IOWA CITY, Iowa — The scores of losing players in last week’s $425 million Powerball jackpot did more than take an extremely long shot at getting rich. Their ticket purchases also helped fund a small but increasingly important part of their states’ budgets.
Changes in the nationwide Powerball and Mega Millions games have led to some of the world’s largest jackpots in the last two years.
Fueled by the growth of those games and the expansion of other offerings, many state lotteries last year reported record revenues and transfers to the state budgets and programs they helped fund.
For every $2 ticket, 50 cents or more might end up paying for police officers in Massachusetts, services for the elderly in Pennsylvania, or education in rural school districts in Idaho, lottery directors say.
In all, about $20 billion out of the roughly $70 billion in overall annual lottery revenues is used by states after prize money, retailer commissions, advertising, and administrative expenses are taken out.
Gary Grief, Texas Lottery Commission executive director, said Powerball sales in his state multiply several times as the jackpots rise, from about $3 million per week all the way up to 10 or 15 times that amount. “That’s a very small piece of a big pie, but every dollar counts,” he said.
He and other lottery directors say that revenue from jackpot games still make up a small fraction of overall sales — instant scratch tickets remain their bread and butter.
Critics say lotteries are a terrible way to fund services. They argue that tickets are heavily taxed since only a fraction of the money goes to payouts and winnings are taxed again. And they say the poor are more likely to play more often, making it a regressive funding source.