The problem with the $1.6 billion Powerball drawing

SSaturday’s Powerball drawing will be the largest in US history after reaching $1.6 billion. This mega jackpot was made possible after Wednesday’s drawing, valued at $1.2 billion, resulted in zero winning tickets.

The staggering amount—more than 22,000 years worth of winnings for the average American household—drives lottery players into a frenzy. But as jackpots like this grow, so do criticisms that lotteries are becoming more predatory and harmful to many who play them.

“We’re having this huge debate around wealth inequality in our country, and you have people spending hundreds of dollars, sometimes thousands on these lottery games, which is pushing people into greater debt,” said Les Bernal, national director of Stop Predatory Gambling, a group for non-profit advocacy. “Powerball is just like an exclamation point on that.”

Why are the jackpots getting bigger?

The first Powerball drawing was in 1992 and an Indiana player won $5.9 million. More than 30 years later, the US economy and American standards of wealth have been radically changed by multiple recessions, inflation and economic growth.

But the big lotteries have also changed the rules to ensure that the jackpots get bigger and bigger – in an attempt to attract media attention and generate buzz. In 2012, Powerball tickets went from $1 to $2 per ticket, and since then the game’s format has undergone several changes to expand the pool of numbers — and make it less likely that each individual drawing will produce a jackpot winner. The effect is that the jackpots swelled.

“In the industry, they have what they call ‘jackpot fatigue,’ where what they’ve found through research and hands-on experience is that smaller jackpots no longer appeal to players,” says Keith White, executive director of the National problem gambling advice TIME. “They design the games deliberately to maximize the bigger jackpots, which are rare. One way to do this is to make the odds worse so that the jackpot becomes bigger.

With an estimated cash value of $782.4 million after taxes, the winning jackpot numbers will be announced from Tallahassee at 10:59 PM ET on Saturday, November 5th. If there are no winners on Saturday, the jackpot will continue to grow.

Powerball winners can either choose to receive their winnings in regular payments over 29 years or take the lump sum upon winning. Recently, financial experts point out that with high inflation it may make more sense to take the annuity and keep more of the income from future payments as the tax rate falls. In the past, a lump sum was a good option so winners could invest for further growth.

White also describes how accepted and normalized lottery participation is today, compared to a few decades ago when a small majority of Americans disapproved of legalized gambling. “Today, polls generally show that about 80-85 percent of Americans approve of legalized gambling,” he says. “There’s a huge culture shift, if you will, and I think that’s reflected in these bigger jackpots.”

Who Will Be Hurt by Lottery Gambling?

Bernal strongly believes that state-sanctioned lotteries are particularly exploitative because of the way they target marginalized groups. “It’s a form of financial fraud that’s only legal if you partner with the state government,” he says.

Research suggests that state lottery dealers tend to be concentrated in lower-income areas and communities of color. Consumer Federation of America survey found that one-fifth of Americans believe that winning the lottery is the only possible way for them to acquire several hundred thousand dollars.

“Lotteries feast on these demographics, they are the business model. Lotteries don’t exist without low-income people spending their fortunes,” says Bernal. “Half the country has stocks and bonds and they own houses. Half the country has nothing, they have no assets, and these are the people we encourage to play the lottery.

White explains that big prizes tend to attract more people, even those who wouldn’t gamble otherwise. But he says: “There is no doubt that the lottery is a form of gambling like any other and excessive use can lead to addiction.”

“The general public does not always view the lottery as gambling, both legally and psychologically. We know that people can develop gambling problems because of their lottery playing; it may even be due exclusively to their playing the lottery,” adds White.

Drew Switko, chairman of the Powerball product group and executive director of the Pennsylvania Lottery, told TIME, “since the mid-1960s, US lotteries have provided entertainment for millions of players while returning billions of dollars in funding to vital public programs, services and good causes such as education, health and social care, transport and the environment to improve the quality of life of residents in their states with strict government compliance requirements.”

“What the ‘critics’ are saying is not a fair statement and, unfortunately, these are common misconceptions about the lottery industry that are not based on fact,” Svitko added. “People from all walks of life and income levels play lottery games.”

Where does the money go?

Powerball tickets are sold in 45 states, Washington, Puerto Rico and the Virgin Islands. According to Powerball, more than half of all ticket sales revenue stays in the jurisdiction where the ticket is sold. Half of the jackpot prizes go on ticket sales, 35% “benefits the good causes supported by lotteries”, 9% goes to operating costs and 6% goes to retailer commissions. Mega Millions follows a similar payout plan.

Each state’s lottery commission must determine where to distribute its winnings. States differ in how they fund various public services. Pennsylvania chooses to fund programs for seniors; Wisconsin used its revenue to reduce property taxes. A handful of countries put their lottery proceeds into their states’ general funds for unspecified purposes, but the majority dedicate their proceeds to fund public schools. new York and California explicitly say that the main purposes of their sweepstakes are to raise money for education.

Lottery Education Funding Persons high skepticism, but critics say states aren’t actually using the revenue to expand their education budgets. Instead, what some analysts say tends to happen is that as more lottery money starts pouring into education, states cut their existing education budgets. In North Carolina, for example, the original account of the state to establish the lottery, it said: “The net proceeds of the lottery shall supplement, rather than be used as substitutes for, the total amount of money allocated for these public purposes.” This specification has since been removed from the law, according to CNN.

What is the largest lottery drawing in US history?

Since the Mega Millions lottery began in 2002, there have been 204 jackpot wins. Powerball has had 210 winning jackpot tickets in its 30-year life.Powerball Ratings that the player has a one in 292 million chance of winning the jackpot.

Here are the biggest lottery jackpots ever, per Associated Press.

  1. 1.6 billion+Powerball drawing November 5, 2022
  2. $1.59 billionPowerball, January 13, 2016 (three tickets, from California, Florida, Tennessee)
  3. $1.54 billionMega Millions, October 23, 2018 (one ticket, from South Carolina)
  4. 1.3 billion dollarsMega Millions, July 29, 2022 (one ticket, from Illinois)
  5. 1.1 billion dollarsMega Millions, January 22, 2021 (one ticket, from Michigan)
  6. 768 million dollarsPowerball March 27, 2019 (one ticket, from Wisconsin)
  7. 758 million dollarsPowerball, August 23, 2017 (one ticket, from Massachusetts)
  8. 731 million dollarsPowerball, January 20, 2021 (one ticket, from Maryland)
  9. 699 million dollarsPowerball, October 4, 2021 (one ticket, from California)
  10. $687.8 millionPowerball, October 27, 2018 (two tickets, from Iowa and New York)

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