By Katherine Hamilton
Who wants to be a millionaire? Not enough lottery ticket buyers.
Mega Millions is raising ticket prices next year from $2 to $5 to boost more jackpots well over the $1 billion mark.
People play the lottery for the fleeting fantasy of instant riches, the American daydream. These days it takes more zeros to deliver that rush: What's it like to be Bezos? Buffett? A billionaire?
A billion dollars has become the new benchmark of life-changing wealth in the popular imagination, lottery officials say. People buy more tickets when billions are involved -- and they are betting people are also willing to pay more per ticket.
"It's really fun to dream about something like that," said Joshua Johnston, lead director of the Mega Millions Consortium. The bigger jackpots should help Mega Millions differentiate itself from Powerball, the other big multistate lottery, and from other forms of betting.
Billions and billions
Ticket sales rise significantly when jackpots close in on $1 billion, sales data shows. But the novelty has worn off somewhat.
The first time the Mega Millions jackpot hit $1 billion in 2018, people bought more than $739.4 million in tickets, according to sales data from Lotto Report. When it happened again in 2023, half as many tickets were sold.
"Think of it as a drug. You need bigger and bigger doses of the drug to get the same high as we become accustomed to larger and larger jackpots, " said Victor Matheson, an economics professor at the College of the Holy Cross in Worcester, Mass., who has studied lotteries.
Record jackpots bring in new players in part due to the media frenzy that helps advertise it.
Player psychology plays a role, too. There is no logical reason why $900 million should be less of an incentive than $1 billion. Many players post online that they wait until the jackpot hits $500 million or $1 billion. It makes buying a ticket feel more worthwhile and gives them something to fantasize about, they say.
"I only play for the fun of the dream, so yes, I only play when the jackpot is really high," one person wrote on Reddit.
Powerball broke the jackpot record most recently when it surpassed $2 billion in 2022. The advertised jackpot is the total that would be spread out over 30 years of increasing payments. The lump sum cash prize in this case was nearly $1 billion.
This has been the trend throughout the lottery's history. Early on, lotteries assumed players would prefer games with a better chance of winning, even if the prizes were smaller. But it turned out players cared more about the oversize jackpots -- even if the odds of winning became more and more microscopic, said Jonathan Cohen, a historian who wrote a book on the growth of American lotteries. Mega Millions is relying on that trend.
"They want to offer being a billionaire, not just being rich, as the ultimate jackpot," Cohen said.
The band Barenaked Ladies sang about all the absurd ways one could spend a seven-figure windfall, including exotic pets and real estate. The hit song, "If I had $1000000," was released on their 1992 debut album and later used in lottery commercials.
"We were 18 when we wrote that song and had no concept of what things cost apart from what we ate," said former member Steven Page, now 54. "The average house price was around $200,000 in Toronto back then, so you could still have a bunch left over. Now I would buy you a house and the song would be over."
A million isn't what it used to be
Pity the poor millionaire. A million bucks has half the value it did when "Who Wants to Be A Millionaire" made its debut in 1998. There are also a lot more of them next door.
Nearly one in five U.S. households had a net worth of at least $1 million in 2022, counting home equity, up from 7% two decades earlier, according to the Survey of Consumer Finances. That is about 23 million American families.
Many now consider $1 million as a baseline for success, rather than something that would transform their lives. In a Charles Schwab survey from August, Americans said they need $2.5 million to be considered wealthy -- a $300,000 increase from 2023.
Billionaires are a rarer breed: In the U.S., there are fewer than 1,000.
Until 1980, the word billionaire didn't often appear in books and printed publications, according to Google's Ngram Viewer, which tracks the use of words over time. It showed up in printed publications almost 340% more in 2022 than it did in 2000. The word millionaire appears about as often as it did 100 years ago.
Billionaires may suffer a similar fate with the rise of the first trillionaires. Apple became the first company valued at $1 trillion in 2018. Seven other U.S. companies have since joined Apple's ranks and some of the world's wealthiest executives are a quarter of the way to trillionaire status.
"That has a trickle-down effect," said Samita Malik, chief insurance officer at Arta Finance. "People now feel like they need to be a billionaire to have really made it because Jeff Bezos is going to be a trillionaire."
--Jeremy Olshan contributed to this article
Write to Katherine Hamilton at katherine.hamilton@wsj.com
(END) Dow Jones Newswires
October 18, 2024 09:00 ET (13:00 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
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