Just how fast is the Powerball lottery growing? To answer this...

Just how fast is the Powerball lottery growing?

To answer this question, we need to estimate the number of tickets sold per lottery. How? we are given the number of winners per division (thelott.com or ozlotteries.com.au) and the odds of winning a prize per division per standard ticket. From here it's a simple calculation to estimate the total number of standard ticket equivalents that need to be sold to produce a distribution of winners at each division.

The following chart shows the relationship between the number of tickets sold per Jackpot draw (starting at Draw 1207 (4/7/2019) and ending at Draw 1260 (9/7/2020)):


Some of you may not see anything in the chart above, but the more astute observers among you will see that $30m and $3m jackpots are now selling more tickets than $40m and $8m jackpots respectively than from a year ago, or that the most recent jackpot run bypassed the $12m/$20m/$40m/$60m/$80m series from last year and instead jumped to $15m/$30m$50m/$80m last round.

So, why are jackpots running at a higher rate now? This is because the jackpot size is determined by the number of tickets sold, this has a two edged effect: (1) More money is carried over to the next jackpot from the higher ticket sales; and (2) More ticket sales increases the chance that a jackpot will be won.

The growth in ticket sales can be clearly seen once we control for the jackpot size. The below graphs present the growth in ticket sales at the (1) $3m jackpot size; (2) $8m jackpot size; and (3) the $80m jackpot size:




Within the last year the $3m jackpot line has grown 37%, the $8m AND $80m jackpot lines have grown 46%!
What do growth rates of 30% PLUS in ticket sales mean? what proportion has Jumbo captured?

Interestingly, Jumbo provided us with their winners distribution list for draws 1209 & 1218 (for FY2020). From this we calculate that Jumbo is capturing 6 to 6.5% of total powerball ticket sales. This figure is further corroborated if we take the publicized figures of 25% online sales for 2019 and that the proportion of Jumbo to TheLott active customers is 1:4.3. (i.e. 5.8%).

The total ticket sales for Powerball in FY2020 was 2.082b. Which means that Jumbo's ticket sales were somewhere between 126.6m and 133.4m, which then translates to a TTV range of $170.9m to $180.1m in powerball ticket sales in FY2020 for Jumbo.

So how will FY2021 TTV track compared to FY2020. I'll look at multiple scenarios:
(A) Base case: 30% growth in lotto sales and Jumbo's market share remains at 6% (Unlikely given that 2020 online sales now account for 30%)
(B) Middle of the road: 40% growth in lotto sales and Jumbo's market share has grown to 7% (Assuming that 2020 online sales are at 30%)
(C) High end case: 50% growth (don't laugh, the FY2020 exit growth rate in ticket sales was TWICE this growth rate) and Jumbo's market share has grown to 7.5%.




I've also added the net effect the new reseller agreement will have on the TTV numbers for comical purposes In the big picture scheme of things, it turns out to be diddly squat.

Anyway ENJOY!!!