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Not All Your $2 Powerball Ticket Goes to the Jackpot… Where Does It Go?

Posted: Tuesday, Sep 24,2019 | Time: 12:32 pm | Edited by: The Lottery Lab Staff

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Recently, someone grabbed a Powerball ticket that won the jackpot worth $768 million, the third-biggest US lottery jackpot. Lotteries are becoming more popular with Americans who are more likely to purchase a lottery ticket and try their luck. Jackpots are constantly breaking records and have even passed from millions to billions. No wonder people are more inclined to purchase lottery tickets nowadays.

But there’s an interesting question- how much of the ticket sales goes into the jackpot? In simple terms, when people buy an extra $1 million dollars' worth of tickets, how much bigger are the winnings?

Facts and figures

Around “34.0066 percent of each sales dollar is contributed to the jackpot” according to Kelly Cripe, working for texas Lottery Commission. The jackpot for Powerball starts at a healthy $40 million. Let’s assume nobody wins the jackpot, and about 10 million tickets are sold before the next draw. Which is consistent with the Powerball participation data released by MUSL). Therefore, one ticket costs $2 that makes the sales revenue equal to $20 million. If we take 34.0066 percent of $20 million, that adds $7,201,320 to the next Powerball jackpot. What was $40 million on the first draw is now $47,201,320 on the second draw, after a rollover.

And so it grows.

Powerball’s biggest jackpot was $1.5 billion and it took about 20 rollovers to reach that point. Week after week, a little more than 34 percent of each ticket sold had been rolled into the fattening jackpot. When ticket sales were modest, 40 or 50 million a week, the pot grew incrementally. But as Powerball fever set in, ticket sales increased dramatically.

In the three days leading up to last Saturday's record-setting $949.8 million jackpot, Powerball retailers in 44 states (plus D.C.) set their own record: $900 million in ticket sales. Lottery officials are used to seeing long lines at convenience stores. And when the jackpot reaches big numbers like $200 million or $300 million, but the torrent of ticket-buying last Saturday surprised even lottery veterans.

So where does the money go?

The Multi-State Lottery Association (MUSL) is the lottery organization which runs Mega Millions and Powerball lotteries across 44 states. MUSL offers various projections based on institutional knowledge, historical data, seasonality, weather and other lesser factors that might possibly affect sales. A major reason contributing to the increased Powerball jackpots is that MUSL changed the format of the games and made it harder to match all 6 numbers ultimately leading to bigger jackpots and higher ticket sales.

The odds of picking all five numbers plus the Powerball number is now one in 292 million, up from one in 175 million. In fact, FiveThirtyEight.com predicted a 63.4 percent chance of a billion-dollar Powerball jackpot at least once every five years.

In case you're wondering where the remaining 66 percent of lottery money goes, then here is a breakdown of the expenses:

  1. about 5 percent is spent on administration (salaries, advertising, paying fees to ticket vendors).
  2. And the rest goes to whatever the state has designated its lottery funds for — in some states, it's educational scholarships, in others it's environmental projects, or even gambling addiction programs.

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