Tuesday, January 12, 2016

You may not win a prize, but Powerball mania might still help

Props to the Wisconsin Lottery for busting out this fact sheet as Powerball mania peaks. As part of this sheet, the Lottery gave stats on how ticket sales have grown exponentially in recent weeks as the jackpot has spiraled higher. As a sort of "base amount", look to the weekend of Thanksgiving, were barely $1 million in Powerball tickets were sold in Wisconsin. Then watch the growth throughout December, particularly the last 2 weeks.

Powerball sales, Wisconsin
Week ending Dec. 5 $1.26 million
Week ending Dec. 12 $1.37 million
Week ending Dec. 19 $1.59 million
Week ending Dec. 26 $2.00 million
Week ending Jan.2 $3.46 million
Week ending Jan. 9 $21.71 million

The Wisconsin Lottery also gives this little reminder to Wisconsinites about how much the Lottery retains in the multi-state game of Powerball.
Wisconsin must contribute 31.29% of its sales to the national jackpot. The rest of the money stays in Wisconsin. Note: 100% of Wisconsin lotto and instant games stays in our state.
But 31.3% of over $21.7 million in tickets sold is still nearly $6.8 million, and likely well above what is being sold in Megabucks and every other Wisconsin lottery game this week, so the Wisconsin Lottery is still adding quite a bit to its revenue line items this week.

And that could make up for the smaller Lottery credit that taxpayers got this year in Wisconsin. As the Legislative Fiscal Bureau notes, one reason Scott Walker’s claim of “lower property taxes every year I’m in office” didn’t come true this year is because the total 2015 statewide Lottery credit was reduced by $1.9 million vs 2014, reducing the write-off that homeowners get from the lottery.

If nothing else, this huge bump in sales for Powerball might prevent another decrease in the lottery credit for next year, as October's projections indicated that the lottery credit was projected to go down by another $4.8 million next year, if the trend of sales continued. Obviously, a wild card is how many of those millions in Powerball tickets end up getting paid back in prizes (the Lottery's report from March indicated that Powerball has about 1/2 of its sales come back in winnings, and the Wisconsin Lottery has a payout of around 59% in all of its games), but that number could be greatly changed if a lot of the non-jackpot winnings end up in Wisconsin.

There's also a legitimate question that many have broached about lotteries throughout the years, and especially with the craziness of the last couple of weeks, asking whether these games of chance are a regressive tax and promotion of a destructive activity, and whether it is coming at the expense of other potential economic activity. Related to that, lottery tickets aren't part of Wisconsin sales tax, and those who don't win obviously don't have lottery proceeds to pay income tax from, so you can see where the risk comes in from a budgetary side if other economic activity is displaced as a result of people buying lots of lottery tickets. But by the same token, if some lottery retailers have to give a few more hours to workers to handle the extra customers, that could be a slightly positive effect for the state budget (even if it stresses out those clerks, as you may have seen if you've been buying tickets in the last week).

We likely won't know in the near future what overall economic and fiscal effect (if any) will come from the lottery ticket sales resulting from the huge Powerball jackpot, mostly since the lottery credit isn't determined until the Fall, as part of the year-end property tax bills. But now you know where all this ties together, and how Wisconsin's bottom line may be affected, and you can impress your workers at the water at the (probably figurative) water cooler tomorrow if they ask "Is this really going to change anything for the state?"

1 comment:

  1. Hey, Jake.

    I like to check out your blog occasionally and I thought you might like to clarify a couple things for me. I'm trying to find info on WI employment-to-population ratio under Walker (verifying his claim of more people employed in WI in 2 decades), as well as change in median income. For instance, I'm trying to make sense of the following 2 links:



    Any thoughts, if you will, and thanks.