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Tue May 24 23:37:07 SAST 2016

The biggest Powerball jackpot ever: the odds and where the money goes

LIZETTE ALVAREZ | 14 January, 2016 07:58
The winning Powerball number is shown after being drawn at the Florida Lottery studio in Tallahassee, Florida January 13, 2016. The winning numbers are 8-27-34-4-19 and the Powerball number is 10. A winning ticket for the biggest-ever $1.59 billion Powerball lottery jackpot was sold in California, state lottery officials said on Wednesday.
Image by: PHILIP SEARS / REUTERS

Your chances of winning the Powerball jackpot are not great — just 1 in 292.2 million.

Below is a list of questions on who, besides jackpot winners, stands to gain from the record-breaking lottery and where the money goes.

Why the frenzy?

At $1.5 billion, it is the largest lottery jackpot ever in the United States: No other has broken the $1 billion mark. But there are other explanations for the mania. With wages and income levels stagnant for many Americans, the lottery has particular allure.

And once a frenzy takes hold, it tends to spread. “Jumping on the bandwagon is an age-old motivator of psychological behavior,” Stephen Goldbart and his colleague Joan DiFuria wrote in a Psychology Today article titled “Lottery-itis.” “We want to be with the in-crowd, to be ‘part of the movement,’ not ‘feel left out.’ ”

Why is the jackpot so big?

In October, the Multi-State Lottery Association stiffened the odds of winning Powerball jackpots from 1 in 175 million to 1 in 292 million, but made it easier to win smaller prizes. The current jackpot has rolled over every week since Nov. 7 because nobody has picked all six numbers.

Why did lottery officials make it so hard to win?

Lottery revenue in some states dipped from 2013 to 2014 or stayed relatively even, so the shift in odds was viewed as a way of re-energizing lottery sales. Bigger jackpots draw bigger headlines, which in turn entice more people to dish out $2 for a ticket, said David R.

Just, a professor of applied economics and management at Cornell University who has written three studies on the lottery. “It’s the Donald Trump effect — it draws eyeballs without having to advertise,” he said. More people equals more revenue.

Just try wading past a phalanx of lottery ticket fiends to buy a gallon of milk for proof that the strategy appears to be working.

How many states participate?

Forty-four states, as well as Washington, D.C., Puerto Rico and the U.S. Virgin Islands. Six states have opted out of the lottery: Nevada (where plenty of other gambling exists), Mississippi and Alabama (which also have casinos and lots of Baptist churches), Utah (home to the country’s largest Mormon population), Alaska and Hawaii. Once lotteries kicked off, there was a domino effect because non-lottery states feared losing out to their lottery-offering neighbors.

Which state reaps the most lottery revenue?

New York, by far. The lottery there brought in $9.2 billion in 2014. Florida came in second with a little over half that amount, $5.3 billion, followed by California with $5 billion and Massachusetts with $4.8 billion.

How much goes to state programs?

In New York, it was $3.1 billion. Florida funneled $1.4 billion to state programs, California $1.3 billion and Massachusetts $971 million.

What kind of programs does lottery revenue pay for?

About two dozen states dedicate part or all of their lottery revenue to education programs. It is hard to rail against education funding — something state officials used as a strategic selling point when trying to persuade voters to embrace lotteries, a form of gambling. But other states (Arkansas, Connecticut and Delaware, for example) shift much of the money to their general revenue funds, and some use it for prisons, the environment and pensions.

So the lottery frenzy is a good thing for states, right?

Supporters say that lottery revenue has helped increase funding in critical areas, especially for education. Georgia and Florida use it for college scholarships, for example. During the recession, lottery funds came in especially handy. But critics say state governments have used lottery money not to increase funding, but to supplant it.

They charge that states have redirected existing money from education into other areas and used the lottery money to plug up the hole in a kind of shell game. “I don’t think things have changed much,” said Patrick A.

Pierce, a co-author of a study on the topic and a professor of political science at Saint Mary’s College in Indiana.

Who plays the lottery?

Many studies have concluded that those who play the lottery regularly tend to be low-income and to spend more of their money, in relative terms, on tickets.

“People with more money spend more on lottery as a total, but they spend a negligible percentage of their income on it,” said Just of Cornell, who just completed his third study of the lottery, this one focusing on Maine. “But people on lower income ranges spend sizable percentages of their income on lotto.”

Critics say this constitutes a regressive tax because it affects the poor more than the rich. But defenders of the lottery say that is simply not true: Playing the lottery is voluntary, so it is not a tax.

Other studies come up with different conclusions.

Who gets most of the money: states or lottery winners?

This varies by state, but here are a few examples. States tend to have a similar division of lottery funds, although some make it more difficult than others to get this information.

In Florida, which has an easy-to-read website, the bulk of the money, 65 percent, is used to pay off winners; 27 percent is steered toward education; 5.5 percent is paid to retailers in commissions; 1.4 percent goes to vendors; and 1.3 percent is used for operating expenses.

New York state uses 60 percent of the money for winners, 30 percent for education, 6 percent for retailer commissions, 1.6 percent for gambling contractor fees and 1.6 percent for other operating expenses.

--(c) 2016 New York Times News Service

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