The Cost of Lottery Tickets Is Rising, Along With the Billion Dollar Jackpots
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What is the main topic discussed in this episode?
This episode is brought to you by Charles Schwab. Decisions made in Washington can affect your portfolio every day. Washington Wise from Charles Schwab is an original podcast that unpacks the stories making news in Washington. Listen at schwab.com slash Washington Wise.
Here's your money briefing for Wednesday, October 23rd. I'm Arianna Espuru for The Wall Street Journal, filling in for J.R. Whelan. Lottery players are now paying attention to more than just their lucky numbers, as the price of a ticket to play Mega Millions and bag a billion dollar jackpot is about to more than double. Why? Not enough people are buying tickets that would make them just a millionaire.
Why is Mega Millions raising the price of a ticket to $5?
A million dollars is worth a lot less than it used to be because of inflation and the cost of living. But it's also a factor of the time and billionaire is becoming a bigger part of our jargon as a society.
How will a higher ticket price create more billion‑dollar jackpots?
Part of that is people can fantasize about being a billionaire because it's more common to hear about billionaires.
Our personal finance reporter Catherine Hamilton joins me to talk about the new math and psychology of playing the lottery. That's after the break.
This episode is brought to you by Charles Schwab. Decisions made in Washington can affect your portfolio every day. Washington Wise from Charles Schwab is an original podcast that unpacks the stories making news in Washington. Listen at schwab.com slash Washington Wise.
It's getting more expensive to buy that ticket to a billion-dollar dream. WSJ personal finance reporter Katherine Hamilton joins me to talk about it. Katherine, you report that Mega Millions is going to raise the price of tickets starting in April from $2 to $5. That's a pretty big jump. Why the change, and how does it compare to what tickets used to cost?
When did Mega Millions ticket prices change before and how big is this jump?
The main idea behind the price increase is they're trying to increase the number of billion-dollar jackpots that they can offer, and that's because the billion-dollar jackpots are really popular. It was $1 for most of the history of Mega Millions, and then it went up to $2 in 2017, but this is by far the biggest increase. The idea is that by increasing the ticket price to $5, that sales will increase and the sales goes towards the jackpot. Basically, it keeps rolling over until a jackpot is paid out. So they'll be able to have more billion dollar jackpots when the sales are higher.
What about that big, bold billion dollar jackpot is like so irresistible to people? Do people buy more lottery tickets because of it?
Yeah, you can see in the sales data how much ticket sales go up when the jackpot hits a billion. A lot of people say that they wait until it hits $500 million or a billion dollars before they buy a ticket because it feels like a better bet. But that spike really, it happens when the jackpot hits a billion dollars.
You wrote a little bit about the psychology behind why people gravitate towards billion dollars. Tell me why.
There's definitely a lot of psychological stuff at play because obviously $900 million shouldn't be less of an incentive than a billion, but that's really where you see the ticket sales go up. And I talked to a bunch of different researchers about this topic, and the consensus kind of is that a million dollars has lost a little bit of its shine over the last couple of decades.
Why do billion‑dollar jackpots drive spikes in ticket sales more than smaller amounts?
For one thing, obviously a million dollars is worth a lot less than it used to be because of inflation and the cost of living. But it's also a factor of the time and billionaire is becoming a bigger part of our jargon as a society. There's more billionaires than there used to be and people are using the word billionaire more than they used to. Part of that is people can fantasize about being a billionaire because it's more common to hear about billionaires.
So now we're at a place where billionaire is kind of like the new millionaire in a way. So are we going to get to a place where like trillionaires? becomes like in the discussion here
That's definitely part of it, too, because trillionaire is also becoming a more frequently used phrase.
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Chapters
7 chapters
1
What is the main topic discussed in this episode?
0:00–0:46
2
Why is Mega Millions raising the price of a ticket to $5?
0:46–0:58
3
How will a higher ticket price create more billion‑dollar jackpots?
0:58–2:01
4
When did Mega Millions ticket prices change before and how big is this jump?
2:01–3:35
5
Why do billion‑dollar jackpots drive spikes in ticket sales more than smaller amounts?
3:35–5:49
6
How might the new rules change the odds and payout structure for players?
5:49–6:18
7
What should players expect and when will the new Mega Millions details be released?
6:18–6:57
Speakers
3 identifiedMore from WSJ Your Money Briefing
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