Guest Contribution: Outlook for the Big Games in 2017. By Stephen Wade

Guest Contribution: Outlook for the Big Games in 2017. By Stephen Wade

One year ago, in the November/December 2015 issue of Lottery Insights, I reviewed the relation between jackpots and sales (aside from multipliers) in Mega Millions and Powerball in the year just past, and projected performance for 2016. The main points of those projections were: 1) in Mega Millions, with no structural changes planned, sales were likely to be higher than in 2015, with the likeliest total around $2.7 billion; 2) in Powerball, the October 2015 matrix change made the likelihood of a jackpot of $1 billion or more in the next year about 17%, with the likeliest total of sales about $5.8 billion.

Actual developments in 2016 have fallen very close to these projections. Between January 1 and the end of October, Mega Millions sold $2.04 billion, compared to $2.22 billion for all 12 months of 2015. With 17% of the year remaining, the game is likely to produce nearly $2.4 billion in 2016.

In Powerball, of course, the one-in-six event came through, with a jackpot over $1 billion in January. Sales for the first ten months of the year were $5.91 billion.

My goal in this article, as in the past couple of years, is to assess what we learned from the past year, and to make some projections about the next. To jump right to the projections:  Mega Millions is likely to do a little more in 2017 than it did in 2016; Powerball is likely to do a lot less. My observations and reasoning follow.

Much has been written, and more could be written, about that exciting time in January 2016. More people bought lottery tickets than ever before. However, it also became clear that only a little over half of the population will spend $2 on a ticket that might be worth more than $1 billion.  And practically all of them had also played for a $600 million jackpot in the past1.  That is, by doubling the size of the jackpot, we got a very small increase in participation.

Further, as most of us expected, seeing a jackpot over $1 billion has raised the bar for excitement. The effects are not as severe as I privately feared, but are clear in the charts below. In the first (Powerball) chart, the blue points (representing actual sales for the draw) fall squarely on the values predicted from the 2014 model, right up until the record jackpot. The scale of the chart is truncated to make what happened later more visible. The starting jackpot immediately after the record win produced higher-than expected sales for a few draws, but as the jackpot approached $200 million, sales that had happened in the past did not appear. The jackpot passed $300 million with little notice.  Finally, when the jackpot exceeded $400 million, sales jumped to levels similar to what we would have expected in 2014.

This Article has been published with kind permission of INSIGHTS: http://viewer.zmags.com/publication/cd83f62b#/cd83f62b/1