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Powerball changes heat up sales

– The historic Powerball jackpot that rose to $500 million Tuesday was all part of a plan that lottery officials put in place early this year to build jackpots faster, drive sales and generate more money for states that run the game.

Their plan appears to be working.

Powerball tickets doubled in price in January to $2, and while the number of tickets sold initially dropped, sales revenue has increased by about 35 percent over 2011.

Sales for Powerball reached a record $3.96 billion in fiscal 2012 and are expected to reach $5 billion this year, said Chuck Strutt of the Des Moines, Iowa-based Multi-State Lottery Association, the group that runs the Powerball game.

It’s the second-highest jackpot in lottery history, behind only the $656 million Mega Millions prize in March.

With soaring jackpots come soaring sales, and for the states playing the game, that means higher revenue.

“The purpose for the lottery is to generate revenue for the respective states and their beneficiary programs,” said Norm Lingle of the Powerball Game Group. “High jackpots certainly help the lottery achieve those goals.”

Of the $2 cost of a Powerball ticket, $1 goes to the prizes and the other dollar is kept by the state lottery organization, said Lingle, who also is executive director of the South Dakota Lottery.

After administrative overhead is paid, the remaining amount goes to that state’s beneficiary programs.

Some states designate specific expenditures such as education, while others deposit the money in their general fund to help supplement tax revenue.

The federal government keeps 25 percent of the jackpot for federal taxes. Most states withhold between 5 percent and 7 percent.

A New York City winner would pay more than 12 percent since the state takes 8.97 percent and the city keeps 3.6 percent.

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