The Mega Millions lottery announced an increase in price from $2 to $5, this will take place next April. Their reasoning is this will create more jackpot winners and bigger jackpots. The jackpot multiplier will also be included in this increase. As a very small time lottery player, this increase will likely mean I don’t buy any more Mega Millions tickets.
I have generally only bought MM tickets when the jackpots were 200 million or more. I don’t think I ever won anything from playing MM. I generally prefer Power Ball, besides winning $50,000 4 years ago, I have had 4 $100 wins and a number of smaller wins. I have also had a number of small wins in the Washington state lottery.
My thinking was if they want to increase the sales of MM tickets, have a lot more small winners. If I knew I had a chance of winning something, even $20 or $30 a few times a year, I would be much more likely to buy MM tickets than to throw money at a pipe dream of winning a multi-million drawing.
Can you shed some light on the reasoning as to how this is supposed to create more jackpot winners? Higher jackpots makes sense (since they are presuming that they will be taking in more money), but I can’t figure how they are expecting to get more winners by increasing the ticket prices.
They may be changing other things about the prize structure?
The only time I ever played lotto was when I was still working. When the jackpot got big enough, a bunch of us would kick in $5 each and someone would get tickets. If the pot was divided into units of 2 or 5 is irrelevant.
When either the Mega Millions or the Powerball jackpot got large enough (usually over a billion), my mother, for one, would buy a ticket or two for that game, and also for the other game. Given this shift, she might only buy one ticket for Mega Millions, or none if the big jackpot was on the Powerball side. In other words, I think it’s going to hurt them.
In my experience selling lotto tickets, people don’t really get excited about Mega Millions or Powerball anymore unless the jackpot is at least getting close to $1 billion. Since the jackpot increases based on ticket sales, the idea is that a higher ticket price will make jackpots increase faster, so more people will buy tickets, and the more tickets sold the more likely it is that someone will hit the jackpot. I’m sure there are statisticians who could look at the figures and break down how more sales from higher jackpots will make up for people choosing to spend $2 for Powerball instead.
They also mention that there’ll be no more “break-even” wins - any winning combination will pay out more money than the price of the wager, so the days of buying a $2 ticket and winning $2, which just feels unsatisfying and like you may as well not have even bothered, will be gone.
The Powerball website had (has?) an entertaining FAQ which addresses a lot of customer “ideas” about how to improve the lottery which are … bunk. ETA: just checked. They still have a FAQ, but they took out all the entertainment. Oh well, Boo-rrrring!
Anyhow, from the now-vanished FAQ entry: The evidence is clear: Some members of the public say they want cheap tickets and that will bring in more total money, but the reality is the ticket purchase money starts flooding in only when the jackpots are huge. Due to the progressive nature of the jackpot, the only way to get to a huge jackpot is to have already taken in a lot of money. Bottom line: High ticket prices increase sales as measured in dollars, not decrease sales as measured in dollars. PB increasing to $2 per chance or MM to $5 per chance feeds into that behavioral reality. OTOH … Obviously there is some point of diminishing returns. I doubt $500/chance would be a success. But at $2 or $5 per chance we’re not to that turnover point yet.
Perhaps said another way, the price-conscious poor person who can’t really afford to play lotteries at all is blowing all their dough on 50 cent scratch-offs. The folks who don’t much care what their fantasy costs will spend $20 or $50 several times a week buying chances at a life changing surprise when the numbers get big enough. You gotta sell 100 poor people a 50 cent ticket to move the needle as much as selling some Soccer Mom or real estate agent a single $50 ticket.
The change a few years ago from 2 to 3 Powerball draws per week was the same idea. It takes WAG 10 draws with no jackpot winners to get the jackpot up the minimally “interesting” number. By doing 50% more draws per week, they get up to that “interesting” level 50% faster. And more importantly to their annual income, 50% more times per year. On average. And it’s all about the averages from their POV.
Must have been some years since you played - at least in my state 50¢ scratch offs are a thing of the past. The lowest ticket is $1 and even those are getting scare, the lottery commission is putting out more $2 for the low end.
But your point still stands and is very much valid.
MrsFtG used to have me buy a $1 ticket back in the day. (This was at the grocery store. I’d get the ticket while she went thru checkout.) I wasn’t keen on it. The return was quite poor.
Back then the state had their own lottery. I ran the numbers and if the jackpot got up to $9 the odds were good (taking into account the cash value, taxes, winning lesser prizes, etc.). This happened often enough. But they shut that down. No one want’s to win “only” a few million. I guess I’m an outlier.
When they raised the price to $2 I did the math on that. It would have to be an amazingly large pot to have good odds. Then you run into a St. Petersburg paradox-like situation. You can pretty much ignore the big jackpot in the math since the chances of winning it are so small even if you play a lot over a lifetime that it basically doesn’t matter in reality. No thanks.
While the deets are low on the $5 deal it effectively rules me out. I don’t have any interest in winning $100m let alone $1b.
I don’t understand this fascination with gigantic payouts.
I Powerball regularly. And will again later today. Hope springs eternally. Uselessly, but eternally
I have never bought (or even looked closely at) a scratch-off in my life.
I’m not much surprised they’ve gone up too. IIRC part of the original motivation of the very low prices, kinda like some candies, was just to absorb the loose change people received from their purchases.
The advent of nearly universal use of cards for routine retail kinda destroyed at least that motivation for sub-$1 pricing.
But ya, I’m one but only get interested when the jackpot is in the headlines. The new pricing structure won’t change my standard $10/visit (realistically 10-20 times a year) and, though I know better, it does feel a little less fun getting only two picks instead of five.
It’s also just harder to toss $5 vs $2 for office pools and gifts for little things like lotto tix.
I read they’re doing this because research shows the average scratchoff purchase is $5. I don’t buy scratchoffs. Could probably count the number of times I’ve bought them on one hand…& still have enough fingers over to snap. The odds aren’t in your favor & while $50 or $100, or even $1000 would be nice it’s not going to change my life. The first two would be dinner out one night.
I have no illusion of winning the Big One, but the worth of the fantasy for $1 or $2 is well worth it to me when it gets up to multi-hundreds of millions of dollars. I figure the take home is somewhere in the neighborhood of 40% - after cash payout discount & taxes, so half a billion dollars means I’m now worth about $200 mil. Not enough for a 500’ mega-yacht but enough for anything else I’d want.
I can get 2/$4 sodas at just about any convenience store, which means my fantasy costs me only one 20oz bottle of soda. I’m probably better off playing the lottery than having that soda anyway so that $2 both gives me a bit of fantasy & makes me healthier. At $5 you’re tipping the scale & I know I’ll be playing it a lot less than the minimal amount I do now, probably $20-$30/ year. I also realize I am not their bread-&-butter customer.
I look at it just like Spiderman. Other than I think he’s optimistic on the take-home percentage.
Right now as I type the Powerball cash payout is 48% of the headline (i.e. bogus) jackpot amount (186.7 mil on 388.0 mil headline). I figure I’ll lose 40% of the cash payout to taxes and the expenses of setting up a trust, etc., so I’ll get to keep 60% of that 48% = 28% take-home vs headline. On 388M that says take-home is 112M. A darn nice payday.
On that money I still can’t buy a big yacht or a Learjet, but I can sure charter them for a week any time I want. And I can buy a Ferrari or two, a small airplane or two (not 10), and any adventures anywhere anytime that I care to imagine.
That’s lifechanging money for somebody who’s already comfortably set by ordinary white collar career standards. $1K on a scratcher? Nope.
Well, except many retail outlets (at least in my state) only accept cash for lottery ticket sales…
(I only know this much about it because I take care of the lottery tickets and vending machines at work. Which means, of course, I can’t play the Lotto where I work. Which is OK by me, since I never played it much anyway.)
I’ve notice you did not include paying off your home, setting up an account where you can retire off the interest, setting up college funds for the next 3 generations of LSLers. In other words, you’re thinking like a jackpot winner.
Yes, currently my store is selling two different $50 scratchers, two $30, a bunch of $20, $10, and $5 with just two $2 and one $1 scratcher (40 games altogether).
Here in FL lottery tickets are cash-only by law. I’d not be surprised to find that’s a consequence of some Federal law.
What I meant was totally different though. …
What I meant was that if somebody makes a retail purchase with cash and gets e.g. 85 cents of change, they might choose to spend that coin on a 50 cent scratcher. If OTOH they bought their purchase with a card, they have no change to get rid of. So the scratcher goes unbought.
The pricing in the old days was about making scratchers an impulse purchase using coins you just received. Now that that doesn’t happen (much), there’s no good reason to not bump the price above a dollar. Since the scratchers have become a separate purchase decision altogether.
IIRC the original pricing of Wrigley’s gum was a nickel and part of the impetus for $X.95 pricing was to encourage customers to have a leftover nickel in change that they’d spend on gum, sold from a bowl next to the cash register, not stick in their pocket.
