Powerball used to have a jackpot limit. Then it exploded


New York
CNN business

The Powerball lottery jackpot will hit $1.9 trillion for Monday’s drawing, making it the biggest lottery prize ever.

But when Lotto America, Powerball’s forerunner, was introduced in 1987, organizers banned jackpots of more than $80 million.

“There was concern about what you could do with that money, like buy a small country or something,” Lotto America CEO Ed Stanek said at the time.

In the 1980s, lottery craze gained momentum as more states introduced lotteries to raise revenue for education and social programs, but jackpots in some smaller states could not keep up with more populous states.

Oregon, for example, was losing players to Washington and California, which offered $20 million jackpots.

So officials from Rhode Island, Oregon, Missouri, Iowa, Kansas, West Virginia and Washington, DC came together to create Lotto America as a way to raise money and offer bigger prizes. They also hoped the bigger pots would attract first-time players.

“Our motivation is to give Oregonians a chance to play in one of the great states,” said then-Oregon Lottery Director James Davey.

The interstate lottery was modeled after those in Canada and the US Virgin Islands.

Officials expected Lotto America to offer weekly average jackpots of $3 million to $5 million, with the possibility of larger prizes within a year or two. Drawing expenses and proceeds from ticket sales were divided among the jurisdictions based on ticket sales for each state or district.

“This is a whole new ball game,” Lotto America spokesman Jack Ratigan said at the time.

Lotto America originally offered players the chance to pick seven numbers from a field of 40 for a minimum bet of $1.

Players matching the numbers selected in a weekly drawing would win a jackpot determined by the number of tickets sold.

The odds of winning the top prize were about 1 in 19 million, compared with about 1 in 8 million in most state lottery games, officials said.

A bankrupt Iowa farmer was the first to win Lotto America in 1988. He said he would use the $3 million prize to save his family’s farm.

A year later, Lotto America switched to picking six numbers in the field of 54. That year, it offered a $20 million jackpot and in 1991, the pot reached $50 million.

By 1992, Lotto America included fifteen states.

The game was renamed Powerball to give players a better chance of winning smaller prizes.

“What we’re hearing is that people like the big prize but want a better chance of winning the smaller prizes,” Oregon Lottery Director James Davey said.

Powerball soon offered a $100 million jackpot.

By the 1990s, however, players began to experience “jackpot fatigue” and Powerball needed ever-larger prizes to maintain interest, said Jonathan D. Cohen, author of “For a Dollar and a Dream: State Lotteries in Modern America.” authors. Meanwhile, instant scratch-off games grew in popularity and became the main form of lottery games.

In 2010, in an effort to win more players and increase the size of the jackpots, Powerball and Mega Millions, the two largest multi-state lotteries, agreed for the first time to allow retailers to cross-sell the two games.

A year later, the price of a Powerball ticket increased from $1 to $2 and the initial jackpots were doubled. The game is now available in 45 states, Washington DC, Puerto Rico and the US Virgin Islands.

These changes have increased Powerball jackpots. The largest Powerball jackpots have come in the last six years. The odds of winning the top prize are now 1 in 292 million.

Lotteries are regressive, meaning that low-income groups spend more of their budget on lottery games than high-income groups.

Powerball tends to be the least backward lottery game, Cohen said, because wealthy people tend to buy tickets when the jackpots are high.

But for most of the year, “there’s a slow burn of disproportionately poor people putting money into smaller prizes.”