So I read an article today about the win of the mega millions jackpot, and that the prize pool was increased by the time of drawing. I am Australian where our lotteries work on a parimutuel basis where 60% of sales in a drawing are divided amongst the prize divisions. And the advertised division one prize is the minimum prize for that drawing and if they don’t sell enough entries to cover that the lottery operator has to eat it and cover the shortfall from their own funds if it is won.
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They work more or less the same way as yours. If nobody wins onw drawing, the funds are rolled into the next drawing. If this happens a few times in a row, the top prize can get huge. As the prize gets bigger, more people buy tickets, which makes it increase even faster.
Here in the US the lottery is run by states, but they cooperate to make jackpot payouts in multi state lotteries like mega millions doable.
The jackpot growth is based on ticket sales, starting at an initial payout ($20 mil for mega millions right now) and split if there are multiple winners so that’s covered. The lower level prizes are all flat payouts except in California where it is pari-mutual. The probabilities are calculated to generate about 50% prize money and 50% revenue. Some other games run higher and overall lottery programs send back 60-65% of revenue as prizes.
Since the prizes are flat payouts, though they run pretty poor payout ratios to drive the jackpots bigger, there is a still a -very- small chance that the revenue wouldn’t cover the flat payouts for their draw based games, but typically a state runs multiple lotteries and can take in actual billions in sales a year, much of which comes from scratch offs which don’t have the issue of running out of money since there are fixed numbers of prizes. You would need an awful lot of twisted probability for a bunch of top prize winners to dent into a states ability to pay. But there’s also insurance for that.
I think the question is why does the amount of the prize seem to increase throughout the evening until the the drawing above the posted amount?
If so, it’s because the posted amount is an estimate based on ticket sales. If sales exceed expectations by the drawing, then the larger gross receipts gets pooled into the potential winnings.
I.e. They post 1.2b prize. But lots and lots of tickets are sold, so by the drawing at 11pm, it’s actually 1.3B in prize money.
Usually it’s 1/2 of ticket revenue. Half goes to price money, half goes to the government agencies who benefit from the lotteries.
Basically, they set a minimum requirement that automatically goes to the next pot if someone wins.
Anything over that minimum goes to the winner, minus a percentage for commissions and sales.
Sales from tickets helps drive up the pot, as long as no one wins, the pot gets bigger.
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