I'm confused about the cap on Powerball jackpot increases. I believe the largest jackpot in Powerball history was the $315m to Jack Whitaker on Christmas Day 2002. So what happens if...the jackpot is $310m and no one wins? Does the next jackpot increase freely to $400m or the amount ticket sales would justify....or does the cap begin once it crosses $315m and is set at $340m for the next drawing?? If it's the latter, I don't see the PB jackpot climbing above $350m for a looong time, not to $500m.
I know this post started regarding PB, but it seems the answers in this post address both PB and MM, which are very similar games. I'm taking the liberty to also address the question as it would pertain to MM. I think it will dventually hit 400 or 500 million...the question is when. The advertised, annuitized jackpot amount is not directly tied to ticket sales, since it is influenced by long-term interest rates. So in an economy with a good long-term outlook, the annuitized, advertised amount will be greater than with a poor economic outlook, given the same amount of ticket sales.
The jackpot odds in Mega Millions are 1:135,145,920. Right now the lump sum for MM is roughly 58.9% of the jackpot. So to advertise a jackpot of $500 million, the lottery would need $294.5 million cash-on-hand to dole out if (oh my bad, for Cash Only's benefit, WHEN, when) you choose lump sum.
How do they raise the $294.5 million? 63% of the 50% prize payout goes to the jackpot. $294.5 million is 63% of 50% of the entire funds collected by MM ------> $934,920,634. Ok, so the lottery currently needs $934 million in sales to advertise a $500m jackpot.
Texas, as far as I know, is the only state with the Megaplier option. In other words, the ticket cost in every other state is $1. Funds raised and tickets sold are in a 1:1 ratio.
So to raise $934,920,634, you need to sell around 925,000,000 tickets (I don't know the exact Texas Megaplier ticket sales percentages).
Back to the odds of 1:135,145,920. Mega Millions, theoretically, should be won every time on that 135,145,920th ticket. 925,000,000 divided by 135,145,920 is approximately 6.84. The MM odds have to "sit out" 6.84 normal cycles for the jackpot to get that high.
Individual numbers in a game are cold for 7 or more cycles. Is the Mega Millions jackpot likely to climb over $500m soon? Probably not.
Either way, PB or MM, $500m is statistically a long way off.
Anyone concur or disagree?