Record Powerball Jackpot Result of Changes to Boost Sales

DES 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.

• <p> Business news website <a href="http://247wallst.com/" target="_blank">24/7 Wall St.</a> has compiled a list of the 10 states that pay out the most in lottery winnings.&nbsp; The figures used are based on the most recently available full set of data, which is from 2010, but it turns out that the best states in which to buy a ticket don't change much from year to year. So which state holds the crown? Read on to find out.</p> <p> </p> <p> <span><span>Photo: </span></span>The spectators gather in front of ABC studio at Times Square to watch the draw for MEGA Millions jackpot winning numbers of an estimated $370 million in New York,&nbsp; Tuesday, Mar. 6, 2007.&nbsp; The company officials have claimed the prize is the largest in the game's history, In a studio in frigid Times Square, lottery officials announced the winning numbers: 42-39-29-22-16; Mega Ball number 20. It wasn't immediately known how many tickets were sold nationwide or who, if anyone, held the winning ticket.</p>
• <p> <strong>Largest Jackpot:</strong> $363 Million, (two-state lottery win shared with Illinois, 2000)<br /> <strong>Prizes Paid:</strong> $1.41 billion<br /> <strong>Ticket Sales: </strong>$2.35 billion<br /> <strong>State Profit from Sales:</strong> $704 million<br /> <strong>Government Use: </strong>K-12 education</p> <p> The Michigan Lottery has been operating since 1972. In that time, it has generated more than $16 billion in revenue for the state's education fund. In 2006, Michigan joined five other states to found a multistate lottery called The Big Game, which would eventually become Mega Millions. Along with Powerball, it produces the largest jackpots in the country. In May 2000, when it was still called The Big Game, one Michigan resident won half of a $363 million jackpot, the third-largest combined jackpot ever won in a lottery in the U.S. The largest single-ticket prize in the state went to a couple in Port Huron, who won $208 Million before taxes.</p> <p> <strong>Photo:</strong> In this photo provided by the Michigan Lottery, Fred Topous, Michigan Mega Millions jackpot winner, displays his lucky ticket on June 17, 2008 in Lansing. Topous, who&nbsp; vowed to continue to play the lottery, elected to take a lump sum payment of $33,989,267.</p>
• <p> <b>Largest Jackpot:</b> $390 Million (two-state lottery win shared with Georgia, 2007)<br /> <b> Prizes Paid: </b>$1.47 billion<br /> <b> Ticket Sales: </b>$2.61 billion<br /> <b> State Profit From Sales:</b> $924 million<br /> <b> Government Use: </b>K-12 education</p> <div> <br /> In 1969, voters from the Garden State approved a lottery system, and by 1971, the first drawing had been held. Though 2010, the lottery&nbsp; generated roughly $18 billion&nbsp; for the state's education budget. In 2005, Harold and Helen Lerner won a $258 million Mega Millions drawing. In 2007, the biggest jackpot in Mega Millions history at the time was shared by ticket holders in New Jersey and Georgia.</div> <div> </div> <div> In January 2010, New Jersey began participating in the Powerball. Three months later, Sandra McNeil of Morristown was the single-ticket winner of a $211.7 million Powerball ticket.</div> <div> </div> <div> <strong>Photo:</strong> Powerball winners Celeste and Joseph Tamburello display a ceremonial check for $70 million from the New Jersey Lottery on March 26 in Lawrenceville. They will get a $41.5 million lump sum payout for the cash value ticket, which they bought at the Little Silver Family Pharmacy in Little Silver, N.J. At right is Foster Krupa, the New Jersey Lottery's marketing manager.</div>
• <p> <b>Largest Single Jackpot:</b> $267 million (2006)<br /> <b> Prizes Paid:</b> $1.51 billion<br /> <b> Ticket Sales:</b> $2.49 billion<br /> <b> State Profit From Sales:</b> $729 million<br /> <b> Government Use:</b> Education</p> <div> The Ohio Lotto's motto is &quot;Take a chance on education. Odds are, you'll have fun!&quot; Since it began in 1974, more than $17 billion in lottery profits have gone to a state education fund. Since 1989, the state lottery association has hosted a game show called <em>Cash Explosion Double Play</em> on Ohio TV. The largest jackpot in the state's history went to an individual in the town of Lyons for $267 million.</div> <div> </div> <div> <strong>Photo:</strong> Jeffrey Erb, general manager of Main Stop, and Linda Freeworth, manager of Lyons Main Stop Citgo, receive a check from the Ohio Lottery's Marie Kilbane, right, in the store in Lyons, Ohio. on March 1, 2006. They were given $100,000 for selling the winning ticket for the $267 million Mega Millions drawing.</div>
• <p> <b>Largest Single Jackpot:</b> $333 million (two-state lottery win shared with New York, 2009)<br /> <b> Prizes Paid:</b> $1.61 billion<br /> <b> Ticket Sales:</b> $3.09 billion<br /> <b> State Profit From Sales:</b> $1.06 billion<br /> <b> Government Use:</b> Education</p> <div> California instituted its lottery in 1984, when it was looking a method for increasing spending on education without raising taxes. The largest jackpot which included a California resident was a $336 million prize shared with a ticket holder in New York in May 2000. The largest single-ticket win for a California resident was a $315 million Mega Millions jackpot awarded in November 2005. That remains the third-largest single-ticket prize in history: An Oregon resident won $340 million in 2005 and a Nebraska resident won $365 million in 2006. In 2010, as one of his last acts in office, then-Gov. Arnold Schwarzenegger proposed a bill which would increase the efficiency of the California Lottery while increasing the percentage of ticket sales that go to state profits. Payout for ticket holders remained at 50%.</div> <div> </div> <div> </div> <div> <strong>Photo:</strong> On June 22, 2005, after California joined the Mega Millions club, patrons lined up to purchase the newly available lottery tickets for the first time -- as well as Super Lottos, scratchers and other California Lottery games.</div>
• <p> <b>Largest Single Jackpot:</b> $115.5 million (1989)<br /> <b> Prizes Paid:</b> $1.87 billion<br /> <b> Ticket Sales:</b> $3.07 billion<br /> <b> State Profit From Sales:</b> $916 million<br /> <b> Government Use:</b> Services for the elderly</p> <div> Since the Pennsylvania State Lottery began, it has steered $20.6 billion to a variety of causes, but its profits have primarily been funneled into an elderly benefits fund. This fund includes subsidies for transportation, tax rebates and Medicare. Currently, about 61% of the roughly $3 billion in annual ticket sales goes to prizes, while 30% goes to the state, and the rest covers expenses. That's a higher percentage of prize return than most other states.</div> <div> </div> <p> <strong>Photo:</strong> Kristine (center left) and Steven White (center right) of Skillman, N.J., the holders of the single winning Powerball ticket for the May 8, 2004 drawing, receive their ceremonial check from the Secretary of Revenue Gregory Fajt, (left) and Executive Director of the Pennsylvania Lottery Edward Mahlman in Harrisburg, Pa. The Whites won the largest prize in the Pennsylvania lottery's history, with an annuity value of $213.2 million.</p>
• <p> <b>Largest Single Jackpot:</b> $390 million (two-state lottery win shared with New Jersey, 2007)<br /> <b> Prizes Paid: </b>$2.13 billion<br /> <b> Ticket Sales:</b> $3.65 billion<br /> <b> State Profit From Sales:</b> $884 million<br /> <b> Government Use:</b> Education</p> <div> One Georgia resident was part of the largest jackpot in the history of the American lottery, winning half of $390 million on February 18, 2006. The other half went to a ticket holder in New Jersey. The state has one of the least efficient lottery systems in the country, with 17% of sales going to pay for the cost of operations. The Georgia lottery also only returns a third of total sales to the public fund, where the money goes to support education. The state didn't begin selling lottery tickets until 1993, making it one of the newest systems in the country. In its first year in operation, the Georgia lottery system sold roughly $1.1 billion in tickets, the most successful entry year on record. Georgia joined the Multi-State Lottery Association (MUSL) in 2010.</div> <p> <strong>Photo:</strong> Mega Millions winners Margaret, left, and James Jones, right, embrace as they hold an oversize replica of their $77,744,832. check during a news conference at the Georgia Lottery Corporation headquarters in Atlanta on Jan. 21, 2005. When the Washington, Ga., couple claimed their prize, worth an annuitized $130 million, they became the second-largest winners in Georgia Lottery history. They selected the cash option.&nbsp;</p>
• <p> <b>Largest Single Jackpot:</b> $330 Million, (four-state shared lottery win, 2007)<br /> <b> Prizes Paid:</b> $2.30 billion<br /> <b> Ticket Sales:</b> $3.75 billion<br /> <b> State Profit From Sales:</b> $1.10 billion<br /> <b> Government Use:</b> Education, state general fundThe Texas Lottery began operating in 1992, just a year before Georgia. Since then, the program has raised $17 billion for the state, with $5.1 billion of that going to the state's general fund, $180 million going to health care programs, and the lion's share -- $11.6 billion -- going to education. In its relatively short history in the MUSL, Texas hasn't had an truly big winners. In August 2007, one resident won part of a $330 million jackpot, but the winnings were split between holders in three other states.</p> <p> <strong>Photo: </strong>Lottery posters are displayed at the Times Market in Bishop, Texas. Bishop native Joan Ginther, who now lives in Las Vegas, won $10 million in June 2010 on a $50 scratch-off ticket. Overall, she has won four Texas Lottery jackpots for a combined $21 million, and the last two winning tickets were purchased at the Times Market.</p>
• <p> <b>Largest Single Jackpot:</b> $189 million (2011)<br /> <b> Prizes Paid:</b> $2.35 billion<br /> <b> Ticket Sales:</b> $3.90 billion<br /> <b> State Profit From Sales:</b> $1.25 billion<br /> <b> Government Use:</b> Education trust fund</p> <div> </div> <div> Florida's lottery benefits the state education trust fund, to which $20 billion has gone since system began operating in 1987. At the moment, lottery income represents about 5% of the state education budget. Florida joined the Multi-State Lottery Association in 2009. Because of its late entry into the MUSL, Florida hasn't had a winner whose jackpot was on the scale of some of the others. However, in October, just nine months after joining MUSL, a Florida resident hit the Powerball jackpot and won $189 million. The MUSL now has 33 members (including Washington, D.C., and the Virgin Islands).</div> <div> </div> <p> <strong>Photo:</strong> Scott Adams, one of the three Powerball hosts, announces winning numbers. The drawings are broadcast nationally from a studio in Universal Orlando Resort.</p>
• <p> <b>Largest Single Jackpot:</b> $294 million (2004)<br /> <b> Prizes Paid: </b>$3.17 billion<br /> <b> Ticket Sales:</b> $4.42 billion<br /> <b> State Profit From Sales:</b> $903 million<br /> <b> Government Use:</b> City and town funds, compulsive gambling, the arts</p> <div> In 2009, the Massachusetts lottery paid out roughly $3.2 billion in prizes to lottery winners, making it the second highest paying state in the country. The extent to which the state profits, however, is low compared to other states. In 2009, the state beneficiaries, which include city and town governments, a state arts fund, and a compulsive gambling support group, received only $859 million. Florida's respective payouts were less, $2.4 billion, but the state still earned $1.28 billion.</div> <p> <strong>Photo: </strong>Judith Zahn of Hatfield, receives a giant check from Massachusetts State Treasurer Tim Cahill at the Massachusetts Lottery Commission Headquarters on July 5, 2007, in Braintree, Mass. Pictured at left is Steve Zahn, Judith's husband, and second from right is Judith's daughter, Hannah. Judith Zahn, a nurse at the VA Medical Center in Northampton, Mass., won a $20 million lottery jackpot. She'll receive a lump after-tax sum of $14 million.</p>
• <p> <b>Largest Single Jackpot:</b> $333 million (two-state lottery win shared with California, 2009)<br /> <b> Prizes Paid:</b> $3.95 billion<br /> <b> Ticket Sales:</b> $7.82 billion<br /> <b> State Profit From Sales: </b>$2.67 billion<br /> <b> Government Use:</b> EducationBesides having the largest lottery system in dollar terms in the country, New York has one of the richest histories of government-run gambling. Since the late 1880's, lotteries and raffles have been used to raise funds for regional public works projects. New York was one of the first states to begin a state-wide system as well, voting in the program in 1966. Since the lottery began in official capacity the following year, more than $36 billion has been raised to fund education. This sum accounts for approximately 13% of all the money that has been raised in the history of U.S. state-run gaming.</p> <p> <strong>Photo: </strong>Mega Millions Winners Richard and Mary Morrison of Miller Place, N.Y. were elated after being presented with their ceremonial check for $165 million by New York Lottery jackpot announcer Ralph Buckley and the Lottery's Yoland Vega at the New York Lottery Customer Service Center on Thursday, Jan. 7, 2010, in Garden City, N.Y.&nbsp;</p>
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"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.