Econified

The Powerball lottery started in 1992, and it has been one of the U.S. lotteries that have consistently held the largest prize amounts in recent years. Winning the lottery is incredibly unlikely, but the life changing payoff fuels high sales. Currently, Powerball is advertising a $1.25 billion payout with the cash option valued at $572 million. Because the way the annuity payments are structured, the cash option is the most common payout method by far. Historically, it was very rare to see grand prizes in a lottery over $1 billion, but it seems like this is far more commonplace now. The current grand prize marks the second time Powerball has had an advertised jackpot over $1 billion. What has changed to make the lottery reach these incredibly high numbers more regularly?

What is the Lottery?

Most people are familiar with the lottery, but here is some context for those who do not regularly play. There are two major competitors in nationwide lottery sales, Powerball and Mega Millions. Both of these are essentially owned by a collective of state governments that utilize the lottery sales to pay out winners and fund state projects. Both of these games are very similar to play. Each Powerball ticket costs $2 ($3 if power play is purchased), and the player gets 5 numbers and a special Powerball number. The numbers in Powerball range from 1 to 69 while the Powerball number can be between 1 and 26. All 5 numbers and the Powerball number must be matched to win the grand prize (a 1 in 292 million chance). A list of payouts and odds for other amounts can be found on Powerball’s website. Mega Millions is played similarly, but the tickets cost significantly more at $5 each. There are also 5 numbers that are 1 to 70 and a Mega ball that is between 1 to 24. Match all 5 numbers and the Mega ball to win the grand prize (1 in 290 million chance). The rest of the Mega Millions payouts and odds for other winnings can be found on the Mega Millions website. Both of these lotteries have incremental grand prizes that are determined by the amount of  ticket sales prior to the grand prize being won. This means the more money made without a winner, the higher the jackpot becomes. Both of these lotteries have seen drastic increases in advertised prize amounts in recent years signaling less lottery winners in recent years.

Why are Grand Prizes so High?

The first lottery grand prize totaling over $1 billion was back in 2016. Since then, the jackpot on either lottery has been more than $1 billion 14 times. However, 9 of these 14 have occurred since 2023. This shows that lottery jackpots have been rising in recent years. There are only two easy ways the lottery can increase the jackpot amounts, increase ticket prices or decrease winning odds. If tickets are more expensive, consumers buying tickets will have to spend more to have the same chance of winning. This means that there will be fewer overall tickets sold while still preserving similar dollar sales. Fewer tickets sold means less grand prize winners, so the grand prize will get higher. The other way to increase grand prize amounts is to decrease the chance for people to win. This can be done by adding more numbers or extending the ranges of available numbers. Anything that can be done to decrease lottery odds will, on average, cause grand prizes to rise.

Both Mega Millions and Powerball have done both of these tactics to raise grand prize amounts. Powerball has only increased their price once since their founding in 1992; they doubled prices from $1 to $2 in 2012. Mega Millions has increased prices twice since their founding in 1996. They increased from $1 to $2 in 2017, and they recently increased their price up to $5 in April of 2025. Prior to the 2017 rise in price for Mega Millions, the odds to win the grand prize were 1 in 259 million. These odds were raised when they raised their price to 1 in 303 million. This means that not only was there a doubling in price, but there was also a decrease in the odds of winning the grand prize. When Mega Millions raised their price to $5, the odds actually did improve to the 1 in 290 million we see today. However, prior to 2017, $100 would have gotten you a 1 in 2.59 million chance to win the grand prize. Now, those odds would be 1 in 14.5 million for the same $100. Powerball has kept prices steady for many years now, but the odds did decrease on the grand prize from 1 in 175 million to 1 in 292 million in 2015. All these changes hover around the 2016 timeframe when $1 billion grand prizes started to appear.

Higher Grand Prizes means more $$$

These higher grand prizes certainly mean higher payouts for those who win, but it also increases lottery sales. Lottery sales data is generally public information, and Texas sales data can be found here. This data shows Texas state lottery FY26 sales which started on September 1st, 2025. The total “draw game” sales (which includes Powerball) was $113 million in Texas on the first week of September. This was the time when Powerball’s grand prize was advertised to be over $1.75 billion. The average “draw game” sales each week for the first 14 weeks in FY26 was $36 million. This highlights a 216% increase in sales for draw games during the time period where the lottery was over $1 billion.

This increase in sales is why lotteries are intentionally trying to raise grand prize amounts. The odds of winning the grand prize are essentially unimportant to consumers that buy tickets. The odds are so astronomically small that people know that they are not going to win when they purchase a ticket. People purchase tickets for the hope of winning despite all odds. This is all to say, people do not care about the odds as long as someone still wins. If the odds allow at least one person to feasibly win, people will have the mindset of “that could be me”.

Lotteries want higher grand prizes, so they can attract more people to buy tickets. Higher ticket sales mean more revenue. State run lotteries allow the state to raise money for programs without having to increase taxes. This incentivizes states to increase lottery revenues despite the potentially detrimental effects of gambling. This is why lottery prices have increased, and lottery odds have historically gotten worse. However, Mega Millions increasing the price to $5 should have brought about higher Mega Millions grand prizes, but Mega Millions has not surpassed $1 billion since the price change in April. This is likely because $5 is quite expensive to spend on a single chance to win. The odds of winning the grand prize are essentially the same, so the perceived value is less. Consumers do not care as much that the other prize amounts have increased for Mega Millions because the grand prize seems more unreachable now. Increasing the grand prize odds seems like a better way to achieve higher jackpots because most ticket buyers will not realize the difference in overall odds. Higher ticket prices are more obvious to consumers. This is likely why Powerball has not increased their price in almost 14 years.

The lottery is a form of gambling, and the odds are very much against you when you buy a lottery ticket. Just like with anything, a few lottery tickets here and there may not be any sign of a problem, but gambling addiction can be extremely difficult to overcome. If you or someone you know needs help with gambling addiction, help can be found at ncpgambling.org or via phone at +1(800)522-4700.