After the Powerball jackpot – what next?


And then, like all good things it came to an end; I, for one, am disappointed.  I wanted to see what would happen if the jackpot continued to grow.  It hit on Wednesday, November 28th for about $590 million; a nice round sum.  But that is nothing compared to what might have been in another 3 days or even a week of the kind of sales we have seen in the last seven days.  If no one had won on the 28th the next drawing would have been on December 1st – preliminary estimates had that jackpot worth $900 million. At the rate this most recent jackpot progressed in two days, that jackpot would have been over a billion dollars.  As I said I was eager to see what social and economic changes would ensue. I will just have to wait for the next one mega jackpot, because with the new format and 42 states linked in both Mega Millions and Powerball it will happen again.

The largest Powerball lottery jackpot the world has ever seen has been won Wednesday night by two tickets sold in Arizona and Missouri. The stage was set for the massive prize early Sunday morning, when lottery officials set the new Powerball lottery jackpot at an estimated $425 million.  Over the next few days, extremely high demand for Powerball tickets prompted officials to raise the jackpot two more times before the Wednesday drawing — and by the time all the sales were totaled at draw time, the jackpot stood at a faint-inducing $579.9 million. The Powerball winning numbers for Wednesday, November 28, 2012, were 5, 16, 22, 23, and 29, with Powerball number 6.  Wednesday’s Powerball jackpot was the accumulation of 15 consecutive drawings without a grand prize winner over a nearly two-month stretch.  The jackpot run-up started as a $40 million grand prize on Oct. 6, 2012. Todd Northrop, Lottery Post, 11-29-12

 UPDATE: Will roll to $900 million if nobody wins tonight; As if $425 million or $500 million isn’t enough, the Multi-State Lottery Association announced that tonight’s Powerball jackpot has been increased again — to $550 Million. Todd Northrop, Lottery Post, 11-28-12

Well, with that Powerball jackpot gone, now life will go back to normal, at least for Powerball and its regular customers. The buying frenzy is over, the long lines are gone and those millions of dream bubbles have burst; well not all of the bubbles have burst.  The lottery association and its members must feel like those two lucky winning-ticket-holders, like they just hit the big one – the really big one.  Certainly, the lotteries are dreaming of more frequent jackpots and sales like Powerball just experienced.  If they did not realize it before, now the directors all realize that the secret to increasing their sales lies in increasing the size of the jackpots; simple, it is not rocket science at all – the bigger the jackpot the faster the tickets sell and they sell to more and more people as it grows.  The next logical step in growing lottery revenues is to put the sales online; thereby making it easier and faster to purchase a ticket.

Given the opinion issued by the Department of Justice just a year ago this December, that may be as easy as making the decision to do it.  According to Department of Justice, the government sees nothing illegal in an online lottery. And significantly, there is no federal regulation to control the process or the product.  That means each state can move forward as it sees fit and in some states the director of the lottery already has the authority to do just that.  Easy.

It would be easy if Congress were not discussing the issue of online gaming; the right-honorable senators are debating the possibly of federal regulation for online gaming.  All interested parties have their lobbyists on the job and when possible they will testify themselves; the issue is just too important to be ignored by the stakeholders.  Next week directors of seven state lotteries are going to Congress to testify.  They oppose the online gaming bill put forward by Harry Reid of Nevada and Jon Kyl of Arizona.  The lottery directors are clearly aware that by using the internet they can grow jackpots even larger and create more revenues for their states and do not want their options limited.

The online gaming bill as proposed would restrict online gaming and keep the state lotteries from offering keno or slot-like games and possibly linked mega-jackpots.  Nevada and the casino industry would like to limit and control online gaming – limit it to what they can offer and regulate.  Nevada has already licensed some 30 companies and would like to be the model for licensing, regulating, taxing and controlling online gaming.  The lotteries are wild cards in this game and the casino industry also wants to keep things in the traditional box. It is too soon to pick a winner in this dogfight – but at this point the lotteries are a very powerful lobby themselves; whether they have enough political muscle to defeat Reid and the casino industry remains to be seen.

The casinos, Nevada and the lotteries cannot all get want they want – because the ultimate prize is an online slot machine – and each wants the exclusive rights.  If the lotteries can put their slots online they will be very, very profitable; the more profitable the lottery slot machines become, the less profitable the casino slot machines will be.   Lotteries will be able to link the progressive slot jackpots within the state and eventually between states, just as Powerball and Mega Millions are linked.  The granddaddy, the grandfather of linked jackpots is Megabucks – the IGT linked progressive.  Occasionally the Megabucks jackpot has reached close to $30 million with several hundred slot machines in Nevada linked together.  A jackpot linked across 42 states would begin much higher than that – Powerball begins at $40 million.  So, regardless of what the lobbyists or those testifying for either side have to say, they are really trying to protect the right operate slot machines online.  That is not what they will be saying, but that is the ultimate goal.

Lottery directors from seven states are planning a trip to Washington next week to speak out against a bill that would legalize Internet poker while restricting the online expansion of lotteries and other games.  Officials from Kentucky, Idaho, Washington state, Missouri, New Hampshire, Georgia and Iowa have signed up for the lobbying fly-in, said David Gale, executive director of the North American Association of State and Provincial Lotteries.  The target is a bill being prepared by Sens. Harry Reid, D-Nev., and Jon Kyl, R-Ariz., that would legalize and set up a framework to license and regulate online poker games. At the same time, it would restrict most other forms of online gambling, including efforts by states to expand their lotteries into online offerings that might more closely resemble keno or slot machines. Steve Tetreault, Las Vegas Review-Journal, 11-29-12

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