WSJ Your Money Briefing - The Cost of Lottery Tickets Is Rising, Along With the Billion Dollar Jackpots

Episode Date: October 23, 2024

Mega Millions is planning to raise the price of a lottery ticket to $5 next year. WSJ personal finance reporter Katherine Hamilton joins host Ariana Aspuru to discuss why it’s getting more expensive to buy that ticket to a billion dollar dream. Sign up for the WSJ's free Markets A.M. newsletter.  Learn more about your ad choices. Visit megaphone.fm/adchoices

OCI is the single platform for your infrastructure, database, application development, and AI needs. Do more and spend less like Uber, 8x8, and Databricks Mosaic. Take a free test drive of OCI at oracle.com slash wall street. Here's your money briefing for Wednesday, October 23rd. I'm Arianna Spuru for The Wall Street Journal, filling in for J.R. Whelan. Lottery players are now paying attention to more than just their lucky numbers, as the price of a ticket to play mega-millions

and bag a billion dollar jackpot is about to more than double. Why? Not enough people are buying tickets that would make them just a millionaire. A million dollars is worth a lot less than it used to be because of inflation and the cost of living, but it's also a factor of the time and billionaire is becoming a bigger part of our jargon as a society.

Part of that is people can fantasize about being a billionaire because it's more common to hear about billionaires. Our personal finance reporter, Catherine Hamilton, joins me to talk about the new math and psychology of playing the lottery. That's after the break. AI may be the most important new computer technology ever, but AI needs a lot of processing speed,

and that gets expensive fast. Upgrade to the next generation of the cloud, Oracle Cloud Infrastructure or OCI. OCI is the single platform for your infrastructure, database, application development, and AI needs. Do more and spend less like Uber, 8x8, and Databricks Mosaic. Take a free test drive of OCI at oracle.com slash Wall Street, oracle.com slash Wall Street, oracle.com slash Wall Street. It's getting more expensive to buy that ticket to a billion dollar dream. WSJ personal finance reporter Katherine Hamilton joins me to talk about it. Katherine, you report that Mega Millions is going to raise the price of tickets starting

in April from $2 to $5. That's a pretty big jump. Why the change and how does it compare to what tickets used to cost? The main idea behind the price increase is they're trying to increase the number of billion dollar jackpots that they can offer. And that's because the billion dollar jackpots that they can offer, and that's because the billion dollar jackpots are really popular. It was one dollar for most of the history of Mega Millions, and then it went up to two

dollars in 2017, but this is by far the biggest increase. The idea is that by increasing the ticket price to five dollars, that sales will increase, and the sales goes towards the jackpot. Basically, it keeps rolling over until a jackpot is paid out. So they'll be able to have more billion dollar jackpots when the sales are higher. What about that big, bold billion dollar jackpot is like so irresistible to people? Do people buy more lottery tickets because of it? Yeah, you can see in the sales data how much ticket sales go up when the jackpot hits a billion.

A lot of people say that they wait until it hits $500 million or a billion dollars before they buy a ticket because it feels like a better bet. But that spike really, it happens when the jackpot hits a billion dollars. You wrote a little bit about the psychology behind why people gravitate towards billion dollars. You wrote a little bit about the psychology behind why people gravitate towards billion dollars.

Tell me why. There's definitely a lot of psychological stuff at play because obviously $900 million shouldn't be less of an incentive than a billion, but that's really where you see the ticket sales go up. And I talked to a bunch of different researchers about this topic and the consensus kind of is that a million dollars has lost a little bit of its shine over the last couple of decades. For one thing, obviously a million dollars is worth a lot less than it used to be because of inflation and the cost of living, but it's also a factor of the time and billionaire is becoming a bigger part of our jargon as a

society. There's more billionaires than there used to be. And people are using the word billionaire more than they used to. Part of that is people can fantasize about being a billionaire because it's more common to hear about billionaires. So now we're at a place where billionaire is kind of like the new millionaire in a way. So are we going to get to a place where like trillionaire becomes like in the discussion here? That's definitely part of it too, because trillionaire is also becoming a more

frequently used phrase. We have more companies that are being valued at a trillion dollars for the first time. And even some billionaires like Elon Musk and Jeff Bezos are getting closer to becoming a trillionaire. They're about a quarter of the way there right now. So for the billionaires right now, a trillion dollars is the fantasy. And so for regular people, I think the psychology is that a billion dollars is the fantasy.

How much can the lottery and those jackpots keep up with the demand for higher prizes? It's a bit of a tricky situation because the first time that Mega Millions hit a billion, higher prizes. That's the challenge that has yet to really be addressed in terms of how do you keep breaking records. And part of that too is the media publishes a lot when the jackpot hits a new record. That's a really big deal. More people hear about it and then they go out and buy the tickets as well. So with the changes we've been talking about, what can someone playing the lottery expect their game to look like? There's new rules with this price increase and all of them haven't yet been published. expect their game to look like? prizes as well, but again Mega Millions hasn't officially released the odds. So by the odds changing you mean the odds are more in your favor at this point? Right now it's a one in 300 million chance of winning the billion dollar jackpot and with these new rules Mega Millions has said that it might be a little bit easier than one in 300

million but still pretty pretty tough. One in 299 million, I'm assuming. Right. It's something like that. We don't have the exact numbers, but yes. That's WSJ Reporter, Catherine Hamilton. And that's it for your Money Briefing. This episode is produced by Zoe Kolkin with Deputy Editor, Chris Zinsley. I'm Arianna Aspuru for The Wall Street Journal.

Thanks for listening. AI may be the most important new computer technology ever, but AI needs a lot of processing speed and that gets expensive fast. Upgrade to the next generation of the cloud Oracle Cloud Infrastructure or OCI. OCI is the single platform for your infrastructure, database, application development, and AI needs. Do more and spend less like Uber, 8x8, and Databricks Mosaic. Take a free test drive of OCI at oracle.com slash Wall Street. Oracle.com slash Wall Street.