The Intrigues of the Powerball Lottery System and Impact on the American Economy

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Powerball is an American lottery game offered by 44 states, the District of Columbia, Puerto Rico and the US Virgin Islands. It is coordinated by the Multi-State Lottery Association (MUSL), a nonprofit organization formed by an agreement with US lotteries. Powerball’s minimum advertised jackpot is $40 million (annuity); Powerball’s annuity is paid in 30 graduated installments or winners may choose a lump sum payment instead. One lump sum payment will be less than the total of the 30 annual payments because of the time value of money.

Drawings for Powerball are held every Wednesday and Saturday evening at 10:59 p.m. Eastern Time. Since October 7, 2015, the game has used a 5/69 (white balls) + 1/26 (Powerballs) matrix from which winning numbers are chosen, resulting in odds of 1 in 292,201,338 of winning a jackpot per play.Each play costs $2, or $3 with the Power Playoption. (Originally, Powerball plays cost $1; when PowerPlay began, such games were $2.) The official cutoff for ticket sales is 10:00 p.m. Eastern Time; some lotteries cut off sales earlier. The drawings are usually held at the Florida Lottery’s studio in Tallahassee.

History of Powerball

Powerball celebrated its 25th Anniversary in April 2017.

The first Powerball drawing on April 22, 1992 had 15 participating lotteries: Delaware, Iowa, Idaho, Hoosier (Indiana), Kansas, Kentucky, Minnesota, Missouri, Montana, Oregon, Rhode Island, South Dakota, Washington DC, Wisconsin and West Virginia.

Today, there are 47 lotteries selling the Powerball game.

In October 2015, the latest version of the Powerball game debuted with enhancements aimed at delivering bigger jackpots and more overall winners. The game matrix was changed; the number of white balls increased to 69, while the number of red balls dropped to 26. The Power Play® feature was enhanced with a 10X multiplier that is available for play whenever the advertised jackpot annuity is $150 million or less. The Match 4 + PB prize was also increased from $10 thousand to $50 thousand.

The largest Powerball jackpot was $1.586 billion in the Jan. 13, 2016 drawing. That massive Grand Prize was split by three winning tickets in California, Florida and Tennessee.

You too can be the next millionaire

“Imagine the moment” that is the slogan of the Powerball lottery attributed to the would-be winner. As the next draw comes up October 25th the winner is going to be $354,300,000 richer. The winning numbers are 16, 54, 57, 62, 69, 23.

Visit the nearest lotto dealer to obtain your tickect, who knows you might be the lucky winner.

There are 9 ways to win a prize in powerball, all prizes are set cash amount, except the grand prize. In California prize payout amount are pari-mutuel and determined by sales and the number of winners.

 

How Tall is $40 Million?

 Powerball’s starting jackpot of $40 million may not seem like much, but ask yourself this – is $40 million really a small amount of money? Is the Smithsonian Institution in Washington, D.C. a small building?

If you were to stack $100 bills, take a look at the heights the money would reach at each estimated jackpot amount.

Powerball Impact on the American Economy

Americans spent $65.5 billion on lottery tickets in the last fiscal year, up almost 10% from the year before. And lottery ticket sales have increased every year since the first state lottery in 1965 — even during the Great Recession, when the sale of most other items declined.

About 25% of the money taken in by lotteries goes to state governments, funding everything from schools to construction and even programs to help problem gamblers.

That’s a big infusion for state coffers. But some experts wonder if state economies would get more of a boost if consumers bought goods and services instead of lottery tickets. The research makes it pretty clear that the answer to that question is a resounding “yes,” according to Victor Matheson, economics professor at College of the Holy Cross.

“People spend disposable income on lottery tickets rather than buying a coffee at Starbucks or some gizmo at Best Buy,” he said.

Matheson argues that spending money with businesses helps spur much more economic activity than gambling on the lottery. While a quarter of Powerball revenue goes to the 43 states plus Washington D.C. that participate in it, about 60% of the money spent on tickets is paid out in the form of winnings. The retailers who sell the tickets get about 5% to 6% of ticket sales as commission, meaning they get only $10 to $12 for every 100 Powerball chances they sell. The remaining 9% or so goes toward administrative costs and advertising spending.

Lottery tickets have become a significant source of funds for states, with just over $16 billion flowing through to state coffers in the most recent year. That’s about 2% to 3% of their total budgets, said Matheson, which doesn’t sound like much. But he said that given the difficulty states have raising tax revenue in the current economic and political environment, those funds would be difficult to replace.

“[There’s] an aversion to raising taxes,” said Matheson. “It’s difficult to see how you would eliminate that much of state budgets and be able to come up with money elsewhere.”

A big jackpot like this week’s Powerball jackpot can be a mixed blessing for retailers selling tickets said Jeff Lenard, spokesman for National Association of Convenience Stores. While the retailers appreciate the extra traffic the lottery brings in, it can also chase away their regular customers who might have otherwise have been spending money on products with better profit margins.

“Convenience stores sell convenience,” he said. “You don’t want to chase away someone from buying a cup of coffee.”

Still, Lenard said many shop owners are happy for the chance to reach new customers. He said the busiest days on record for convenience stores were back in March of this year, when the competing Mega Millions lottery had a record $656 million jackpot.

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