Christmas US$1 billion jackpot

Remember this moment because it probably won’t last: A US lottery jackpot is projected to soar above US$1 billion, and that’s still a big deal.

Friday’s Mega Millions drawing is worth an estimated US$1.22 billion, evoking headlines and likely luring more people to convenience stores with dreams of private spacewalks above the Earth. Mega Millions operates a lottery across several states in the USA.

It doesn’t seem to matter that the USA’s top 10 jackpots — not including this one — already have boasted 10-figure payouts. For many of us, something stirs inside when a number ticks one dollar above US$999,999,999.

“The question lurking is, what happens when US$1 billion becomes routine and people don’t care about it anymore?” said Jonathan D. Cohen, author of the 2022 book For a Dollar and a Dream: State Lotteries in Modern America.

“There’s no easy round number after a billion,” Cohen said. “But also, how much money can one person possibly, possibly, possibly need?”

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Meanwhile, Mega Millions’ ticket prices will rise from US$2 to US$5 in April. The increase will be one of many changes that officials say will result in improved jackpot odds, more frequent giant prizes, and even larger payouts.

Lotteries date back to at least ancient Rome

Cohen notes in his book that lotteries have existed in one form or another for more than 4,000 years. In Rome, emperors and nobles held drawings at dinner parties and awarded prizes that ranged from terra cotta vases to people who were enslaved. As early as the 1400s, lotteries were used in Europe to fund city defenses and other public works.

Sweepstakes were common in the American colonies, helping to pay for the revolution against Britain. Cohen noted in his book that Thomas Jefferson approved of lotteries, writing that they were a tax “laid on the willing only”.

Lotteries began to fall out of favour in the US in the 1800s because of concerns over fraud, mismanagement, and impacts on poor people. But starting in the 1960s, states began to legalise them to help address financial shortfalls without raising taxes.

“Lotteries were seen as budgetary miracles, the chance for states to make revenue appear seemingly out of thin air,” Cohen wrote.

Mega Millions’ first jackpot started at US$5 million

When Mega Millions started in 1996, it was called “The Big Game” and involved only six states. It was meant to compete with Powerball, which then had 20 states and the District of Columbia.

The original payout for The Big Game started at US$5 million. The value would be nearly twice that today accounting for inflation.

In 2024 dollars, the before-taxes prize could buy a rare copy of the US Constitution or cover Michael Soroka’s US$9 million contract to pitch next season for the Washington Nationals.

By contrast, the pre-tax winnings from Friday’s Mega Millions prize could theoretically buy a Major League Baseball team. The Nationals would be too expensive. But Forbes recently valued the Miami Marlins at US$1 billion.

A better comparison might be Taylor Swift’s tour revenue at the end of 2023. Her Eras Tour became the first to earn more than US$1 billion after selling more than 4 million tickets.

Swift, however, was expected to bring in a total of more than US$2 billion when her tour finally wrapped up December 8, according to concert trade publication Pollstar.

Why jackpots are getting bigger

These days, Mega Millions and its lottery compatriot Powerball are sold in 45 states as well as Washington, D.C. and the US Virgin Islands. Powerball also is sold in Puerto Rico.

In October, Mega Millions said it hoped increased ticket revenue and less stratospheric odds would lead to more people winning even as prizes grow extraordinarily high.

Games with massive payouts tend to be more popular despite the slimmer odds. Larger jackpots also attract more media attention, increase ticket sales, and bring in new players, Cohen said.

Lottery officials have allowed the odds to become lower, with a larger pool of numbers to pick from, Cohen said. And that has made games harder to win, leading to payouts rolling over into even larger prizes.

The first US$1 billion jackpot was in 2016. Cohen said he expects the upward trajectory to continue. Meanwhile, he warned against the tropes of the troubled or bankrupt lottery winner.

A well-known example is Andrew ‘Jack’ Whittaker Jr. He won a record Powerball jackpot after buying a single ticket in 2002 but quickly fell victim to scandals, lawsuits, and personal setbacks as he endured constant requests for money, leaving him unable to trust others.

Most winners don’t turn out like him, Cohen said.

“Even if we deny it, we all sort of believe in the meritocracy — this belief that if you won your money through luck, then you probably didn’t actually deserve it,” Cohen said. And yet various studies have shown that “lottery winners are happier, healthier and wealthier than the rest of us”.

AP