Mega Millions surpasses $1 billion again. Why are there so many big jackpots? by Cyrus Moulton July 31, 2023 Share Facebook LinkedIn Twitter A Mega Millions wagering slip is held in Cranberry Township, Pa. AP Photo/Gene J. Puskar Lottery fever – and the jackpot purse – continue to rise, as no grand prize winner on Tuesday means that the Mega Millions jackpot rises to $1.25 billion for the next drawing on Friday. Sound familiar? It is. In fact, we had billion-dollar jackpots for the game in January. And before that in July 2022. And again in January 2021. Yakov Bart Associate Professor, D’Amore-McKim School of Business. Photo by Matthew Modoono/Northeastern University So the Mega Millions latest prize is not surprising to Yakov Bart, an associate professor of marketing at Northeastern University, who researches lotteries. “I think, basically, we are kind of getting used to seeing jackpots go above $1 billion,” Bart says. The Mega Millions jackpot has reached $1.25 billion, its fourth-largest prize ever. It’s the fifth time the Mega Millions jackpot has surpassed $1 billion—the most recent time being in January when a winning ticket in Maine led to a $1.348 billion prize. All of the game’s billion-dollar prizes have also been in the last five years, with the largest jackpot—$1.537 billion—setting the record in October 2018. The next drawing is 11 p.m. Friday Eastern time zone. Bart says that there are several factors explaining the high jackpot. First of all, Mega Millions changed its rules and decreased its odds in October 2017. Players used to pick five numbers from 1 to 75 and a Mega number from 1 to 15 in order to win the grand prize—achieved by matching all six numbers. That decreased the odds from 1 in 258,890,850, to 1 in 302,575,350, the Washington Post reported. But those numbers have not dissuaded players. Northeastern Global News, in your inbox. Sign up for NGN’s daily newsletter for news, discovery and analysis from around the world. Name: Email: Comment: Email Subscribe Reader Type World News University News “The folks running lotteries understand that for most lottery players this does not impact likelihood of purchasing lottery tickets,” Bart says. “People have a hard time making sense of the numbers because the likelihood is so very very small.” Those decreased odds, however, have made rollover of prizes more frequent. Without a grand prize winner in Mega Millions, the prize continues to the next drawing date and adds funds from the latest ticket sales. Friday’s prize has been rolled over since the spring when the last prize was won on April 18. “That’s the major driver of the numbers we see,” Bart says, of the two interrelated factors. Meanwhile, the billion dollar jackpots also attract media attention (guilty as charged), leading to more ticket sales. “Big numbers attract more attention—if you’re more likely to see it in the news, you’re more likely to say ‘maybe I’ll give it a chance,’” Bart says. “It creates free advertising for the lotteries.” Again, the jackpot rises. Finally, Bart says a final reason this jackpot got so high so quickly, and why we’re likely to see more billion-dollar jackpots in the future, is interest rate hikes. The advertised price—in this case $1.25 billion—is an annuity based on the value of money invested in portfolio bonds over 30 years, Bart explains. Rising interest rates thus means the bonds will accrue more interest over time. But is this increasing-prize trend sustainable? Moreover, although a lottery offer might offer the quickest and easiest way to substantially leap income brackets, is it equitable? Sustainability is hard to judge. “There are only so many times people will be surprised by a billion dollar jackpot, and as billion jackpots become more and more routine, they will be covered less frequently in news, and then this (free advertising) effect will go away,” Bart says. “But there’s no penalty so to speak for lottery officials to reduce the odds.” Equitability is easier to determine. “This high variance across jackpots in different points in time is actually problematic from the equity point of view,” Bart says. He noted his recent paper that found that people living in low-income neighborhoods lose 10% more when they buy lottery tickets than those in more affluent locales. So, Bart is not running out to buy a ticket for Tuesday. “I understand the negative return on the investment,” he says. Cyrus Moulton is a Northeastern Global News reporter. Email him at c.moulton@northeastern.edu. Follow him on Twitter @MoultonCyrus.