A look at the cost of lottery tickets
When purchasing your lottery tickets do you ever stop to think about the actual cost of the ticket? Various draws have various prices for each ticket. How do operators decide how much to charge for a ticket anyway? Does it come down to a set formula, an educated guess, or does it depend on other factors?
Potential for Prizes
Well, operators have to consider that there must be a significant amount of lottery tickets sold to cover the cost of the various prizes for each draw. In other words, the ticket price charged must be enough so that the total amount of tickets sold for each draw cover paying out all the prizes in case they are all won. So operators must weigh a delicate balance between the total prize pool and potential total ticket sales to come up with a ticket price that will generate the required revenue, but be affordable for players to purchase.
Much of the data that is used to determine ticket price is numerical and geographic factors. First, every draw has both a total number of available prizes of varying amounts, plus the jackpot amount. The area where the tickets are sold is another factor. If sold only in one state or province, the ticket price might be low as there will be fewer purchases and probably fewer winners. If sold nationally, the ticket price might be higher as more people will be buying tickets, therefore more prizes may be won, and generally, prizes and jackpots will be larger.
Costing Examples
As an example of this, let’s look at one national and one local lottery put on by the province of Ontario in Canada and its next door neighbour, the state of New York in the United States.
Lotto Max $5 – national, progressive jackpot, maximizes at $70 m and further sales split up into additional million dollar prizes
2 draws per week
3 sets of numbers
Daily Grand $3 – national, $1000 a day for life
2 draws per week
1 set of numbers
Ontario 49 $1 – Ontario only, $2m per draw
2 draws per week
1 set of numbers
Lottario $1 – Ontario only, progressive jackpot
1 draw per week
2 sets of numbers
Power Ball and Mega Million $2 – national, progressive jackpot
Mega Millions
2 draws per week
2 sets of numbers
Powerball
2 draws per week
1 set of numbers
New York Lotto $1 – state only, progressive jackpot
2 draws per week
2 sets of numbers
New York Cash for Life $1000 a day – $2, state only
Daily draws
1 set of numbers
Looking at Canada’s Lotto Max, the cost is $5 per ticket with a maximum progressive jackpot of $70 m. The U.S.’s Power Ball and Mega Millions are $2 per ticket with an unlimited progressive jackpot. One of the reasons Power Ball and Mega Millions can be sold at $2 per ticket is that the United States has ten times the population of Canada, and to provide a maximum jackpot of 70 million, Lotto Max tickets are $5 each due to Canada’s smaller population. And altougj Mega Millions gives you 2 sets of numbers per ticket and Powerbll give you 1 set of numbers, Lotto Max gives you 3 sets of numbers.
And both the Ontario 49 and Lottario are only sold in the province of Ontario, with the New York Lotto only sold in New York State. Although Ontario is bigger than New York, and has one tenth the population, with a smaller geographic area for both, tickets can all be sold for $1 each.
New York’s Cash for Life and Ontario’s Daily Grand greatly different to ech other. Cash for Life is strictly for New York State for a cost of $2 and 1 set of numbers, but draws are held each day. The Daily Grand is across Canada, $3 per ticket, 2 draws per week and one set of numbers. New York has a large population, about 19.5 million people compared to Canada with about 37.5 million people. Even so, Canada has to sell the Daily Grand tickets at $1 more than New York, and have fewer draws per week.
As you see, in order to set ticket prices, everything from the prize amounts to the area in which the tickets are sold. But on average, ticket prices for all types of draws are low and even spending $5.00 per ticket for a chance at a large win is still a bargain.