The History of Multi-State Lottery Games
Editor’s note: Jonathan D. Cohen is a University of Virginia student currently writing a cultural history of the lottery.
On September 12, 1964, Paul Cordone of Gloversville, New York, won what was at the time the biggest lottery jackpot in American history. The previous year, New Hampshire became the first state to legalize a state-operated lottery and Cordone was an immediate beneficiary. Through a complicated system that involved two separate raffles and a horse race—to ensure the game wasn’t rigged—Cordone was one of six winners to take home the grand prize. His jackpot? $100,000.
This sum pales in comparison to the Powerball prize from last Saturday, when an as-yet-unidentified New Jerseyan won a mind-boggling $429.6 million. Yet even this windfall falls far short of the record-breaking $1.4 billion Powerball prize which captured the attention of millions of lottery players this past January. With Americans purchasing record quantities of lottery tickets in 2016, millions have wondered how to pick the winning numbers that will grant them unimaginable riches. What many should consider, too, is what exactly Powerball is and how the largest legal lottery jackpot in the United States swelled from six to ten figures in just half a century.
Originally known as Lotto*America, Powerball is the product of the Multi-State Lottery Association (MUSL) a nonprofit owned by its 37 members (34 state lotteries, the D.C. Lottery, and the lotteries of the U.S. Virgin Islands and Puerto Rico). Every member as well as ten affiliate members offer Powerball, making the game available in 44 states from over 160,000 lottery retailers. As of 2013, 95% of the American population lived in a state that offered Powerball, a sum that may soon rise if Alabama or Mississippi passes a lottery in the coming year.
However, Powerball was not the first multi-state lottery game. In 1985, Maine, Vermont, and New Hampshire formed the Tri-State Lottery in order to provide larger jackpots and win back players who had begun traveling to New York or Massachusetts to buy lottery tickets. The formation of the Tri-State Lottery reveals the main goal of multi-jurisdictional lottery games: draw in players with jackpots larger than any single state can provide. Accordingly, MUSL was formed by lotteries from five small-population states as well as the District of Columbia in 1987. As with many lottery games, the key appeal of Powerball was the promise that the initial jackpot would increase: if a drawing went without a winner, the prize pool would grow. By 1996, Powerball had spread to a total of 22 states and offered a minimum jackpot of $1 million. Since then, MUSL has gradually increased the minimum jackpot size—it currently stands at $40 million—while also increasing the eligible number pool, making an outright grand-prize winner less likely. In 2016, the odds of winning the Powerball jackpot sit at 1 in 292 million, requiring players to correctly guess five numbers ranging from 1 to 69 as well as one “Powerball” number between 1 and 26.
While Congress briefly considered a federally-run lottery in the 1980s, Powerball effectively serves as a national lottery in terms of its size and its scope. In 2012, Powerball—which was not yet sold in high-playing states such as Florida and California—garnered nearly $4 billion in ticket sales, or 6% of total lottery ticket sales nationwide, a percentage that has only grown in recent years. As with all lottery games, MUSL provides revenue for state governments. Like state-run lottery games, approximately 50% of every dollar spent on a Powerball ticket goes to prizes, while roughly 5% remains with MUSL for operating expenses and 5% goes to retailers. The remaining total, approximately 40% of revenue, goes to the governments of lottery states, most of whom channel the money to education or to their general fund. In 2014, states took in around $20 billion from the over $70 billion that Americans spent on lottery tickets, according to the National Association of State and Provincial Lotteries.
Multi-state lottery games, and all games with large jackpots, have had an enduring appeal for American lottery players. Though a relatively recent phenomenon, multi-state games have been crucial for the expansion of lotteries over the past 30 years and help explain why national sales of lottery tickets have increased every year since the late 1980s. If the nation’s recent history is any indication, multi-state games with massive jackpots may present the future for lotteries in the United States.