California lottery jackpots could be less than advertised in a coronavirus slump
The California Lottery’s Mega Millions jackpot stood at $113 million Tuesday, and so far, the lottery has the money to pay up if someone wins.
But the coronavirus is taking a toll on ticket sales. If sales remain in a slump, the lottery might not be able to pay advertised jackpots, its deputy director of finance told the State Lottery Commission during a special meeting Monday.
“The ... unprecedented impact the COVID-19 health crisis is having on sales means each game is in imminent danger of having sales be insufficient to support the advertised jackpot,” said Nicholas Buchen, the deputy finance director, according to a transcript of the call.
The Lottery Commission voted at the meeting to scrap lottery regulations that required Mega Millions and Powerball jackpots to be at least $40 million. The change will give the lottery more flexibility to keep jackpots in line with sales, executives said.
Lottery executives described the change as a formality, saying lottery rules already allow it to pay less than the advertised amount if sales don’t support the jackpot.
“If sales were to take a substantial dive, regardless of the amount that was advertised, at that point the winner would just get what sales support,” Buchen told the commission.
The California Lottery Act, passed in 1984, doesn’t require the dollar amounts to be in the regulations, Sharon Allen, the lottery’s deputy director of sales and marketing, told the commission.
Additionally, official rules for both games already specify the $40 million is not guaranteed, Allen said.
The group that manages the Powerball game lowered its minimum jackpot to $20 million on March 25, Buchen told the commission. The California State Lottery is not part of the decision-making body for that game.
The Mega Millions Consortium, of which the California State Lottery is a member, opted at its last meeting to keep the minimum at $40 million for now, but could adjust it down depending on ticket sales.
The executives asked the commission to remove the specific amounts from the regulations so the lottery can act quickly if the consortium decides to reduce the jackpots.
“Removing these subsections will eliminate unnecessary sources of conflict between lottery regulations and the official rules of both games,” Allen said.
In addition to specifying minimum amounts, the regulations had specified that each jackpot prize must increase by a set amount from the last prize. The regulations said the Mega Millions jackpot had to grow by $5 million per draw, while the Powerball set the minimum bump at $10 million. The commission also eliminated those requirements.
The California State Lottery was created to help fund education in the state. The department contributed about $1.7 billion to education in the state in the 2017-2018 fiscal year, about 1 percent of the state’s budget for public schools.
When the lottery’s sales decrease, so do its contributions to schools, the officials told the commission.
Sales for the most recent Powerball draw were down $775,000 from a comparable draw in December with a similar jackpot, a decrease of 24 percent, Buchen told the commission.
Mega Millions sales dropped $1 million in a recent draw, down 34 percent, he said.
The games are continuing and many lottery employees are still going in to work.
“We’re balancing the order from the governor to stay in place and at home but also communicating that the games are still happening,” Allen told the commission.
Lottery sales representative Paulina Vasquez told commissioners she and other lottery workers developed COVID-like symptoms while working, saying one worker is now on life support.
“It was a little too late when they pulled us out of the field,” she said.
Alva Johnson, the department’s director, cited the lottery’s school contributions in remarks after Vasquez spoke.
“This is in fact a critical function, and that is why we are still open,” Johnson said.
This story was originally published March 31, 2020 at 4:50 PM.