0816 powerball
A billboard promoting the Powerball game is seen along a highway February 17, 2006 near the Illinois border in Pleasant Prairie, Wisc. - 

Jeremy Hobson: Someone who recently visited a gas station in the small Michigan city of Lapeer is about to be very rich. That's where the winning Powerball ticket was sold, and the jackpot is $337 million. That beats Powerball's previous record of $210 million, which was collected by a Rhode Island woman in February.

So what's up with these huge lottery jackpots recently? For answers, we're joined by Romel Mostafa who is an expert on state lotteries at the University of Western Ontario. Good morning.

Romel Mostafa: Good morning and good to be on your show.

Hobson: Great to have you. So it does seem like there have been a lot of these mega jackpots lately. What’s going on?

Mostafa: So, people do get attracted to, you know, large prizes and states have been ramping up in terms of these mega lotteries and it’s a good way perhaps, for them to bring in some revenue when there’s a recession.

Hobson: Yeah well, we obviously hear about the winners, as the people who get the numbers right and go collect their money but as you mentioned, states are the ones bringing in a lot of money as well.

Mostafa: Right, so it’s about 30 percent of total sales from lotteries are actually profited by the states. And In fact, South Dakota, West Virginia, and Rhode Island, more than 7 percent of their state revenues come from lottery profits.

Hobson: Now, do lottery sales go up when the economy gets worse?

Mostafa: What our research suggests – in one of our studies – when people think that their relative income has gone down then they tend to buy lottery tickets. It could be, in a recession like this, if you feel that you’re relatively poorer than before than that might increase your propensity to buy lottery tickets.

Hobson: So, do you think we should be worried about our economy if lottery sales are up right now?

Mostafa: No, not necessarily. I think the economy, the basics, the fundamentals look pretty strong for the U.S. economy. There’s no reason to believe why the U.S. economy would not come back.

Hobson: Romel Mostafa is a professor at the Richar Ivey School of Business at the University of Western Ontario. Thanks so much for talking with us. 

Mostafa: Thank you.


Follow Jeremy Hobson at @jeremyhobson