The Powerball lottery jackpot is expected to reach $1.9 billion for Monday’s drawing, making it the biggest lottery win of all time.
But in 1987, when Lotto America, the precursor to Powerball, was launched, organizers banned jackpots exceeding $80 million.
“There was concern about what to do with that money — like buy a little country or something,” Lotto America director Ed Stanek said at the time.
The lottery craze had taken hold in the 1980s as more and more states introduced lotteries to raise revenue for educational and social programs, but the jackpots of some smaller states couldn’t compete with the more populous states.
Oregon, for example, lost players to Washington and California, which offered jackpots of up to $20 million.
So officials in Rhode Island, Oregon, Missouri, Iowa, Kansas, West Virginia and Washington, DC banded together to form Lotto America to pool money and offer bigger prizes. They also hoped that the larger pots would attract new players.
“Our motivation is to provide Oregonians with an opportunity to play games that they could play in any of the major states,” said then-Oregon Lottery Director James Davey.
The interstate lottery was modeled after those in Canada and the US Virgin Islands.
Officials hoped Lotto America would offer average weekly jackpots of $3 million to $5 million, with the possibility of higher prizes in a year or two. Expenses for conducting the draws and profits from ticket sales were divided among the jurisdictions in proportion to each state or district’s ticket sales.
“This is a whole new ball game,” Lotto America spokesman Jack Ratigan said at the time.
Lotto America initially offered players the ability to pick seven numbers from a field of 40 for a minimum bet of $1.
Players whose numbers match those selected in a weekly drawing would win a jackpot determined by the total number of tickets sold.
The odds of winning the grand prize were about 1 in 19 million, compared to about 1 in 8 million odds for most state lottery games, officials said.
A bankrupt Iowa farmer became the first Lotto America winner in 1988. He said he would use the $3 million prize to save his family’s farm.
A year later, Lotto America switched to picking six numbers from a field of 54. That year it offered a $20 million jackpot and in 1991 the pot reached $50 million.
By 1992, Lotto America had grown to fifteen states.
The game has been renamed Powerball to give players a better chance of winning smaller prizes.
“What we’re hearing is that people like the big prize, but they want a better chance of winning smaller prizes,” said James Davey, director of the Oregon Lottery.
Powerball soon offered a $100 million jackpot.
By the 1990s, however, players were starting to get “jackpot fatigue,” and Powerball required bigger and bigger prizes to keep interest alive, said Jonathan D. Cohen, author of “For a Dollar and a Dream: State Lotteries in Modern America.” “. Meanwhile, instant scratch games grew in popularity and became the main form of lottery play.
In an effort to attract more players and increase jackpot size, Powerball and Mega Millions, the two largest multi-state lotteries, agreed in 2010 to allow retailers to cross-sell both games for the first time.
A year later, the price of a Powerball ticket went from $1 to $2 and the initial jackpots doubled. The game is now available in 45 states, Washington DC, Puerto Rico and the US Virgin Islands.
These changes have pushed the Powerball jackpots way up. The five biggest Powerball pots have all come in the past six years. The odds of winning the grand prize are now 1 in 292 million.
Lotteries are regressive, meaning that lower-income groups spend more of their budget on lottery games than higher-income groups.
Powerball tends to be the least regressive lottery game, Cohen said, because wealthier people tend to buy tickets when the jackpots are increasing.
But for most of the year, “disproportionately poorer people are slowly burning money into smaller prizes.”