The Historic Powerball’s Effect On States

Last night (Jan. 13), the winning numbers for the largest lottery jackpot in history were finally drawn, with the winning Powerball numbers — a $1.58 billion jackpot — shared between players in three states: California, Florida and Tennessee.

Christian Teja, Director of Communications with Massachusetts State Lottery Commission, with whom PYMNTS spoke with just hours before the winning numbers were announced, had obviously hoped that a Massachusetts citizen would be (based on dollar amount) among the luckiest lottery winners ever.

While that wasn’t in the cards (or, perhaps more appropriately, tickets) — but there’s always hope for next time — the fact remains that the historic Powerball drawing was a boon for every state in the U.S. based simply on ticket sales, jackpot aside, and the retailers to which hopefuls flocked.

PYMNTS:  When potential Powerball winnings reach as high as $1.58 billion, is there any need for the Lottery Commission to spend any money on marketing?

CT:  No — at the moment, our marketing budget is really zero. Right now, we’re relying on our resources like the media — in particular, social media. … You can’t go anywhere without knowing what the jackpot is. We have signs in all our retailers, but we’re not doing any kind of paid advertising.

PYMNTS:  As far as the jackpot amount, is there a threshold where you see a real uptick in interest and ticket sales?

CT:  In recent years, $300 million has kind of been the threshold where interest really tends to blossom and sales increase.

What we’re seeing here is just unprecedented territory. Obviously, it’s a record-setting jackpot — it’s the first time any U.S. lottery has been up over $1 billion; it’s now a world record. And the ticket sales are higher than ever.

PYMNTS:  How much of an increase in ticket sales do you see with increased media attention?

CT:  The jackpot is really what generates the interest and the awareness built partially by the media.

When it’s at its base levels of $40 million up to $200 million or so, we’ll see, in Massachusetts, sales between about $600,000 and $1 million. That number starts to increase once the jackpot increases $300 million. … Now, it’s kind of no holds barred for us.

We did $23.8 million in sales in Saturday’s (Jan. 8) drawing and exceeded that number for the Jan. 13 drawing.

PYMNTS:  If someone wins a $1.58 billion jackpot, how much does the state gross?

CT:  The state gets 5 percent of any jackpot; federal withholdings are 25 percent.

PYMNTS:  For what is the state’s earnings earmarked?

CT:  42 percent of all Powerball sales in Massachusetts go back into the state’s general fund that is used for unrestricted local aid. This has been a tremendous boon for the Massachusetts economy in terms of local aid numbers.

It’s also helped the retailers, who get 6 percent in commissions and bonuses of all Powerball sales — not to mention generating traffic into their stores. It helps their businesses in all aspects.

PYMNTS:  How much of overall lottery sales does Powerball represent?

CT:  Looking at last year, the Lottery did over $5 billion in product sales; Powerball only accounted for about 2 percent of that.

The vast majority of our Lottery sales come from instant tickets — which constitute about 70 percent — while Keno monitor games account for about 17 percent. So those two make up about 87 percent of our total sales.

Year to year, Powerball ranges according to how high the jackpot climbs.

PYMNTS:  What does a $1.5 million jackpot make possible for a state?

CT:  The Lottery’s mission is to return as much net profit as possible that becomes unrestricted local aid for the state.

What’s been happening in the last few weeks in terms of Powerball ticket sales is a great snapshot, but the real determination is in how it plays out over the course of the entire year — where the jackpot levels are for the other 49 or so weeks.