Lottery Post Exclusive

By Todd Northrop

Updated: Nov. 6, 2009, 11:28 a.m.
Updated: Nov. 10, 2009, 11:21 p.m.

In January 2010 the state lines that have been dividing the United States into "Powerball states" and "Mega Millions states" will be blurred by a cross-selling arrangement between the two multi-state lottery titans.

But it was not an arrangement the country's biggest lotto games entered into easily or even willingly. 

The lines of division between America's two biggest multi-state games trace back to the inception of Mega Millions, then called The Big Game, in September of 1996.

At the time, Powerball was the only game in town for states looking to add a huge jackpot game to their state's lineup.  Six states — Georgia, Illinois, Maryland, Massachusetts, Michigan, and Virginia — decided to start their own big-jackpot multi-state lottery game called The Big Game.

The Big Game was formed as a consortium of states, jointly operating the game and rotating responsibility for various duties.  This was a break from Powerball, which is operated by the Multi-State Lottery Association (MUSL), an independent Iowa-based entity that operates multi-state games for the states.

Georgia, which had joined Powerball the previous year as the 19th state to sell tickets for the game, was informed by MUSL that it would not be allowed to sell both Powerball and Big Game, and Georgia was forced to relinquish their MUSL membership.

Thus began a 13-year rivalry, under which states were forced to choose one multi-state game or another, and lottery players had to travel to another state to play the multi-state game not offered in their home state.

So what happened to change all of that?

The economy.

In early 2009, some state legislators in the North East started looking for new ways to generate revenue in a down economy.  As lawmakers in Mega Millions states watched players line up in neighboring states to buy tickets for huge Powerball jackpots, they wondered, why not bring that revenue in our state?

Without regard to the rivalry between the multi-state game operators, legislators in New Jersey and Massachusetts included millions of dollars in new revenue in their budgets based on the addition of Powerball to their game lineups.  The story quickly spread in the news media that Powerball was coming to Mega Millions states — but nobody ever bothered to consult the multi-state game operators about it.

Soon after, MUSL doused the flames by saying that no such arrangement was possible, but by that point the genie was already out of the bottle.  In previous years when the economy was humming along legislators might have accepted the rivalry as insurmountable, but with state budgets on the brink of collapse, the directive to the lotteries became "find a way to make it happen".

In October 2009, the two multi-state games announced a ticket cross-selling agreement in which states could sell tickets for both games (https://www.lotterypost.com/news/202175).

The agreement itself does not mean that every state will immediately offer both games, but it does offer the possibility for states to do so, where such a possibility did not previously exist.

Government-run lotteries are controlled at the state level, and each state has the sole authority and responsibility for choosing the games that will be offered within its borders.  Some states will offer both games at the soonest possible moment, while other states will take more time to consider their options.

But using history as a guide, it would seem inevitable that every state will eventually offer both games.  It took 20 years, but in the time since Powerball was created in 1988 (then called Lotto America), every state that operates a lottery eventually joined one multi-state group or the other.  Florida was the last hold-out, and finally relented in July 2008, when they joined MUSL (https://www.lotterypost.com/news/177532).

According to several state lottery representatives, players will be able to purchase tickets for both games in some states starting January 2010.

Lottery players across the nation, traditionally forced to cross state lines in order to play "the other game", are naturally eager to learn when their home state will offer tickets for both games.

In response, Lottery Post has compiled a state-by-state analysis of the current status of dual multi-state game sales.

Lottery Post has attempted to seek direct comment from representatives of each state lottery; some states provided status and comments, while others did not.  In cases where states ignored the request for comment, Lottery Post gleaned information from media reports, when available.

Any time the big multi-state games make changes, state lotteries normally take the opportunity to make changes of their own, and the cross-selling agreement could usher in several changes for state lotteries.

For example, Kansas will look to add the Megaplier feature currently available only in Texas, while Tennessee will drop their in-state lotto game when Mega Millions is added.

In the coming months, Lottery Post will continue providing updates in the form of news commentary and analysis.  As always, state lottery representatives are encouraged to contact Lottery Post directly, in order to spread the word to players in their state about the latest news concerning multi-state game sales, or any other important lottery-related issues.

Arizona

Current affiliation:  Powerball
Will cross-sell:  Unknown
Responded to Lottery Post:  No

Unknown: No media reports located, no information published on the lottery's Web site, and the lottery did not respond to a request for comment.

Arkansas

Current affiliation:  Powerball
Will cross-sell:  Probably
Responded to Lottery Post:  No

From local media reports:

The Arkansas Lottery has responded generally in media reports that Arkansas will cross-sell Mega Millions tickets when it becomes available.

Arkansas Lottery Director Ernie Passailaigue, the former chairman of the Powerball group, said he thinks that combination would bring even more money to Arkansas.

"You're going to generate jackpots that are going to generate half a billion dollars or more," he said. "My take on it is that would be for those people who like the large jackpot games."

California

Current affiliation:  Mega Millions
Will cross-sell:  Unknown
Responded to Lottery Post:  No

Unknown: No media reports located, no information published on the lottery's Web site, and the lottery did not respond to a request for comment.

California may have challenges adding Powerball, like it did when it added Mega Millions, because California law does not allow fixed lottery prize amounts, and all non-jackpot Powerball prizes are fixed amounts.

Colorado

Current affiliation:  Powerball
Will cross-sell:  Not decided
Responded to Lottery Post:  No

From a lottery press release:

The Colorado Lottery could begin selling Mega Millions as early as next year, if approved by the Colorado Lottery Commission.

Beyond gaining approval from the Colorado Lottery Commission, the Lottery will have to work with its gaming vendor to make Mega Millions operational in Colorado. Powerball and Mega Millions each fund the jackpot differently, use a different process of estimating and guaranteeing jackpots and hold drawings on different nights.

"While many details need to be addressed, we're excited about the opportunities that offering Mega Millions may bring," said Colorado Lottery Director Jack Boehm.  "We are always exploring new ways to bring entertainment to our players and customers.  This is what helps us maximize the profit we generate for our beneficiaries throughout the state."

Connecticut

Current affiliation:  Powerball
Will cross-sell:  Unknown
Responded to Lottery Post:  No

Unknown: No media reports located, no information published on the lottery's Web site, and the lottery did not respond to a request for comment.

Delaware

Current affiliation:  Powerball
Will cross-sell:  Not decided
Responded to Lottery Post:  No

From a Delaware Lottery press release issued Oct. 13:

"While many of the technical details and costs to our individual state are yet to be known, we will be looking very carefully at the near term option of selling both games," said Delaware Lottery Director Wayne Lemons.  "Our job will be to determine whether selling the two similar games would be both profitable and convenient to our Delaware players."

"The additional prospect of selling a combined single game at a later date seems favorable, and we will begin communicating with our network of retailers and customers immediately to identify preferences and to develop a successful strategy that will benefit both the public convenience and increase revenues that support state services," Lemons added.

District of Columbia

Current affiliation:  Powerball
Will cross-sell:  Unknown
Responded to Lottery Post:  No

Unknown: No media reports located, no information published on the lottery's Web site, and the lottery did not respond to a request for comment.

Florida

Current affiliation:  Powerball
Will cross-sell:  Not decided
Responded to Lottery Post:  No

From local media reports:

"The Florida Lottery has not yet made a decision about offering Mega Millions," said Connie Barnes, a spokeswoman for the Florida Lottery.  "The agreement between Powerball and Mega Millions is still being developed and there are still many details yet to be worked out."

"We're studying the pros and cons and potential revenue estimates," she said.  "Having been the last state to join a multi-state we're still benefiting from Powerball unlike other states that have been in Powerball or Mega Millions for many years and have players who are more anxious for something new."

Georgia

Current affiliation:  Mega Millions
Will cross-sell:  Unknown
Responded to Lottery Post:  No

Unknown: No media reports located, no information published on the lottery's Web site, and the lottery did not respond to a request for comment.

Idaho

Current affiliation:  Powerball
Will cross-sell:  Unknown
Responded to Lottery Post:  No

Unknown: No media reports located, no information published on the lottery's Web site, and the lottery did not respond to a request for comment.

Illinois

Current affiliation:  Mega Millions
Will cross-sell:  Unknown
Responded to Lottery Post:  No

Unknown: No media reports located, no information published on the lottery's Web site, and the lottery did not respond to a request for comment.

Indiana

Current affiliation:  Powerball
Will cross-sell:  Unknown
Responded to Lottery Post:  No

Unknown: No media reports located, no information published on the lottery's Web site, and the lottery did not respond to a request for comment.

Iowa

Current affiliation:  Powerball
Will cross-sell:  Probably
Responded to Lottery Post:  No

From local media reports:

"We think Iowa players will enjoy the chance to play for even more big lotto prizes," Iowa Lottery CEO Terry Rich said.

"We still have a lot of details to work through involving legal, information-technology and marketing issues," Rich said. "But we think these new games can offer entertainment for Iowa players and help for the state of Iowa during these tough economic times."

Kansas

Current affiliation:  Powerball
Will cross-sell:  Yes
Responded to Lottery Post:  Yes

The Kansas Lottery has a verbal approval to move forward and begin testing and development of Mega Millions.  They intend to sell both Powerball and Mega Millions starting January 31, 2010.

Kansas will also look to include the Megaplier feature with the Mega Millions game, which is currently only available in Texas.

The lottery is projecting an overall increase in revenue of between $12 million and $15 million once Mega Millions is added.

Kentucky

Current affiliation:  Powerball
Will cross-sell:  Not Decided 
Responded to Lottery Post:  Yes

The Kentucky Lottery is seeking approval to cross-sell Mega Millions and Powerball from its Board of Directors at their next meeting on Dec. 10.

Louisiana

Current affiliation:  Powerball
Will cross-sell:  No
Responded to Lottery Post:  Yes

The Louisiana Lottery has no immediate plans to pursue legislative approval to sell the Mega Millions game.

After their second most successful year in history, the Louisiana Lottery's fiscal year first quarter sales were up nearly 10 percent over last year, thanks in large part to strong Powerball sales, which were up 21 percent.  Powerball continues to perform well and as expected in Louisiana.

Every form of legalized gaming is represented in Louisiana, and the lottery feels the market is saturated.

Considering these facts and Powerball's solid performance, the Louisiana Lottery decided against pursuing legislative approval in the near term to sell the Mega Millions game.

The lottery will continue to monitor player feedback and research, and will consider re-evaluating their decision on Mega Millions in the future if it would benefit the state and their players.

Maine

Current affiliation:  Powerball
Will cross-sell:  No
Responded to Lottery Post:  Yes

The Maine Lottery tersely indicated that they have no authorization to cross-sell the Mega Millions game at this time.

In addition, in local media reports, Maine Lottery Director Dan Gwadosky said he opposes the move because it does not fit with Maine's marketing plans.

"We're very concerned about the mix of games that we're offering at any one time," Gwadosky said.  "How many large jackpot games is appropriate to offer?  And some of the analysis that they provided, I think, understates the effect of cannibalization that's going to happen to our current existing games, that are really quite vibrant."

Maryland

Current affiliation:  Mega Millions
Will cross-sell:  Yes
Responded to Lottery Post:  Yes

The Maryland Lottery will be selling both Mega Millions and Powerball games, with Powerball sales to begin as early as Jan. 31, 2010.

The Lottery estimates that Maryland lottery players will spend roughly $50 million for Powerball tickets in the first year.

Massachusetts

Current affiliation:  Mega Millions
Will cross-sell:  Yes
Responded to Lottery Post:  No

Massachusetts was one of the states that forced the cross-selling issue to the forefront, going so far as to add future Powerball revenue to the state budget.

Even though Massachusetts did not issue a statement to us directly concerning the matter, we are listing the state as a firm "yes" for cross-selling because of their previous stance, combined with local media reports in which officials were quoted as being supportive of the concept.

Michigan

Current affiliation:  Mega Millions
Will cross-sell:  Yes
Responded to Lottery Post:  No

From local media reports:

In 2010, Michigan will introduce the multi-state Powerball game.  "We hope to be doing that in the winter of next year," said Andrea Brancato, spokeswoman for the Michigan Lottery.

Minnesota

Current affiliation:  Powerball
Will cross-sell:  Yes
Responded to Lottery Post:  No

From local media reports:

Minnesota expects to start selling Mega Millions tickets in early 2010.

The Lottery says the addition of Mega Millions will generate more money for the state's environmental programs and general fund.

Missouri

Current affiliation:  Powerball
Will cross-sell:  Yes
Responded to Lottery Post:  Yes

Although the Missouri Lottery does not need approval to begin selling Mega Millions, Lottery officials do intend to discuss the matter with its five-member commission during a meeting scheduled for this Friday, Nov. 6.  The lottery does intend to offer Mega Millions next year, along with the Powerball game.

The unofficial start date for Mega Millions sales is Jan. 31, 2010.  However, there are many details that have yet to be worked out before cross-selling both games can come to fruition.

The lottery is not ready yet to discuss projections of added revenue, as all the variables need to be determined and analyzed.

Montana

Current affiliation:  Powerball
Will cross-sell:  Not decided, but probably
Responded to Lottery Post:  Yes

The Montana Lottery Commission will make a decision at its next meeting in December 2009.  During that meeting it is expected that the Commission will approve sales of both games, with a launch date in 2010.

The lottery anticipates an overall increase in total revenues of at least 10%.

According to the Montana Lottery, several studies, as well as feedback from lottery players collected throughout the United States, clearly support the concept of dual multi-state game sales within each state, and point to increased state revenues directed to good causes, as well as more overall winners.

Nebraska

Current affiliation:  Powerball
Will cross-sell:  Unknown
Responded to Lottery Post:  No

Unknown: No media reports located, no information published on the lottery's Web site, and the lottery did not respond to a request for comment.

New Hampshire

Current affiliation:  Powerball
Will cross-sell:  Probably
Responded to Lottery Post:  No

From local media reports:

There's no specific date set for implementation, but lottery officials are hoping that at some point in 2010, the New Hampshire Lottery will begin selling Mega Millions tickets.

"As a result of [the cross-selling agreement], sometime in 2010...New Hampshire [will begin] selling Mega Millions," Maura McCann of the state lottery said in October.

"This will allow New Hampshire players a wider choice of products and lets them play both games in the state," said Rick Wisler, the state lottery's executive director."

McCann said there are no revenue projections for Mega Million sales in the Granite State.

"It's really too early to tell because we don't have a start date," she said.

New Jersey

Current affiliation:  Mega Millions
Will cross-sell:  Yes
Responded to Lottery Post:  No

New Jersey was one of the states that forced the cross-selling issue to the forefront, going so far as to add future Powerball revenue to the state budget.

Even though New Jersey did not issue a statement to us directly concerning the matter, we are listing the state as a firm "yes" for cross-selling because of their previous stance, combined with local media reports in which officials were quoted as being supportive of the concept.

New Mexico

Current affiliation:  Powerball
Will cross-sell:  Yes
Responded to Lottery Post:  Yes

At a special meeting Oct. 27, the New Mexico Lottery’s board of directors approved adding Mega Millions to the current slate of games.  The lottery’s goal is to be ready to sell Mega Millions by late January.

The lottery has made a conservative projection that incremental sales could increase 5% or approximately $3 million, which would annualize to approximately $1 million in additional revenue for the state’s college scholarship program.  However, initial projections could be impacted by a number of variables including jackpot run-ups, player perceptions, funding for marketing, and game cannibalization (players continuing to buy the same number of tickets, just shifting to a different game).

New York

Current affiliation:  Mega Millions
Will cross-sell:  Unknown
Responded to Lottery Post:  No

Unknown: No media reports located, no information published on the lottery's Web site, and the lottery did not respond to a request for comment.

North Carolina

Current affiliation:  Powerball
Will cross-sell:  Yes
Responded to Lottery Post:  Yes

The North Carolina Education Lottery (NCEL) Commission unanimously voted Nov. 2 to begin selling tickets for Mega Millions starting Jan. 31, 2010.

On Oct. 7, the Multi State Lottery Association (MUSL) and the Mega Millions consortium reached an agreement in principle to begin the process for implementation as early as next calendar year 2010, and to work toward the development and implementation of a national lottery game, with an anticipated launch date of late fall 2010.

"By adding another big jackpot game, our state can expect cross-selling revenues to be 18 to 25 percent higher than current Powerball sales for the first fiscal year or roughly $38 million to $52 million," said Tom Shaheen, NCEL executive director and MUSL president. "This would mean a return of approximately $11 million to $15 million more for education. If we experience longer jackpot runs than anticipated, these numbers may be higher."

North Dakota

Current affiliation:  Powerball
Will cross-sell:  Not decided
Responded to Lottery Post:  No

From local media reports:

North Dakota Attorney General Wayne Stenehjem says he expects to decide within a few weeks whether the state should join the Mega Millions lottery game.

A North Dakota lottery advisory board supports the move, but Stenehjem says he personally doesn't want to add another lottery game.

Ohio

Current affiliation:  Mega Millions
Will cross-sell:  Unknown
Responded to Lottery Post:  No

Unknown: No media reports located, no information published on the lottery's Web site, and the lottery did not respond to a request for comment.

Oklahoma

Current affiliation:  Powerball
Will cross-sell:  Unknown
Responded to Lottery Post:  Yes

The Oklahoma Lottery declined to provide comments about whether or not they intend to cross-sell Mega Millions tickets.

Oregon

Current affiliation:  Powerball
Will cross-sell:  Not decided
Responded to Lottery Post:  Yes

The Oregon Lottery is working through the practical issues of cross-selling Powerball and Mega Millions.

At the November Lottery Commission meeting Director Penn will inform the Commissioners about the cross-selling agreement.  A month later at the December Commission meeting, the lottery is expecting a final decision to be reached.

Pennsylvania

Current affiliation:  Powerball
Will cross-sell:  Unknown
Responded to Lottery Post:  No

Unknown: No media reports located, no information published on the lottery's Web site, and the lottery did not respond to a request for comment.

Rhode Island

Current affiliation:  Powerball
Will cross-sell:  Unknown
Responded to Lottery Post:  No

Unknown: No media reports located, no information published on the lottery's Web site, and the lottery did not respond to a request for comment.

South Carolina

Current affiliation:  Powerball
Will cross-sell:  Yes
Responded to Lottery Post:  Yes

The South Carolina Education Lottery Board of Commissioners voted unanimously in its November 10 meeting to approve the cross-selling of Powerball and Mega Millions.

Ticket sales could begin as early as January 31, 2010.

The lottery does not yet have firm projections of added revenue if Mega Millions is added, but their hope is that adding Mega Millions to their game offerings will increase the transfer of funds to the Education Lottery Account by 15 to 18 percent.

South Dakota

Current affiliation:  Powerball
Will cross-sell:  Not decided
Responded to Lottery Post:  Yes

The South Dakota governing board has yet to take up the matter of cross-sales, and does not have further comment at this time.

Tennessee

Current affiliation:  Powerball
Will cross-sell:  Yes
Responded to Lottery Post:  No

From local media reports:

The Tennessee Lottery will start selling tickets to the multi-state Mega Millions game early next year and eliminate the in-state Lotto Plus game.

Adding Mega Millions, which is similar to Powerball, is expected to boost profits for education by $10 million to $15 million over 12 months.  If implemented in early 2010, it likely will raise about $6 million for education before this fiscal year ends, said Andy Davis, the lottery's chief financial and information systems officer.

Doing away with Lotto Plus was a matter of logistics since winning numbers for Lotto Plus, one of the lottery's newer instate jackpot games, are drawn on Tuesday and Fridays, the same nights as Mega Millions, Tennessee Lottery CEO Rebbecca Hargrove said.  Also, Lotto Plus turned out just $4.8 million in profits for education last year, far less than what Mega Millions is expected to generate, she said.

In addition to improving profits, cross-selling games could make it easier for national retail chains that want to sell lottery tickets and could be a step toward a national lottery game, which is targeted for 2012, Hargrove said.

Had the lottery groups decided not to proceed with dual sales, Tennessee and five other Southern states were primed to launch Lotto South, a regional jackpot game, which could still launch at a later time, Hargrove said.  Discussions about Lotto South are being conducted with North Carolina, South Carolina, Georgia, Virginia and Kentucky.

Texas

Current affiliation:  Mega Millions
Will cross-sell:  Unknown
Responded to Lottery Post:  No

Unknown: No media reports located, no information published on the lottery's Web site, and the lottery did not respond to a request for comment.

Vermont

Current affiliation:  Powerball
Will cross-sell:  Unknown
Responded to Lottery Post:  No

Unknown: No media reports located, no information published on the lottery's Web site, and the lottery did not respond to a request for comment.

Virginia

Current affiliation:  Mega Millions
Will cross-sell:  Yes
Responded to Lottery Post:  Yes

The Virginia Lottery Board has approved selling Powerball tickets in Virginia, and the Lottery will begin selling Powerball tickets by Spring 2010, or sooner if possible.

The Lottery indicated that they are not ready yet to release revenue projections.

Washington

Current affiliation:  Mega Millions
Will cross-sell:  Yes
Responded to Lottery Post:  Yes

Washington is one of three Mega Millions states that required legislation to sell both games.  The 2009 Legislature granted Washington’s Lottery the ability to offer Powerball following final passage of Engrossed Substitute Senate Bill 6108.

No firm start date for Powerball has been set, although it is hoped that it could be in early 2010.  Several implementation details need to be worked between the Powerball and Mega Millions states, which accounts for the inability to set a start date decisively.

The lottery expects that Powerball will eventually generate approximately $30 million in sales annually, after the game has been established in Washington State for several years.

West Virginia

Current affiliation:  Powerball
Will cross-sell:  Probably
Responded to Lottery Post:  No

From local media reports:

"We want to give our players the opportunity not to cross over the border to Ohio and play Mega Millions," state Lottery Marketing Director Nikki Orcutt said last month.

The cross-selling could begin early next year, but a firm date was not set.

Wisconsin

Current affiliation:  Powerball
Will cross-sell:  Yes
Responded to Lottery Post:  Yes

The Wisconsin Lottery will sell both Powerball and Mega Millions, with a start date for Mega Millions of sometime in the first quarter of calendar year 2010.

The Lottery is not ready yet to release sales projections for Mega Millions or the impact to revenue.