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Louisiana Lottery may add Mega Millions next year

Aug 30, 2011, 2:15 pm

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Louisiana Lottery

With the price of a Powerball ticket slated to increase from $1 to $2 starting next year, state lottery officials are betting that adding a second multi-state jackpot game will help draw in additional revenue. The game, Mega Millions, is offered in 41 states, plus the District of Columbia and the Virgin Islands.

For $1, players pick five numbers, from 1 to 56, and one "Mega Ball," from 1 to 46, and are eligible to win the jackpot by matching all six winning numbers in a drawing.

In 2010, 23 state lotteries signed on to offer Mega Millions, on Tuesday and Friday nights, as part of a cross-selling agreement between the game and Powerball. Louisiana officials passed on bringing it into the fold, opting instead to "study the prospect, and that's what we've been doing," said Rose Hudson, president of the Louisiana Lottery Corp.

At the time, Louisiana officials believed that "the striking similarity between the two games, the saturated gaming market in Louisiana, weighed against the operational cost of launching and maintaining a new draw-style game, we are not confident that enough players would play Mega Millions on a regular basis in addition to what they already play," as Kimberly Chopin, a Louisiana lottery spokeswoman, told the Arkansas Democrat-Gazette in January 2010.

Now, that's changed: Hudson believes the time is ripe because Powerball is set to make the jump in price, and adding Mega Millions will let the state retain a $1 jackpot game. It's also projected to add as much as $8.5 million in lottery sales to the state's books, according to estimates.

The starting jackpot for Powerball is going to double as well, from $20 million to $40 million. "That's the exciting thing for us," Hudson said. "By expanding the portfolio, for us to go to Mega Millions, we will still have a $1 jackpot game that we will be able to offer our players."

While costs to operate the game, including prize expense and retailer commissions for selling winning tickets, would depend on sales volumes, the state estimates that the price tag is expected not to exceed $4.9 million a year.

Louisiana officials held a public hearing to discuss the move in Baton Rouge on Friday. A final report from the lottery board is expected to be forwarded to the state Legislature this fall, with plans to move forward before the end of next year.

Powerball is offered in 42 states, on Wednesday and Saturday nights, as well as the District of Columbia and the Virgin Islands. It also uses six numbers: five are drawn from a pool of 1 to 59 and one "Powerball" is selected, from 1 to 39.

So far, Hudson said most feedback on the proposal has come from retailers and lottery players who live along the Louisiana border, and typically cross state boundaries to get their Mega Million fix.

"We know that the players are interested in having the opportunity to purchase Mega Millions, and we get that kind of feedback from our sales reps and from our sales partners," she said.

Talk of adding Mega Millions in Louisiana and the recent spread of cross-selling one game with another comes as some lottery officials across the country have discussed prospects for creating a national lottery game, which proponents say would have a larger jackpot potential.

Ultimately, it's the prospect of a high windfall that has kept the tickets printing, state officials say.

"That's kind of the draw for players," Hudson said, adding that crafting the rules for a national game would require "a delicate balance."

In Arkansas, lottery officials began offering Mega Millions in 2010, "the first second we could sell them," said Julie Baldridge, director of public affairs and legislative affairs for the Arkansas Scholarship Lottery.

Baldridge said offering both Powerball and Mega Millions complement each other, because players tend to gravitate toward the game with the higher jackpot. And sometimes, it'll be tough for them to choose.

"Two good jackpots, and we're getting two good sets of sales," she said. For instance, Aug. 5 drew $142,000 in gross sales for Mega Millions tickets in Arkansas, for a $99 million jackpot. The next day, for a $180 million Powerball jackpot, the state sold $298,000 in tickets.

"It's the high jackpot that dictates the play," she said. "It'll draw people who seldom play the lottery."

Once the Powerball changes at the beginning of the year, Baldridge expects players' habits to change as well. "What you're going to have is, you're going to hit $100 million jackpots really fast, but it's a different price point, so your $1 price point is going to evaporate in January," she said.

"It's not that you're going to double your sales," Baldridge added, "but you're going to have more sales."

In Arkansas, the lottery brought in about $500 million last year, she said, compared to $383 million in 2009, for the nine months when gaming was first offered.

Gerald Busald, a mathematics professor at San Antonio College who has studied state lotteries, said he believes in the current format, players will be drawn to the higher payoff between the two games. Texas had already offered Mega Millions when it added Powerball to its roster, and Busald said the games "fed off of each other, that is, they cannibalize each other to some extent."

"I think that pretty much it depends on the one with the greater jackpot which is going to get the greater play," he said.

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