The Kentucky Lottery Corporation's board of directors has approved a cross-selling agreement allowing sales of the Mega Millions multi-state jackpot game in the Commonwealth.
Tentatively set to go on sale in Kentucky at the end of January 2010, lottery players will have both Mega Millions and Powerball available as multi-state multi-million dollar games.
Drawings for Mega Millions are held Tuesday and Friday nights, while Powerball drawings will continue to be held Wednesday and Saturday nights.
Mega Millions is played like Powerball in that tickets cost $1 and players select five white balls from 1 to 56 and one "Mega Ball" from 1 to 46. The game also has an add-on "Megaplier" feature which acts as a prize multiplier. Mega Millions also holds the world record for largest annuity-based prize ever awarded ($390 million in March 2007).
The option of offering both Powerball and Mega Millions had not been possible until an agreement was reached during an October joint meeting of the Powerball and Mega Millions lottery directors.
Kentucky Lottery president and CEO Arch Gleason was an advocate for the cross-selling arrangement during negotiations. "This is a win-win situation for the Kentucky Lottery, as it will allow our players more chances to play for the large jackpots they enjoy," said Gleason.
"Research conducted in 2008 showed 24% of players would play both of the games, and 38% would play in addition to games already played," Gleason said. He also reported collective sales of the two games could reach approximately $125 million to $130 million annually, with Mega Millions accounting for approximately $60 million of that amount. Gleason said some cannibalization of Powerball and other online game sales is expected, which will result in a net incremental sales gain of approximately $32 million annually. For the remainder of FY 10, he estimated total Mega Millions sales of $25 million and an incremental sales gain of approximately $13 million.
Powerball sales in Kentucky during FY09 were $96.9 million, which was a 1.5% drop from the previous year. The first Powerball (then known as Lotto America) ticket in Kentucky was sold on January 10, 1991.
As it now stands, there are 31 states, the District of Columbia and the U.S. Virgin Islands participating in the Powerball game. Mega Millions is offered in 12 states.
Once the cross-selling agreements go into effect at the end of next month, Gleason says 35 of the 45 jurisdictions that had previously been selling one game or another will make both available to their players. Other lotteries are expected to join in the cross-selling during 2010.
The board also learned the results of fiscal year-to-date sales. Vice President of Finance Rick Kelley reported overall sales from July through October have totaled $261.6 million, which is $255,000 (or 0.1%) less than in the prior fiscal year. This number is also $3.2 million (1.2%) less than budgeted.
Kelley reported the Kentucky Lottery is experiencing the industry-wide trend of softening instant ticket sales. Sales for these games have declined $10.1 million (6.1%) for the FY to date compared to last year, and are $10.5 million (6.3%) less than budgeted. Online games such as Pick 3 and Powerball however are $9.9 million (or 10.4%) higher for the first four months of the current FY than from the previous FY.
Even in light of the declining sales, Kelley said, the Kentucky Lottery has been able to increase profits back to the state. This is due in large part to the increase in sales of online games, which have a higher profit margin than instant tickets. Year-to-date income before transfer of dividends was $69.8 million dollars, which is $4.6 million than the same period in the previous year and $1.5 million more than budgeted.
In other actions, the board:
- Approved an amendment to the personal services contract with Delehanty Consulting LLC.
- Accepted an internal audit report indicating the KLC's compliance with items in the June 2009 APA's auditors alert.
- Approved game rules and regulations for eleven scratch-off games and five pull-tab games.
The next meeting of the KLC's board of directors will be January 22nd. The meeting will begin at 9:30 AM EST, and will be held at the Kentucky Lottery headquarters at 1011 West Main Street in Louisville. Committee meetings will begin at 8:30 AM EST.