The lottery is one of the most lucrative industries in America, with ticket sales topping $100 billion in 2015 alone. The majority of the money goes to prizes, but state governments also make a profit from the lottery.
WINNING THE LOTTERY
The odds of winning a jackpot vary by lottery, but the more people play, the higher the chances that someone will win. As a result, more players are willing to spend their hard-earned cash on tickets.
The largest jackpots can be worth millions of dollars. But even small prizes are often enough to entice people to buy tickets.
LOCAL GENERAL FUNDS
The majority of the proceeds from a lottery go back to the participating states, but individual states have the freedom to decide how they want to use their lottery money. Many have used lottery revenue to enhance local infrastructure like roads, bridges, and public services.
MERCHANDISING TO GENERATE REVENUE
Lotteries often partner with sports franchises or popular brand-name products to offer large prizes as a way of generating additional money for the state. For example, in June 2008, the New Jersey Lottery teamed with Harley-Davidson to offer a scratch game that paid out a motorcycle as the top prize.
The majority of lottery revenues go to the state, where they are split among prizes, retailer commissions, administrative costs, and state profits. Retailers usually collect 5% to 8% in commissions and about 2% as bonuses for selling winning tickets.