Record Powerball result of changes to boost sales

DES MOINES, Iowa (AP) — The historic

Powerball jackpot boosted to $500 million on Tuesday was all part of a

plan lottery officials

put in place early this year to build jackpots faster, drive sales

and generate more money for states that run the game.

Their plan appears to be working.

Powerball tickets doubled in price in January to $2, and while the number of tickets sold initially dropped, sales revenue

has increased by about 35 percent over 2011.

Sales for Powerball reached a record $3.96

billion in fiscal 2012 and are expected to reach $5 billion this year,

said Chuck

Strutt, executive director of the Des Moines, Iowa-based

Multi-State Lottery Association, the group that runs the Powerball


There has been no Powerball winner since

Oct. 6, and the jackpot already has reached a record level for the game.

It was first

posted at $425 million but revised upward to $500 million when

brisk sales increased the payout. It's the second highest jackpot

in lottery history, behind only the $656 million Mega Millions

prize in March.

It took nine weeks for the Mega Millions jackpot to get that high, before three winners — from Kansas, Illinois and Maryland

— hit the right numbers, each collecting $218.6 million for their share of the split.

With soaring jackpots come soaring sales, and for the states playing the game, that means higher revenue.

"The purpose for the lottery is to generate revenue for the respective states and their beneficiary programs," said Norm Lingle,

chairman of the Powerball Game Group. "High jackpots certainly help the lottery achieve those goals."

Of the $2 cost of a Powerball ticket, $1

goes to the prizes and the other dollar is kept by the state lottery


said Lingle, who also is executive director of the South Dakota

Lottery. After administrative overhead is paid, the remaining

amount goes to that state's beneficiary programs.

Some states designate specific expenditures such as education, while others deposit the money in their general fund to help

supplement tax revenue.

The federal government keeps 25 percent of the jackpot for federal taxes.

Most states withhold between 5 percent and 7

percent. There's no withholding in states without a state income tax

such as

Delaware, Pennsylvania, South Dakota, and Texas. A New York City

winner would pay more than 12 percent since the state takes

8.97 percent and the city keeps 3.6 percent.

Powerball and Mega Millions games are seeing jackpots grow faster and higher in part because the states that play both games

agreed in 2010 to sell to one another.

Both games are now played in 42 states, Washington, D.C., and the Virgin Islands. The larger pool of players means jackpots

roll over to higher numbers faster, which tends to increase the buzz about the jackpots which increases sales. It all can

result in higher jackpots sooner.

"It really happened with both of these games became national games," said Terry Rich, CEO of the Iowa Lottery.

Still, just seven of the top 25 jackpots occurred after January 2010 when the cross-selling began. That just points to the

unpredictability of games of chance like lotteries. It still comes down to the luck of the numbers, Rich said.

It has been proven that once the jackpot reaches a certain threshold more players buy.

The Quick Shop in Ottumwa, Iowa, is one of the state's highest-volume lottery ticket sellers due to its location across the

street from a John Deere farm implement factory.

"It's picking up by the minute," said store owner Mark Ebelsheiser. "We're selling probably 60 to 70 percent more than normal.

When it gets up this high they really come out and get them."

Bob Allison, a retired Indian Hills

Community College instructor and administrator, buys tickets weekly for a

group of people

at the college in Ottumwa. On Tuesday he and two golfing and

fishing buddies went in together to buy additional tickets. Allison

said he usually buys a few additional tickets when the jackpot

gets so high.

He said he'd make a lot of people very happy if he won.

"My kids would probably retire quick," said the father of three daughters.

Between $20 and $30 million in tickets were

sold between Wednesday and Saturday drawings for most of October. Once

the jackpot

hit $100 million on Oct. 27, nearly $38 million worth of tickets

were sold by Oct. 31. As the jackpot grew to more than $200

million on Nov. 17, sales surged by nearly $70 million by the next

Wednesday. Then the jackpot reached over $300 million on

Nov. 24 and ticket sales over the next four days surpassed $140


"Somewhere around $100 million those

occasional players seem to come back into the stores in droves," said

Rich, the Iowa

Lottery CEO. The lottery also notices a significant increase in

workers and other groups joining together in pools to combine

resources to buy numbers, he said.

Trina Small, manager at the convenience store in Bondurant, Iowa, where a couple bought a $202 million ticket on Sept. 26,

said sales have been heavy. She said Monday night Powerball sales were at about $800, at least $200 more than normal. She

expects Tuesday and Wednesday sales to be even more.

"It's kind of like Black Friday all over again," she said.

Small doesn't usually play the lottery

herself but said she may buy a chance at the record jackpot. She's just

trying to decide

if her chances are better buying it elsewhere since a jackpot

ticket was sold at her store just two months ago — the old adage

about lightning striking twice.

"The odds are against you anyway but I'm pretty sure they're more against you getting one from this store," she joked.

Powerball has posted sales exceeding $714 million in the current jackpot run since early October and it's possible more than

$1 billion in tickets will have been sold by the end of Wednesday when the next drawing is held.

A single winner choosing the cash option would take home more than $327 million before taxes.

Strutt said the chance of getting a winner this Wednesday is approaching 60 percent.