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Powerball to lower jackpot starting point and increases due to plunge in sales

Topic closed. 75 replies. Last post 7 months ago by KY Floyd.

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KY Floyd's avatar - lysol avatar.jpg
United States
Member #23834
October 16, 2005
4264 Posts

"I also assumed they'd go back to $40M minimum and $10M increases when this is back to normal."

I suspect that at the very least they'll continue it as an experiment after things go back to normal. Assuming we'll know what and when "normal" is. Even when they first adopted the $40 million starting jackpot they were well short of fully funding the advertised annuity until getting through several drawings without a winner. Even skimming 50% off the top they could still have a net loss if somebody won on the first drawing. Typical sales for an advertised jackpot of $40 million might be about $25 million, and depending on interest rates they might have to pay out the entire $25 million as a cash jackpot. After 2 or 3 drawings they couldn't lose money, but it could still be several more drawings before they had enough cash to fund the annuity (and equal the advertised cash value) and make their planned 50% profit. It was easy to tell when the jackpot was fully funded, because the rollovers started to be more than the minimum.

People not going out as much has obviously reduced sales (at least among the players who normally drive sales higher as the jackpot goes up), but it used to be unusual for he advertised jackpot to reach $80 to $10 million without having rollovers of more than the $10 million minimum. More recently, but well before the  coronavirus made it to the US, we started seeing the advertised jackpot get well past $100 million before exceeding the minimum rollover. On 11/2/19 the advertised jackpot was $150 million before it was won without ever having a rollover of more than $10 million. The next time around it made it to 160 before increasing by $11 million to 171 on 12/18/19. Some of that is because of jackpot fatigue and declining  sales (or at least a slower increase a the jackpot increases) and some was due to lower interest rates requiring more cash to fund an annuity of any given size.

My guess is that they'll wait a while to see how sales rebound as people start going out to the stores more often before considering any changes back towards the old model. After that I expect that we might see the starting jackpot go up again, but with a lower increase. Based on typical starting sales from a few months ago and current interest rates we might see minimum increases of $7 million, but they might decide that a nice round $5 million is better. And I suppose there's even a very slim chance that they might finally decide to just tell the truth and post a cash jackpot that's based on an estimate of actual ticket sales.