While it’s the first time Powerball has seen back-to-back billion-dollar grand prize cycles, lottery jackpots have gotten bigger more frequently over the past several years, experts say.
One reason for more frequent large Powerball jackpots is a 2015 change to the game’s matrix, according to J. Bret Toyne, executive director of the Multi-State Lottery Association, which runs Powerball.
Powerball players must correctly choose all six numbers to win the grand prize — five white balls and one red ball for the jackpot.
In 2015, Powerball added more numbers for the white and red balls, which decreased the chance of hitting the jackpot. Currently, there is roughly a 1 in 292 million chance of winning the grand prize, compared to the previous odds of about 1 in 175 million, Toyne said.
Plus, the game added a Monday drawing in 2021, he said. Without a jackpot winner, the estimated grand prize keeps rolling over until a player chooses all six numbers.
Higher interest rates have boosted jackpots
Another reason for bigger lottery jackpots over the past couple of years has been rising interest rates, said Akshay Khanna, CEO of Jackpot.com, which sells state lottery tickets.
Similar to savings accounts, higher interest rates allow jackpots to grow more quickly over time, he said. “The higher the interest rates, the more you’re earning on that pool of capital.”
Of course, this may shift once the Federal Reserve reverses its policy and begins cutting interest rates.
In the meantime, more online sales options and the “media frenzy” as jackpots grow have also contributed to higher grand prizes, Khanna said. “The combination of these two things is really driving these higher and higher jackpots, particularly in the last two years,” he said.
Wednesday’s Powerball drawing comes less than three months since a single ticket sold in California won the game’s $1.08 billion jackpot. Meanwhile, the Mega Millions jackpot is back down to $48 million and the odds of winning that prize are roughly 1 in 302 million.
Join CNBC’s Financial Advisor Summit on Oct. 12, where we’ll talk with top advisors, investors, market experts, technologists and economists about what advisors can do now to position their clients for the best possible outcomes as we head into the last quarter of 2023 and face the unknown in 2024. Learn more and get your ticket today.