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.
"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.
