Powerball winner in Colorado claims state's largest prize ever

Powerball winner from a small Colorado city claimed a $90 million jackpot. The prize is the largest ever that the state has awarded to a Powerball winner. 

A tow truck driver from a small western Colorado city claimed his $90 million Powerball jackpot and told reporters he has been waking up and feeling like his win wasn't real.

The Denver Post reported (http://goo.gl/QgJjl0 ) Wednesday that the winner, who identified himself only as Claude G. at a news conference, said he woke up Sunday as his wife screamed in joy.

The drawing was Saturday night. The prize is the largest Powerball jackpot ever won in Colorado.

Previous Colorado lottery winners also have only identified themselves by their first name and an initial.

Claude G. says he is from Rifle, where he bought his ticket. The city along Interstate 70 has struggled to recover from the recession and a drop in natural gas drilling. Concerns have long been raised about the regressive nature of the lottery, wherein low income people tend to buy the bulk of the lottery tickets that fund certain state programs. But because a wider swath of earners tend to buy tickets for them, big Powerball Jackpots are somewhat less regressive, as the Monitor reported in 2012: 

The company that runs Powerball raised single ticket prices from $1 to $2 in January in an effort to create larger jackpots and generate more revenue for the 42 US states that use Powerball proceedings to fund state run programs, including things like academic scholarships.

The price increase reduces the number of tickets, but makes the jackpot “more likely to roll over,” says Victor Matheson, an economics professor at the College of the Holy Cross in Worcester, Mass. “It generates the same level of revenue while selling half as many tickets, decreasing the odds of a win.”

It’s been a successful tactic. Powerball ticket sales generated $3.96 billion in fiscal year 2012, and a spokesman for the Iowa-based Multi-State Lottery Association, which runs Powerball, told theAssociated Press that figure is expected to reach $5 billion in the coming fiscal year.

That means more funding for the states, which receive $1 of every $2 ticket sold. Where that money comes from, however, is a thorny issue.

Lotteries are far and away the most popular form of household gambling, with worldwide revenues reaching nearly $262 billion in 2011.

“The thing lotteries offer that other forms of gambling don’t is the possibility of an life-changing event happening instantly,” Dr. Matheson says. “You can have a good night at a casino and come away with a few hundred bucks, but a $250 million lottery ticket is a life-changer.”

Adding to the appeal, he says, is the fact that there is no skill involved, and lotto is unmatched in terms of convenience. “There are literally tens of thousands of locations where you can buy a ticket,” as opposed to just a smattering of casinos across the country.

But study after study indicates that those who play the lottery regularly are relatively poor on average, and spend a greater percentage of their household budgets on tickets. In South Carolina, for instance, 54.3 percent of  frequent lotto players made less than $40,000 per year, according to a 2009 state-conducted survey. In Texas, a 2004 study found that someone with less than a high school education spent a median $600 on the lottery each year; someone with a graduate school education spent less than a third of that, at $156. In one study released in March, households earning less than $13,000 annually spent 9 percent of their earnings on lottery tickets.

“There’s no doubt this is a highly regressive tax,” Matheson says. “Lotteries are in the business of selling hope, and they prey on people who are down on their luck and don’t see any other options to make their life better.”

What’s more, the resulting windfall for states is “less than 3 percent of state revenues,” says Kent Grote, a professor of economics at Lake Forest College inChicago. And they don’t necessarily fund programs for  the low-income groups who are footing the bill.

In Florida, for instance, the state lottery funds Bright Futures, a college scholarship program for high-achieving students who don’t generally come from  the most impoverished backgrounds. “If we’re going t be taking money primarily from low income people, then let’s use it for programs to help lower income groups,” Mr. Grote says.  If it’s general education, fine.”

But huge lotto jackpots, like the one that will be announced Wednesday night, aren’t necessarily the worst offenders, Matheson points out. “The large jackpots attract people from a large income spectrum. The more that the lottery emphasizes high payoff low odds, you are more likely to attract higher income buyers.” Games with lower payouts, like scratch off tickets, are “disproportionately purchased by low-income individuals.”

“There are studies out there that suggest it gets less regressive as lotto jackpots get larger,” Grote adds.