A big lottery jackpot is back. In July, Mega Millions offered a $1.3 billion prize, the fourth largest in American history. This week, Monday night’s Powerball drawing promised an even more astronomical sum: $1.9 billion, a national record. The odds of winning are just 1 in 292.2 million. But across the nation, Americans from all walks of life are shelling out a few dollars for the dream of becoming a billionaire. (Update: On Tuesday, midday, officials announced that one blessed Californian is now living that dream.)
As any frequent lottery player can probably tell you, jackpots hit the $1 billion mark for the first time in 2016. There have been four 10-figure prizes since. Why have these numbers suddenly become so big? And what does it mean for states and for gamblers that hopeful players have come to expect such massive jackpots?
Powerball and Mega Millions are both a type of lottery game known as “lotto.” To play, bettors select numbers from within a predetermined number range. The game operator draws numbers, and if someone guesses all of them correctly, they win the grand prize. If no one hits the jackpot, the prize rolls over, resulting in a bigger prize for the following drawing several days later. This is how we get prizes like this week’s: No one has won Powerball since Aug. 3. Since then, the prize has increased from $20 million to $2 billion.
Lotto has roots in a lottery game from 16th-century Italy, and was first introduced in the United States in Massachusetts and New York in 1978. Compared to today’s games, players back then had much higher odds of winning comparatively miniscule prizes. New York’s 1978 lotto offered 1 in 3.8 million odds, and a 1979 newspaper ad boasted of a “staggering” prize, “the biggest jackpot amount ever,” a whopping $506,656 ($2.07 million in 2022 dollars).
The key was the possibility that the prize would grow with each failed drawing and subsequent rollover. A bigger prize, officials understood, would attract more players, which would push the jackpot higher, which would attract more players, and so on. Lottery administrators recognized that players were interested in bigger jackpots—even if this meant worse odds of winning. So states gradually reduced the odds in order to increase the chances that prizes would roll over. And roll over they did. In the mid-1980s, Illinois and New York were both swept up in lotto fever over then-record-breaking prizes of $40 and $41 million, respectively.
Initially, states with smaller populations were out of luck when it came to lotto. How could Iowa compete if hopeful gamblers could head to neighboring Illinois to buy tickets for the bigger prizes offered in the Land of Lincoln? Eventually, states like Iowa began to fight back. In 1987, the District of Columbia and six states—Iowa, Kansas, Oregon, Rhode Island, Missouri, and West Virginia, five of which bordered a larger lottery state—formed Lotto America, a multistate lotto game later known as Powerball. In 1993, the Powerball jackpot reached $110 million, at the time one of the largest in American history and the first available to residents of small states without the need to cross state lines to buy tickets.
Jackpots have only gotten bigger from there. Powerball and Mega Millions (another multistate game) gradually added more states to their rosters, and, in 2010, tickets for both games became available in every state with a lottery, massively increasing the number of potential players. The games have also continued to add more numbers to the pool of numbers that players choose from (lowering the odds of winning) and have shifted their prize distribution, pushing more money into the top jackpot. In a separate development affecting the size of this week’s potential payout, last week’s Federal Reserve announcement of another interest rate increase to fight inflation helped bump up the number (because annuities are paid out in government bonds).
State lottery commissions view big prizes like these as the ultimate windfall. Record-setting rollovers like this week’s Powerball spark huge bumps in sales. Last year, lotto games accounted for roughly 12 percent of total nationwide lottery sales. While lotto is by no means the biggest moneymaker (that’s an honor held by scratch tickets), big prizes draw in new players and represent a small but significant bonus for revenue-hungry states.
And why are so many players drawn in by big prizes? For gamblers, the bigger the jackpot, the better, of course, especially considering that it is a myth that most lottery winners end up broke and miserable. But two months ago, the Powerball jackpot sat at $170 million. Last month, it was $353 million. Why weren’t players rushing to buy a chance at landing these eye-popping sums? Would $1.9 billion really be that much more life-changing than $170 million?
The answer lies in what lottery officials call “jackpot fatigue,” a phenomenon in which jaded players expect bigger prizes in future drawings. Once a prize record is broken, players’ definition of a “large” prize begins to ever-so-subtly increase. This has been going on for a long time. “We’ve had so many people who’ve won a million or more, it now takes a pot of $10 million to generate the interest that $5 million did once,” a Michigan Lottery spokeswoman explained in 1988.
Jackpot fatigue primarily affects the infrequent players who help drive lottomania. One in eight American adults buys a lottery ticket at least once a week. Compared to the overall population, this group is disproportionately nonwhite, poorer, and less educated. Many of these players buy lotto tickets before the jackpot has gotten big—playing for that $20, $120, or $200 million jackpot. Once the losses of these players pile up long enough, the jackpot begins to approach record-setting territory. At this point, media coverage escalates, reminding those who rarely think about the lottery to buy tickets, and encouraging middle- and upper-class players to dip their toe in the lottery pool. Many of these people do not take the lottery seriously, but they want to take part in the cultural craze. And they reason that if they don’t play, they can’t dream.
So they play. And in the process, they set the standard for the size the jackpot needs to be to pique their interest. While $40 million was big enough to get players excited in the 1980s, from 2012 until 2020 Powerball and Mega Millions started at $40 million.
For state lottery commissions, large rollover prizes like this week’s Powerball ultimately represent a double-edged sword. In the short term, states will see an increase in sales and a rush of new and infrequent players. In the long run, though, it will take an even bigger prize to attract media attention next time. Billion-dollar jackpots are already becoming routine. Eventually $2 billion jackpots will be, too. At that point, it might take as much as $3 or $5 billion to get players interested. These astronomical sums will only be possible if Powerball and Mega Millions encourage more rollovers by reducing the odds of winning even further—or if bettors have an epic streak of bad luck.
States have long been able to count on the fact that, no matter how bad the odds get, hopeful bettors will line up for their tickets and their chance at a new life. Lottery players know the odds are against them. They might even think that they don’t need that much money. Nonetheless, they will not pass up a chance at an unprecedented prize. “Somebody’s gotta win,” they tell themselves; “might as well be me.”
