If you feel like top payouts seem to be getting larger, you are correct — and it is absolutely on purpose, lottery expert Victor Matheson said.
“They’ve been engineered to get bigger,” said Matheson, an economics professor at the College of the Holy Cross in Massachusetts.
He won Powerball’s $314 million jackpot. It ruined his life.
Matheson said lottery companies make the grand prize roll over more often by lowering the odds and directing more of the $2 per ticket into the jackpot. News reports (such as this one) also fuel excitement.
The Multi-State Lottery Association, which runs Powerball, changed the game’s format in October 2015, The Washington Post previously reported.
The association upped the number of those white balls that fill the tumbler from 59 to 69, which doubled the combinations of white balls. The odds of winning the jackpot went from 1 in 175 million to 1 in 292 million. But the group did make it easier to win non-jackpot prizes by decreasing the number of red Powerball balls from 35 to 26 — jackpot winners must correctly guess the five white balls and the final red ball.
Powerball set a world record in January 2016 with a jackpot of $1.586 billion, according to the Powerball website.
The Powerball organization started in 15 states and now operates in 45 states, D.C., Puerto Rico and the U.S. Virgin Islands.
Even with that growth, Matheson said, the frequency at which players win big has stayed about the same because of changes to the game.
“The chance of winning has increased at roughly the same rate as the population of the states offering the game,” he said.
You’ve won the Mega Millions jackpot! Time to hide.
Matheson said a winner who elects to receive earnings via an annuity can expect to yield a bit over $600 million — but they’d be joining the nation’s highest income-tax bracket of between 35 percent and 37 percent. He said a winner should also expect that they aren’t alone because big jackpots of round numbers draw more players, which means an increased chance of splitting the pot.
It’s possible, he said, that if there are two winners of a $1 billion jackpot, they each could net as low as $185 million after taxes.
But, let’s be real, he said: “I wouldn’t shed too many tears for a person who walks away with $185 million.”
Winner of a $560 million Powerball jackpot can keep the money and her secret, judge rules
When asked about his prospects of getting a winning ticket, Matheson turned to statistics.
“As an economist studying gambling, I know the math. And the math doesn’t work out very well for gamblers,” he said.
It’s all a matter of perspective, he said. If someone is spending $2 to play the lottery for financial gain, that’s a terrible reason to buy a ticket. But if it’s about entertainment and spending $2 to dream with friends and family, that’s a sound investment.
“That’s different than thinking about what you’d do with the $47 you win at the 50-50 raffle you win at the high school girls volleyball game,” Matheson said.
The Bureau of Labor Statistics has analyzed lottery data and found that households in the second highest of five income groups spent the most on tickets and pooled betting, laying down an average of $94.72 from the third quarter of 2017 through the second quarter of 2018. That number for all households was $69.52. The next-biggest spenders were households in the second-to-lowest-income bracket, spending an average of $81.98.
As expected for any financial risk available at a gas station, the lottery has awful odds when it comes to beating the house.
Matheson said states sell about $100 billion worth of lottery tickets every year and keep $30 billion annually after paying out prizes and covering retailer and administrative costs.
Matheson said the statistics give him enough peace not to play.
“The chances of me winning are almost exactly the same whether I buy a ticket or not,” he said.
The next Powerball drawing will be Monday at 11 p.m.
Top 10 Powerball jackpots, according to a Powerball news release:
1. $1.586 billion — Jan. 13, 2016 (Calif., Fla., Tenn.)
2. $1 billion (estimated)
3. $768.4 million — March 27, 2019 (Wis.)
4. $758.7 million — Aug. 23, 2017 (Mass.)
5. $731.1 million — Jan. 20, 2021 (Md.)
6. $699.8 million — Oct. 4, 2021 (Calif.)
7. $687.8 million — Oct. 27, 2018 (Iowa, N.Y.)
8. $632.6 million — Jan. 5, 2022 (Calif., Wis.)
9. $590.5 million — May 18, 2013 (Fla.)
10. $587.5 million — Nov. 28, 2012 (Ariz., Mo.)