Friday, October 18, 2013

The October 19 2013 Mega Millions Lottery Changes

(from www.ctlottery.org)
Last Spring, Mega Millions announced that it was going to make major changes to its nationwide lottery game. This came in response to the Powerball price increase last year, and to the realization that the playing public is eager to frantically buy lottery tickets when the offered jackpots are absurdly high.

So to capitalize on the players desire to win gigantic jackpots and to derive larger revenue profits, the Mega Millions format was changed to make the probability of winning the jackpot even more difficult. By doing this, it is believed that the the average jackpot prize offerings will be in the $200 to $800 million range. And, by keeping the ticket cost at the same single dollar price, players will be more eager to purchase multiple tickets at once.

Truthfully, this logic is brilliant, and we believe that Mega Millions will accomplish its goals.

The 2013 Mega Millions Changes
The table below shows a summary of the 2013 Mega Millions changes. Most notably, players will find that the cost of ticket prices will remain the same $1 cost, prize payouts will be substantially lower, and the chances of winning will be much harder.

Summary of 2013 Mega Millions Changes Megaplier Prizes
  • White Balls increased to 1 to 75 (19 more)
  • Megaball lowered 1 to 15 (down from 46)
  • Starting jackpot at $15 million (up from $12 million)
  • Jackpot will increase by $5 million minimum
  • Match 5 prize fixed at $1 million (up from $250,000)
  • Regular Ticket Costs $1 (no change)
  • Chance of winning 258,890,850 (up 83M or 47.4%)
  • Annuity payout moved to 30 years (up from 26)
  • Annuity payments increase by 5% every year
  • Overall chance of winning any prize 14.7
  • Megaplier Ticket still Costs $2 (no change)
  • All prizes multiplied by 2, 3, 4 or 5 times (5 times is new)
  • Average megaplier value is 3.87 times

Because the number of white balls increased to 75, the chances of winning the 2nd tier prize of 5+0 has grown to 1 in 18,492,204. Comparing this to the old 1 in 3,904,701 value for 1 in 56, we see that it is 5.975 times harder to win this prize. This means that the the 2nd tier 5+0 prize is undervalued in the new Mega Millions game.

However, since the number of Megaballs decreases to 15, the overall chance of winning any prize drops to in in 14.7 verses one in 40 in the old format.

Start Date
The new Mega Millions will become effective on Saturday October 19, 2013, and the first drawing will be held on Tuesday October 22, 2013.

Mega Millions's Reasons for Changes.
According to summaries, the main reason that the Mega Millions format is changing is that they want to make the game more exciting by offering larger jackpots. To do this, they increased the number of combinations to make the jackpot more difficult to win. However, they wanted to be competitive with Powerball. So, they kept ticket price at the same $1 cost. Thus:
  1. to increase jackpots, they increased the odds of winning to 1 in 258.9 million;
  2. by keeping the price at $1, a player who spends $2 on Powerball can get 2 Mega Million Tickets;
  3. for the same Powerball price, the odds of winning are only 1 in 129.45 million (lower than Powerball);
  4. by offering the match 5 prize of $1 million, they are consistant with Powerball;
  5. by offering the Megaplier, a player matching 5 white balls only could win $2 to $5 million;
  6. by changing the annuity payment to 30 years, they are consistant with all the other major lottery annuities.
  7. and lastly, by lowering the Megaballs to only 15, the will be more overall winners.

Game Variety
Now that the odds of winning have increased by 47%, it is easy to see that winning Mega Millions will be more difficult. Further, the value of individual prizes has been reduced substantially.

To help understand the impact of the Mega Millions changes, the table below lists the Mega Millions and Powerballs differences side by side. Powerball is shown in the light blue columns, and the new Mega Millions is shown in the pink columns.

Match MM 5/75+1/15
PB 5/59+1/35
Prize $
Prize $
Prize $
Prize $
Power Play
5+1 258,890,850.00 175,223,510.00 1 1 $15,000,000 $40,000,000 $15,000,000 $40,000,000
5+0 18,492,203.57 5,153,632.65 14 34 $1,000,000 $1,000,000 $3,866,667 $2,000,000
4+1 739,688.14 648,975.96 350 270 $5,000 $10,000 $19,333 $40,000
4+0 52,834.87 19,087.53 4,900 9,180 $500 $100 $1,933 $200
3+1 10,720.12 12,244.83 24,150 14,310 $50 $100 $193 $200
3+0 765.72 360.14 338,100 486,540 $5 $7 $19 $14
2+1 472.95 706.43 547,400 248,040 $5 $7 $19 $14
2+0 33.78 20.78

1+1 56.47 110.81 4,584,475 1,581,255 $2 $4 $8 $12
1+0 4.03 3.26

0+1 21.39 55.41 12,103,014 3,162,510 $1 $4 $4 $12
0+0 1.53 1.63

Illustrated above are the odds (or chances), number of winners, prize payout for normal tickets, and prize payout for the multiplier (Megaplier and Power Play) tickets of both games.

Because the differences are rather large, we have decided not to illustrate these in graphic form.

In summary, we believe that the increased odds of winning both the Mega Millions Match 5 and Jackpot will result in a far fewer number of players winning prizes of  $1 million or more. But, since few people win these now, most players will not realize the importance of this improbability.

Correspondingly, players will obtain a "false" sense of security thinking that they really have a chance to win the jackpot because it seems there are more winners. Compared to Powerball, there will be 3 times more players who match the Megaball than those matching the Powerball number. But, those who win at Mega Millions will only receive $1 verses those Powerball players who receive $4.

So just think, you will get 1/4th the amount of money but 3 times the number of winners. So, in reality, things are much worse on a dollar to dollar basis.

But, those who play the Megaplier option will fare much better. In this case, one should compare the Megaplier payouts to the normal $2 Powerball ticket. When this is done, it is easier to see that Mega Millions odds are lower than Powerball and the payouts are much better.

However, we believe the new Mega Millions game will be very successful. Indeed, jackpots will be typically be large and the frequency of winning will keep players hooked on the game.

More Information:
The following links provide you with more information about the 2013 Mega Millions lottery.

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