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      The Powerball Regressivity: An Evidence from the World's Largest Lottery Prize

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          Abstract

          On January 13, 2016, the largest jackpot prize in world history took place.  In this paper, we examied the Powerball's regressivity from the 16th drawing with a jackpot prize of $301.8 million to the 20th drawing with a jackpot prize of $1.5 billion.  These last five drawings allowed us to examine whether the regressivity continues to decline and turns progressive as jackpot levels approach the billion-dollar mark.  Our sample include Powerball sales from 44 states and the District of Columbia.  Since the cost of living varied across states/jurisdictions, we used real lottery and income data to estimate income elasticity.  For the 16th through 18th drawings, there is a positive relationship between jackpot level and income elasticity.  However, on the 19th drawing with a jackpot of $949.8 million, the income elasticity declined to 0.554 from 0.900.  On the 20th drawing, the income elasticity increased to 0.649 but remained below 0.900 reached on the 18th drawing.

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          Author and article information

          Contributors
          Journal
          The Journal of Gambling Business and Economics
          The University of Buckingham
          11 October 2019
          : 12
          : 1
          : 49-64
          Affiliations
          [1 ] Loyola University Chicago
          [2 ] Suffolk University
          [3 ] Rider University
          [4 ] Handong Global University
          Article
          10.5750/jgbe.v12i1.1489

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