Record-obliterating year for Powerball, Mega Millions lotteries

Posted: January 05, 2013

Charge another buck for Powerball, and KAPOW! the nation's lottery fever hits uncharted heights.

Last year, Powerball and Mega Millions demolished the old marks for biggest jackpots, as Powerball sales soared to unprecedented levels.

Before last year, no jackpot ever hit $400 million.

In March, Mega Millions hit $656 million.

In September, Powerball hit $587.5 million.

Even their cash payouts broke the old annuity marks.

Two other Powerball jackpots topped $300 million. Two more were hit in the Philadelphia area - $172.7 million split by dozens of SEPTA workers in March, and $50 million won by Roger Custer of Bucks County in early December.

Nationwide, Powerball sales topped $5 billion - up more than $1.5 billion.

K-ching!

Credit a highly calculated move: doubling the cost of a Powerball ticket to $2, as of Jan. 15, 2012.

And don't forget that three years ago, dozen of states, including Pennsylvania and New Jersey, began selling both Powerball and Mega Millions, vastly increasing the audience.

"As the Powerball game entered its 20th year, we knew that we had to do something special," said Norm Lingle, executive director of the South Dakota Lottery and chairman of the Powerball Game Group. "Powerball was already the best-known lottery brand on Earth, but the marketplace was changing and Powerball was in danger of becoming just another big jackpot game."

"We did a lot of research and ran the numbers on a variety of different game designs," said Chuck Strutt, executive director of the Multi-State Lottery Association, a trade group that oversees Powerball and Mega Millions. "In the end, players in research told us they liked the new game and the math showed that it would be a tremendous success."

Powerball correctly bet that increasing incentives would overcome any resistance to the higher price.

The minimum jackpot was raised to $40 million, and each subsequent boost was by at least $10 million. This meant Powerball's jackpots were often substantially bigger than those of Mega Millions, whose tickets remained $1 each.

In addition, Powerball boosted its minimum second-tier prize to $1 million - which doubles to $2 million if the player also has the $1 Power Play option. As a result, the game created 443 millionaires in 2012 (not counting the split with Uncle Sam).

The odds were also improved a bit for players.

Most important, though, was the likelihood of record-setting jackpots, because the bigger the jackpot, the faster cash gets bet.

Last January, the changes spurred a University of Pennsylvania math professor to boldly predict historic payoffs.

"Certainly by summer, we're going to see a record jackpot, I would think," said Dennis DeTurck, dean of the College of Arts and Sciences. ". . . It is conceivable that the jackpot would exceed half a billion dollars, and even approach a billion dollars."

Remarkably, the record annuity jackpots would have been even higher if not for unusually low interest rates, which meant less income to back long-term payouts.

The $2 ticket created a two-fold advantage for Powerball. Jackpots were not only more likely to rise faster (more money per ticket), but more likely to roll over (fewer tickets sold to fund a given jackpot).

Although Powerball had a $336.4 million jackpot less than a month after the change, it was Mega Millions that rewrote the record books, leapfrogging in one week in late March from $290 million to $356 million to $656 million.

Partly it was luck that none of the numbers hit.

But Powerball's $2 tickets probably helped boost that Mega Millions jackpot. After Powerball's jackpot got hit on March 21, its grand prize rebooted to $20 million - while Mega Millions was more than 10 times as big for half the price. As bets go, it was a much better bargain (even if the chances of winning with one ticket were still a microscopic 1 in 175 million).

Not that Mega Millions benefited all year.

Its 2012 sales, including the $1 Megaplier prize-multiplying option, were up about 10 percent, from $3.1 billion in 2011 to $3.44 billion in 2012. Jackpot totals actually declined, from $1.6 billion to $1.53 billion, as none of its other jackpots topped $120 million.

In November, Powerball shattered all of its own jackpot records, when it rose from $250 million the day before Thanksgiving to $587 million one week later.

Thanksgiving indeed.


Contact staff writer Peter Mucha at 215-854-4342 or pmucha@phillynews.com.

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