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// PUBLIC GAMING INTERNATIONAL // May/June 2016
a little bit with each jackpot run. The tip-
ping point for the $1.58 billion jackpot was
around $250 million. Will that increase and
is that a problem?
R. Hargrove:
There are two thoughts
on that. Powerball used to limit the
amount that the jackpot would increase.
Once a new record was set, the jackpot
would be allowed to increase by $25 mil-
lion on each roll, with the balance of
the revenues being rolled down to fund
lower-tier prizes. The idea was to create a
larger number of millionaires in addition
to the winners of the big jackpot. The
reality is that the million-dollar jackpot
winners do not receive the kind of press
that drives sales. The end result is that we
lost some of the positive impact of con-
tinuously increasing jackpot sizes, with-
out generating much impact or publicity
from the creation of more millionaires.
Sales always increase with every in-
crease in jackpot size. I believe the tipping
point where sales start to sky-rocket has
more to do with the media coverage than
some preconceived magic number in the
consumers’ minds.
There are many different ways that
the jackpot run-up can be managed. The
challenge is to do it in a way that appeals
to the players. We know for instance,
that players are very motivated by big
jackpots. The bigger the better in many
players’ minds. As the jackpot rises, play-
er-ship and sales rise exponentially. What
we are trying to figure out is how to re-
apportion the prize money in a way that
appeals to players. We know consumers
often say they would rather a prize pool of
$500 million be used to create 500 mil-
lionaires than for it all to be given to one
or two jackpot winners. That’s what they
say, but that’s not how they play.
The $1.58 billion jackpot was actually
shared by three different people who held
the winning ticket numbers. Even though
they each received a third of the $1.58
billion, the thing that sticks in everyone’s
mind is $1.58 billion. And in the hours
leading up to that record jackpot, the
players were not ruminating over the pos-
sibility they might have to split the jack-
pot. They were playing to win the entire
amount. In addition to the $1.58 billion
jackpot winners, there were also 73 people
who won $1 million each and another five
who won $2 million prizes. Those who did
not win either the jackpot or one of the
second-tier prizes would probably say they
wished the $1.58 billion were split among
1,600 people to create 1,600 millionaires.
But in the next roll of jackpot games, they
won’t be factoring in the odds to win the
lower-tier prizes. They will see the big
jackpot number on billboards, at POS in
the store, and in media headlines. This ex-
citement will cause them to jump into the
game when it reaches the threshold that
captures their imagination. That might be
$100 million for some; it might be $250
million for others, or more for others.
We are sensitive to the issue of rising
consumer and media expectations. To date,
though, the benefits of rising jackpots con-
tinue to outweigh the benefits of capping
the jackpot. You get far more promotional
impact and media coverage by having the
jackpot go higher than you have by cre-
ating more millionaires. The players who
prefer the large jackpots do not want them
to be capped, while the players who pre-
fer other value propositions have plenty of
other lottery game options.
But if the game were capped at $500 million,
for example, wouldn’t that amount still be in
the sweet spot of super high “jackpot fever”
media coverage and consumer engagement
and sales?
R. Hargrove:
We are grappling with
these questions and don’t know what the
right answer is. Keep in mind that Power-
ball and Mega Millions are the only two
national jackpot games. These are the
only two games that offer the possibility
of winning a gigantic jackpot, albeit at
longer odds. There are hundreds of other
games with all varieties of value propo-
sitions, all of which include better odds
to win a smaller prize. There are many
draw games and instant games that award
a million-dollars and more in top prizes.
There are many games that offer prizes of
less than that, everything from multi-mil-
lion dollar prizes down to $1 and count-
less increments in between.
It’s true; we do not want the tipping
point of consumer and media excitement
to continue to rise. But we are a consum-
er-centric business. We want to give the
consumer options to play the games they
want to play. If the consumer wants to play
big jackpot games, if they are motivated to
come out in larger and larger numbers as
the jackpot continues to rise, should we
necessarily deny them that option?
But still, wouldn’t it be better to cap or man-
age the jackpot roll-up so that you in effect
create more record jackpots?
R. Hargrove:
Perhaps but not necessar-
ily. Think of the record-setting jackpot, be
it Powerball or Mega Millions, like an NFL
Super Bowl game. The Super Bowl is the
single biggest sports event in the U.S. Ev-
ery year it generates huge over-the-top ex-
citement for everyone, huge benefits for all
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