The historic Powerball jackpot of $500 million 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. The next Powerball drawing is at 9:59 p.m. Wednesday.
“Everybody’s wishin’ and hopin’,” said John Jansen of Wichita as he walked out of a convenience store on East Douglas late Tuesday afternoon clutching a Powerball ticket. “That’s about what it amounts to.”
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.”
That seems to be the case in Kansas.
“With Powerball going up, people are buying more scratch tickets and everything else, “said Nick Gardinier, an employee at the Davis Liquor Outlet in northwest Wichita. “A lot of people who haven’t been buying tickets are buying them now.”
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 programs each state designates.
The federal government keeps 25 percent of the jackpot for federal taxes. Most states withhold between 5 percent and 7 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 points to the unpredictability of games of chance like lotteries. It still comes down to the luck of the numbers, Rich said.
The long odds don’t concern Brian Dry, a nurse at the Sedgwick County jail who has five children. He said he would help everyone in his family retire, as well as give to churches and homeless shelters, if he hit the jackpot.
“I feel my chances are just as good as anybody else’s who buys a ticket,” Dry said after buying a Powerball ticket at a Wichita convenience store.
“You gotta always be optimistic when you play these games,” said Shawn Jackson, an aircraft worker who bought six Powerball tickets at a store in Wichita on Tuesday. “It’s all about trying to help family out.”
It has been proven that once the jackpot reaches a certain threshold more players buy.
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.
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 time Wednesday’s drawing is held.