Powerball had a jackpot limit. Then it exploded

New York
CNN Business

The Powerball lottery jackpot is expected to reach $1.9 billion – each time the deferred draw takes place – making it the biggest lotto prize ever.

But in 1987, when Lotto America, the precursor to Powerball, was introduced, organizers banned jackpots over $80 million.

“There were concerns about what you could do with that money – like buy a small country or something,” Lotto America director Ed Stanek said at the time.

The lottery frenzy had set in in the 1980s as more states introduced lotteries to raise revenue for education and social programs, but some smaller states’ jackpots couldn’t keep up with the more populated states.

Oregon, for example, was losing players to Washington and California, which offered jackpots of up to $20 million.

So officials from Rhode Island, Oregon, Missouri, Iowa, Kansas, West Virginia, and Washington, D.C. came together to create Lotto America to pool money and offer higher prizes. They also hoped that the bigger pots would attract new players.

“Our motivation is to give Oregonians a chance to play games that they could play in one of the great states,” said then Oregon Lottery Director James Davey.

The interstate lottery was modeled after those of Canada and the US Virgin Islands.

Officials hoped Lotto America would offer average weekly jackpots of $3-5 million, with the possibility of higher prizes after a year or two. The operating costs of the raffles and the proceeds from ticket sales were divided among the jurisdictions in proportion to each state’s or district’s ticket sales.

“It’s a whole new ball game,” Lotto America spokesman Jack Ratigan said at the time.

Lotto America initially offered players the option of choosing seven numbers from 40 for a minimum bet of $1.

Players whose numbers matched those selected in a weekly draw would win a jackpot determined by the total number of tickets sold.

The odds of winning the top prize were about 1 in 19 million, compared to about 1 in 8 million in most state lottery games, officials said.

A bankrupt Iowa farmer was the first Lotto America winner in 1988. He said he would use the $3 million prize to save his family’s farm.

A year later, Lotto America changed to selecting six numbers from a field of 54. That year it offered a jackpot of $20 million and in 1991 the pot reached $50 million.

By 1992, Lotto America had grown to include fifteen states.

The game was rebranded as Powerball in an effort to give players a better chance of winning smaller prizes.

“What we’re hearing is that people like the big prize, but they want a better chance of winning smaller prizes,” said Oregon Lottery Manager James Davey.

Powerball quickly delivered a $100 million jackpot.

During the 1990s, however, players began to experience “jackpot fatigue” and Powerball needed bigger and bigger prizes to maintain interest, said Jonathan D. Cohen, author of “For a Dollar and a Dream: State Lotteries in Modern America”. During this time, instant scratch games grew in popularity and became the main form of lottery gambling.

In 2010, in an effort to win more players and increase jackpot sizes, Powerball and Mega Millions, the two largest multi-state lotteries, agreed to allow retailers to sell both games for the first time.

A year later, the price of a Powerball ticket was increased from $1 to $2, and the initial jackpots doubled. The game is now available in 45 states, Washington DC, Puerto Rico, and the US Virgin Islands.

These changes have increased the Powerball jackpots. The five biggest Powerball pots have all happened in the past six years. The odds of winning the top prize are now 1 in 292 million.

Lotteries are regressive, meaning lower income groups spend more of their budget on lottery games than higher income groups.

Powerball tends to be the least regressive lottery game, Cohen said, because wealthier people tend to buy tickets when jackpots skyrocket.

But for most of the year, “there’s a slow burn of disproportionately poorer people pouring money into smaller prizes.”


Not all news on the site expresses the point of view of the site, but we transmit this news automatically and translate it through programmatic technology on the site and not from a human editor.
Back to top button