Overall payback is the percentage of the sales proceeds paid out in prizes. Alone, it can be deceiving depending on the payout table (ie. lots of large prizes with little in between), but should always be kept in mind when choosing games to play and sizes of wagers.
Example, PA Pick 3 odds is 1 in 1000 and pays 500 to 1. On average, for every $1000 taken in, $500 is paid out. $500/$1000 = 50% overall payout.
Most lottery numbers games, including Mega Millions and Powerball, are around 50% give or take several percent. Instant games, including even lowly $1 ones, are typically 60%-80%.
Casino games are typically around 85%-95%. Table game Blackjack (21) is often among the highest payout games, and can exceed 100% overall payback for those playing at a table using a smallish number of hand-shuffled decks (verses auto-shufflers constantly shuffling back in past played cards) along with counting cards (# of 2-10, face, high, low, etc that have come out so far).
PA Lottery will pay out $5,089,200 total in prizes (6,000 winning tickets) regardless of number of raffle tickets sold. Thus the overall payout percentage is extremely variable (most lottery games are fixed to slightly variable). Less sales, better it is for players.
All 500,000 Raffle tickets X $20 = $10,000,000 with $5,089,200 paid out. $5,089,200 prizes / $10,000,000 revenue = 50.892% overall payout with the state netting 49.108% ($10,000,000 - $5,089,200).
400,000 Raffle tickets X $20 = $8,000,000 with $5,089,200 paid out. $5,089,200 prizes / $8,000,000 revenue = 63.615% overall payout with the state netting 36.385% ($8,000,000 - $5,089,200).
300,000 Raffle tickets X $20 = $6,000,000 with $5,089,200 paid out. $5,089,200 prizes / $6,000,000 revenue = 84.82% overall payout with the state netting 15.18% ($6,000,000 - $5,089,200).
I mentioned overall payout can be deceiving, because in some games there are some big prizes and lots of small ones with few in between. Payout percentage takes into account all prizes, including those that may be near impossible to win. Same is true with lottery games. So one shouldn't rely on payout percentage alone, but use it as another measure of whether a game is worthwhile or not...
For example, if given a choice between playing $200 (10 tickets) in a sold out PA Lottery raffle or same $200 on 10 $20 instant games, the instants are the better deal in both regards to odds of hitting anything and overall payout.
However, if one believes the PA Lottery raffle is only going to sell 300,000 tickets, then the raffle is likely the better way to go in regards to overall payout ~85% verses ~75% or so for $20 instants.
Regardless of whether all 500,000 raffle tickets sell or only 300,000, $20 instants still have better odds of winning something at 1 in ~3 verses 1 in 50, likely at best, for the raffle. Overall payout percentage takes into account all prizes, including the large ones. Since the majority of the raffle payout is the top 8 prizes, the higher overall payout only helps slightly unless one plays a lot of tickets - say 500 or even 1,000+ raffle tickets. At that level of play, the improved overall payout will likely make a noticeable difference. For a lower wager player who buys say 10 raffle tickets, they will likely hit nothing whether 100,000 tickets are sold or all 500,000. However, the higher payout percentage could be the difference in some instances, so shouldn't be discounted entirely. Rambling on, and hope this make sense.
Some casinos in Vegas can advertise 100%+ payback on some machines and still make money. If the average player bets less than max (payout tables are often skewed with lower wagers having less proportionally lower payout) and/or doesn't play long enough to hit the near impossible to win top prizes, they'll likely never win back all of their money; likely lose some.
In short, overall payout percentage is another criterion to use for choosing games to play along the amounts to wager. Hope this helps :)