thing with all that money. My chances at getting struck by lightening are greater than me winning this PowerBall tonight. Congratulations winner !

November 28 2012 at 2:09 PM Report abuse rate up rate down Reply

Can't win, if you don't play? Maybe the government ought to be buying tickets? That's got just as good of a chance of solving the financial crisis as Obama does?

November 28 2012 at 10:01 AM Report abuse -1 rate up rate down Reply

I'm winning this tomorrow and you guys are all invited to the after party.

November 27 2012 at 9:47 PM Report abuse -1 rate up rate down Reply

And our children still cant read... Money solves nothing people what matters is everyday folks to lend a helping hand to each other... Thats what will make us strong again..

November 27 2012 at 9:08 PM Report abuse rate up rate down Reply

I would love to win and I always have faith, you never know......

November 27 2012 at 6:51 PM Report abuse +1 rate up rate down Reply