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Why the world's biggest lottery jackpot wasn't

Oct 30, 2018, 10:46 am

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Mega MillionsMega Millions: Why the world's biggest lottery jackpot wasn'tRating:

DES MOINES, Iowa — Call it the world's largest lottery prize that wasn't.

The Mega Millions jackpot that had been announced as the biggest ever at $1.6 billion ended up being the second-biggest at $1.537 billion. It's a difference that likely means little to the lucky person who bought the ticket in South Carolina and won Tuesday night's drawing, but it raises questions about how lottery officials make estimates and whether they were influenced by a desire to claim the jackpot amount surpassed all others.

How do they estimate the jackpot?

Although Mega Millions is sold in most states, 11 of them largely run the game and are in charge of determining the estimated jackpot, according to Gordon Medenica, director of the Maryland lottery, one of the key 11 states. When jackpots grow especially large , lottery officials from those states compare notes daily about sales figures and combine that information with historical data to make an initial estimate and then decide whether it needs updating.

Why were they wrong this time?

Actually, they're wrong every time. That is, it's an estimate and because the exact jackpot is determined by sales figures across 44 states plus Washington, D.C., and the U.S. Virgin Islands, there is no way to hit the exact figure. Usually no one notices, but when you scream that the prize is the biggest ever, then mumble that it's actually the second-biggest, people notice.

Officials note, however, that the reason jackpots grow so dramatically when prizes get enormous is because people who don't normally play decide to buy a few tickets. That's great for lottery sales but makes it more difficult for officials to estimate how many irregular players will participate and how many tickets they'll buy, adding further complications to the jackpot estimate.

OK, but missing the mark by $63 million?

Yes, there's a big difference between the estimate and the actual prize, but in part that's because the prize is so huge. The estimate doesn't sound so wrong if you frame it as being off by about 4 percent. If the prize was estimated as a more common $100 million and the payout was $96 million, would anyone notice?

Given the missed estimate, the top prize remains a $1.586 billion Powerball jackpot shared by winners in California, Florida and Tennessee in January 2016.

Marketing, marketing, marketing

The explanations are all fine and good, but officials acknowledge the "biggest ever" status enabled them to draw an incredible amount of attention to the Mega Millions drawing.

Peggy Stover, a marketing professor at the University of Iowa's business college, said it's invaluable to trumpet something as being the first or the best. As Stover puts it, "Whether it's your first kiss or first time on a roller coaster, people tend to remember the first of anything much more vividly than the second."

Put another way, "It is tough when you market yourself as the second best."

Skepticism from a gambling expert

Richard McGowan, a Jesuit priest and gambling expert at Boston College, agreed that estimating big jackpots isn't an exact science, but he said officials are under increasing pressure to tout big prizes as the percentage of people playing lotteries has declined over the years. Many people won't even notice a jackpot unless they hear it's the largest ever, he said.

"Anything to spruce up the excitement factor, they're going to use," said McGowan who consults for lottery organizations and groups opposed to gambling. "Just think how much free publicity they got."

McGowan notes that media outlets also like to run stories about "biggest-ever" prizes.

Lottery players, do you care?

David Kramer, an attorney in Omaha, Nebraska, said he buys a lottery ticket when the jackpot soars for "the three days of daydreaming it gives me of what I'd do with the money if I won."

Any outrage that a prize advertised as the world's largest was actually one spot down the list?

"Does it make a difference to somebody this morning that when they thought they were going to win $1.6 billion and they only won $1.537 billion?" he asked. "I think the answer is a resounding, 'No.'"

AP

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17 comments. Last comment 2 years ago by TheMeatman2005.
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CDanaT's avatar - Nolz june15.jpg
Central TN
United States
Member #121189
January 4, 2012
4772 Posts
Offline

While atty Kramer is probably correct about it making a difference in the grander scheme of things.... Being off $63 Million/almost 4% ??? ehhhhhh, IMHO they could do smidge better and consider it a lesser number for more of an fluctuation factor. ALMOST nobody would be complaining one bit if the jackpot was advertised at $1.5 Billion and you won $1.537 Billion... yeah, yeah, yeah, I know, bigger numbers sell more tickets and the jackpot is an estimate. I hear ya on that one............... just my nickels worth on the subject

Integrity: There is just no substitute.

    Coin Toss's avatar - shape barbed.jpg
    100
    Zeta Reticuli Star System
    United States
    Member #30469
    January 17, 2006
    11503 Posts
    Online

    Sounds like a bait & switch, doesn't it?

    Those who run the lotteries love it when players look for consistency in something that's designed not to have any. So many systems, so many theories, so few jackpot winners. 

    Lep

    There is one and only one 'proven' system, and that is to book the action. No matter the game, let the players pick their own losers.

      CDanaT's avatar - Nolz june15.jpg
      Central TN
      United States
      Member #121189
      January 4, 2012
      4772 Posts
      Offline

      Sounds like a bait & switch, doesn't it?

      I don't know about a bait n switch but prestidigitation comes to mind

      Integrity: There is just no substitute.

        Raven62's avatar - binary
        25
        New Jersey
        United States
        Member #17842
        June 28, 2005
        131900 Posts
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        They had High Hopes, but That's Life!

        A mind once stretched by a new idea never returns to its original dimensions!

        Catch-22: A dilemma or difficult circumstance from which there is no escape because of mutually conflicting or dependent conditions.

        Corruptissima re publica plurimae leges: When the republic is at its most corrupt the laws are most numerous.

          OldSchoolPa's avatar - Lottery-057.jpg
          Gurnee, Illinois
          United States
          Member #49729
          February 12, 2007
          951 Posts
          Offline

          Technically, the SC winner is actually the largest lottery jackpot winner since the previous record-breaking Powerball jackpot was split by 3 winning tickets. This one is the largest single ticket winner.

          I would take it and actually turn it into true billions as I would focus on investing rather than spending, avoid any vices (playing the lottery and traveling first class would be my only vices), and only investing in business I know the fundamentals of.

          Get MONEY!!! Winning a JACKPOT lottery is one  MIRACLE I desire for 2019!!!  NOW come to my subconscious mind you 6 winning numbers!US Flag

            savagegoose's avatar - ProfilePho
            adelaide sa
            Australia
            Member #37135
            April 11, 2006
            3340 Posts
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            Bu , is the winner richer than elon musk? i'd give it a year lol

            " Still swinging, still missing "
            2014 = -1016; 2015= -1409; 2016  = -1171; 2017 = -1257 ; 2018 = - 1380 =  TOT =  - 6233

            keno historic = -2291 ; 2015= -603; 2016= -424; 2017 =-427; 2018= -223   TOT = -3968

            :

              LottoMetro's avatar - Lottery-024.jpg
              Happyland
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              September 1, 2013
              1146 Posts
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              Switching over to a centralized system advertising a 'progressive' jackpot, such as casinos use, would eliminate the need for proper estimates and embarrassment from lack thereof. But, this probably won't happen given the lotteries' inability to ever agree on something.

              If the chances of winning the jackpot are so slim, why play when the jackpot is so small? Your chances never change, but the potential payoff does.
              If a crystal ball showed you the future of the rest of your life, and in that future you will never win a jackpot, would you still play?

              P&L % = Total Win($)/Total Wager($) - 1

                KY Floyd's avatar - lysol avatar.jpg
                NY
                United States
                Member #23834
                October 16, 2005
                4264 Posts
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                "The estimate doesn't sound so wrong if you frame it as being off by about 4 percent."

                How about when the estimate is off by a bit more than 10%?  The previous jackpot was $1 billion, and they advertised an increase of $600  million and only got $537 million. That's their actual error. The fact that they can never be absolutely sure what the final jackpot will be is completely irrelevant. They could have done what MUSL did with the record PB jackpot and started by advertising the jackpot at 1.3 or 1.4 billion, and then bumping it up when current sales data warranted it.

                Getting this wrong wasn't a simple mistake because they overestimated sales. It was a colossally stupid blunder brought on by a desire to boast about a fake record as early as possible despite a reasonable analysis saying it probably wasn't going to happen. The PB record was produced an increase of $640 million when the jackpot rolled from $948 million. If everything had remained the same an increase from $1 billion to $1.6 billion would have been a reasonable estimate, but it's almost 3 years later and things were very different.  Sales are now consistently lower for jackpots of any given size, making a comparable sales estimate risky right off the bat. Perhaps even more importantly, the record PB jackpot was competing against a MM jackpot that had reset to only $15 million the night before PB rolled from 948 but this time around MM was competing against a more popular game that was already advertising a jackpot of $430 million. The writing was on the wall, and they should have seen it.

                  Avatar

                  United States
                  Member #185897
                  November 23, 2017
                  29 Posts
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                  Why can't they just update the number every day, or multiple times a day? I'd favor regulation that would require them to behave that way instead of trying to guess the final number days ahead.

                    oate's avatar - AS5hcja

                    United States
                    Member #193172
                    October 22, 2018
                    491 Posts
                    Offline

                    Sounds like a bait & switch, doesn't it?

                    Yes, especially considering they always advertise the inflated annuity value rather than the much lower lump sum value, the latter being what winners almost always opt for.

                    Only my hairdresser knows for sure.

                      weshar75's avatar - Lottery-042.jpg
                      Mcminnville, Oregon
                      United States
                      Member #3013
                      December 13, 2003
                      4802 Posts
                      Offline

                      I would rather the jackpot be low and then be surprised when they draw and say the new amount then over stating the jackpot.  But that is just me.-weshar75

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                        New Member
                        florida
                        United States
                        Member #178725
                        December 13, 2016
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                        SC ticket holder is the top single winner of a jackpot though.  Power ball was split by 3 when it was the record highest.  I'd rather be the sc winner then be oe of the 3 record powerball winners.  Don't think about it too much people. brain hurts fine wine..cigars boat club golf shoes missed the hole in one sc gettin the boogey on.

                          TheGameGrl's avatar - Lottery-012.jpg
                          A long and winding road
                          United States
                          Member #17083
                          June 10, 2005
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                          well since it takes 6- 8 weeks to even see the funds materialize for the winner I tend to think asking them to update daily is a stretch. When data and updates are literally a keystroke away, the entire system relies on accurate forecasting. 4 % is within acceptability. Most statisticians would not be up in arms of that pt percentage.

                          2500,2202,4441,6506,202, *13***

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                            New Member
                            florida
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                            well since it takes 6- 8 weeks to even see the funds materialize for the winner I tend to think asking them to update daily is a stretch. When data and updates are literally a keystroke away, the entire system relies on accurate forecasting. 4 % is within acceptability. Most statisticians would not be up in arms of that pt percentage.

                            Lord shinnok overseer of the netherrealm..now lottery headquarters. 4% can happen bugs an grubs..but drinking to  much here we share... oh no the 4% cometh by hare.  the statisticians flailing arms... "we down cloddened to the very bright...a 4%, our mistakes"   like wise.