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Why does the Mega Millions Jackpot not start at $40 mil?

Topic closed. 40 replies. Last post 3 years ago by ryanm.

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whiteballz's avatar - Lottery-015.jpg
Nutley, New Jersey
United States
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August 1, 2012
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Posted: March 24, 2014, 1:48 pm - IP Logged

even at $2 per ticket, I don't think Powerball makes any money if the jackpot is won at the default amount of $40 million. Which does happen sometimes and when it does they lose money. I think the people who run PB start the jackpot at $40 million and hope no one wins the base amount. If too many win the jackpot at the default amount you'd better believe they'd change the format or go out of business.

Don't quote me on this, but I read somewhere on this forum, that Powerball doesn't become profitable until about 4 rollovers. I don't know who said it and I'm too lazy to look up the thread. I'm sure someone will correct me if I'm wrong.

If Mega Millions starts at $40 million with the $1 tickets and the jackpot is won at the default amount, it would be a huge loss for MM.

In any event, your choices are simple, either you buy the $1 mega millions ticket with the default jackpot at $15 million with the knowledge that even after taxes, it will be more money than most people make in a lifetime or you just wait until the jackpot rolls over to whatever amount you think is worth throwing a dollar wager against astronomical odds.

That is the beauty of the free market. You decide what you do with your own money.

.

    LottoMetro's avatar - Lottery-024.jpg
    Happyland
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    Posted: March 24, 2014, 2:13 pm - IP Logged

    It all boils down to sales, sales, sales, and cost.

    MM puts 32.577% of ticket sales towards the jackpot. That $8.3 million starting cash jackpot after the recent win? Deficit. Sales were $18,035,251 which means the jackpot was only funded with roughly $5,875,344. Powerball can afford higher starting jackpot because 1) higher ticket price yet comparable sales, and 2) they have a reserve pool which deducts 2% to pad deficits. MM may have a reserve too, I don't remember.

    Yes, early wins can be a liability nightmare, but over time they average out.

    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?

    2017: 0% (0 tickets)
    P&L % = Total Win($)/Total Wager($) - 1

      mrcraft's avatar - images3lp4 zps7dbb4a10.jpg
      Los Angeles, California
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      Posted: March 24, 2014, 2:27 pm - IP Logged

      My thoughts is that they should merge the two and create a single national lottery.  I don't know the politics behind it all, but my understanding is they are both administered by the MUSL.

      - $2 per line, start at $50 million, bonus balls at ~15-18, white balls at ~70-75, and 3 draws per week (Tues, Thurs, Sat)

      I think the rollovers will be larger and quicker to reach frenzy levels; easier to get your $2 back than PB presently; and potentially more revenues with increased sales generated by more frequent mega jackpots.  The current lottery money put in play is being diluted by having both PB and MM.

      Just a thought...

        LottoMetro's avatar - Lottery-024.jpg
        Happyland
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        Posted: March 24, 2014, 2:44 pm - IP Logged

        My thoughts is that they should merge the two and create a single national lottery.  I don't know the politics behind it all, but my understanding is they are both administered by the MUSL.

        - $2 per line, start at $50 million, bonus balls at ~15-18, white balls at ~70-75, and 3 draws per week (Tues, Thurs, Sat)

        I think the rollovers will be larger and quicker to reach frenzy levels; easier to get your $2 back than PB presently; and potentially more revenues with increased sales generated by more frequent mega jackpots.  The current lottery money put in play is being diluted by having both PB and MM.

        Just a thought...

        I agree, but they look at it as the player has more "choices." Those loyal to MM who feel $2 is too much will simply revert to playing their state lotteries, at least until the jackpots reached record sizes.

        Both PB and MM are supervised/marketed by MUSL; however, Mega Millions is actually separate from Powerball and changes to the game are approved by the Mega Millions Group lotteries. MUSL and the Mega Millions Group apparently has "differences," which is the reason they are separate. I recently heard that another state left the group and joined MUSL, so maybe they will get the message.

        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?

        2017: 0% (0 tickets)
        P&L % = Total Win($)/Total Wager($) - 1

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          LAKE HAVASU AZ
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          Posted: March 24, 2014, 3:34 pm - IP Logged

          If PB can do it- why not MM?

          What is the issue- anyone know?

          By now the powers that be must know that the public is behind this new format- why not show their true colors by starting above the paltry $15 mil? The starting price is an insult..IMHO compared to PB.

          Thoughts?

          screw the amounts starting point what  I HATE Angry  is the cash option crap ..HALF!! both games do that Mad,plus the dam taxes...Mad

          please return to your normal thread  Cheers...thank you

          some day....some day

            Jon D's avatar - calotterylogo
            Los Angeles, California
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            Posted: March 24, 2014, 3:36 pm - IP Logged

            If PB can do it- why not MM?

            What is the issue- anyone know?

            By now the powers that be must know that the public is behind this new format- why not show their true colors by starting above the paltry $15 mil? The starting price is an insult..IMHO compared to PB.

            Thoughts?

            Why? Simple. One is $2 and the other is $1 per play.

            Remember Powerball when it was $1? Starting JP was only $20M.

            The base sales for PB are almost twice that of MM, but only because the ticket price is twice as much. MM actually sells more tickets, but less revenue because of the lower $1 price.

            The games are also structured differently with prize share percentages, etc. Such that PB Jackpot is not fully funded until the 5th or 6th draw, whereas MM is fully funded by the 2nd or 3rd draw.

            You want the starting JP the same for MM? Well then be careful what you ask for, because you might get it...with a $2 MM ticket price. Bang Head

              rcbbuckeye's avatar - Lottery-043.jpg
              Texas
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              Posted: March 24, 2014, 8:52 pm - IP Logged

              screw the amounts starting point what  I HATE Angry  is the cash option crap ..HALF!! both games do that Mad,plus the dam taxes...Mad

              please return to your normal thread  Cheers...thank you

              The cash option is actually the REAL jackpot, not the annuity. They take the cash amount and invest it to achieve the annuity.

              Yes they advertise the annuity. Simply marketing. Those that study the lotteries understand how it works.

              CAN'T WIN IF YOU'RE NOT IN

              A DOLLAR AND A DREAM (OR $2)

                noise-gate's avatar - images q=tbn:ANd9GcR91HDs4UJhjxO7cmeMQWZ5lB_FOcMLOGicau4V74R45tDgPWrr
                Bay Area - California
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                Posted: March 24, 2014, 8:53 pm - IP Logged

                Why? Simple. One is $2 and the other is $1 per play.

                Remember Powerball when it was $1? Starting JP was only $20M.

                The base sales for PB are almost twice that of MM, but only because the ticket price is twice as much. MM actually sells more tickets, but less revenue because of the lower $1 price.

                The games are also structured differently with prize share percentages, etc. Such that PB Jackpot is not fully funded until the 5th or 6th draw, whereas MM is fully funded by the 2nd or 3rd draw.

                You want the starting JP the same for MM? Well then be careful what you ask for, because you might get it...with a $2 MM ticket price. Bang Head

                Well that explains it. Thanks.

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                  Morrison, IL
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                  Posted: March 24, 2014, 10:47 pm - IP Logged

                  Why? Simple. One is $2 and the other is $1 per play.

                  Remember Powerball when it was $1? Starting JP was only $20M.

                  The base sales for PB are almost twice that of MM, but only because the ticket price is twice as much. MM actually sells more tickets, but less revenue because of the lower $1 price.

                  The games are also structured differently with prize share percentages, etc. Such that PB Jackpot is not fully funded until the 5th or 6th draw, whereas MM is fully funded by the 2nd or 3rd draw.

                  You want the starting JP the same for MM? Well then be careful what you ask for, because you might get it...with a $2 MM ticket price. Bang Head

                  If that's the case, then Mega Millions should start at $20 million, but keep the minimum $5 million increases, especially seeing as the Mega Millions annuity is larger than the Powerball annuity given any cash jackpot, because MM's payments increase by 5% each year in contrast to PB's 4%.

                  ---

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                    Posted: March 25, 2014, 7:36 am - IP Logged

                    Winning a $15 million jackpot does not equate to having $15 million in the bank. The cash option after all taxes are factored in would leave the winner with roughly $5 million. You may not be worth anything close to $5 million but I am willing to bet there are some L.P. members who are.

                    LOL You're right and wrong I am not worth anywhere near 5 million and neither is anybody else who's a member on this site, including you

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                      Posted: March 25, 2014, 7:38 am - IP Logged

                      The question is not whether one would refuse $15 mil Shelby, its why it cannot start at  $25-$30 mil given the odds?

                      LOL yeah I understood the question, but they would not let it stay at a $1 drawing then, that's why. Also if it's not a question whether or not one would refuse the 15 mil they why does it matter if it started at a higher amount?

                        Gliter's avatar - Lottery-029.jpg
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                        Posted: March 25, 2014, 9:34 am - IP Logged

                        Euromillions starts at 12m, & we have about 9 countries take part.

                         

                        One word Greed

                        Good things come to those who wait.

                          Teddi's avatar - Lottery-008.jpg

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                          Posted: March 25, 2014, 11:01 am - IP Logged

                          Euromillions starts at 12m, & we have about 9 countries take part.

                           

                          One word Greed

                          What you fail to put into your comment is that 12 million euros equals 12 million euros. $15 million does not equal $15 million. If we're lucky, maybe we'll see $5 million.

                          So it isn't the same thing at all. 12 million euros is even still WAY ahead of our $40 million PB starting jackpot.

                          You're comparing apples and oranges. Just because they are both fruit don't make them the same thing. It's not about greed, it's about arithmetic.

                            Jon D's avatar - calotterylogo
                            Los Angeles, California
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                            Posted: March 25, 2014, 11:03 am - IP Logged

                            If that's the case, then Mega Millions should start at $20 million, but keep the minimum $5 million increases, especially seeing as the Mega Millions annuity is larger than the Powerball annuity given any cash jackpot, because MM's payments increase by 5% each year in contrast to PB's 4%.

                            Or maybe PB should start at $30M instead. Wink

                            Actually, if they were honest and based the JP on actual base revenue collected, they would start MM at $10M and PB at $20M. But they go for the marketing bump of a larger starting JP to speed up the rate of increase of sales. MM has a slightly higher annuity factor, but PB has a dedicated jackpot reserve, so the PB JP is more inflated than MM.(and they run a JP deficit longer)

                              Teddi's avatar - Lottery-008.jpg

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                              Posted: March 25, 2014, 11:12 am - IP Logged

                              Why? Simple. One is $2 and the other is $1 per play.

                              Remember Powerball when it was $1? Starting JP was only $20M.

                              The base sales for PB are almost twice that of MM, but only because the ticket price is twice as much. MM actually sells more tickets, but less revenue because of the lower $1 price.

                              The games are also structured differently with prize share percentages, etc. Such that PB Jackpot is not fully funded until the 5th or 6th draw, whereas MM is fully funded by the 2nd or 3rd draw.

                              You want the starting JP the same for MM? Well then be careful what you ask for, because you might get it...with a $2 MM ticket price. Bang Head

                              I get what you're saying but MM is making more money now. Much more. There are a lot more rollovers than there used to be. No real reason why they can't take some of the additional money they are making from the increased number of rollovers and apply it to the starting JP. If they are indeed fully funded by draw 3 and people aren't winning until between draw 15 or more, they could start the JP at $20 million without batting an eye. They could even take it out of their advertising budget because God knows with the huge JP amounts that are happening frequently now, the tickets sell themselves.