The Illinois Powerball has been active in Illinois for only two years and already has a major impact on the revenue of Mega Millions. The impact on Mega Millions sales is a negative impact that was not expected. When the Multi-State Lottery Association and Mega Millions lottery participants agreed to sell Mega Millions and the Powerball games side by side in the collective forty-four state lotteries; they did so with the intention of increasing the sales of each group's respective game. In other words, mega million states thought that by adding Powerball more revenue would occur for each game and Powerball only states thought that by adding Mega Millions more revenue would occur for each game.
Although it would seem to make sense that more sales of each would occur if you sold them side by side, the real problem is that this premise ignores consumer behavior. Unfortunately, the total opposite tends to be true once it is studied. The following paragraphs prove such a point by using the financial statements of the Illinois lottery and comparing the changes in Mega Millions revenue since 2005 and Powerball revenue since 2010.
To understand the full picture, a discussion of Mega Millions revenue for the past six years needs to take place first. Fiscal year ending financials show that Mega Millions was doing very well before the Illinois Powerball was introduced in 2010. For instance, from 2006 through 2010, mega Millions sales revenue averaged $217.33 million annually. Ironically, the second highest year of revenue for Mega Millions was 2010; the first year of the Illinois Powerball. During this year, total sales for Mega Millions were $221 million.
Despite the high average amount of sales from 2006 through 2010, Mega Millions revenue takes a sharp nose dive when the Illinois Powerball has a full year of implementation and advertising behind it. For instance, in the fiscal year 2011, Illinois Powerball revenue jumped 88.4% with a $45.7 million increase while Mega Millions revenue tumbled 22.9% with a $51.64 million decrease. In other words, Illinois Powerball revenue nearly doubled while Mega Millions revenue declined to its' lowest levels in almost eight years.
A reduction in Mega Million sales by the addition of the Illinois Powerball represents players' sentiment about each game and overall consumer behavior. By ignoring these two powerful factors, the Illinois lottery (and possibly other state lotteries) could be jeopardizing revenue in major games, such as Mega Millions, that have pushed the state lottery forward from inception. Whether you agree or not, share your thoughts on this article with your friends, family, and co-workers through Facebook, Twitter, and LinkedIn.