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After spending 15 years in the world of lottery, I can tell you, wrapping your head around draw game mechanics can feel like trying to solve a Rubik’s Cube blindfolded. In this article, I’m hoping to break down the nuts and bolts of lotto-style games and share the core strategies I lean on to keep these games not just running, but thriving and sustainable for the long haul.
Lotto games pulled in over $13 billion in U.S. sales in FY25. While that might seem small compared to the $61 billion in scratch games, lotto games are more profitable per dollar spent. Powerball and Mega Millions have prize payouts of around 50%, meaning that for every $1 spent, about 50 cents is returned in prizes. Scratch games, by comparison, average around a 69% payout, so roughly 69 cents goes back out. So, while scratch games still generate the lion’s share of total funds to good causes, the ratio is closer to 1 to 3, not 1 to 5, because lotto games keep more for the state. That’s why these games remain a core part of the lottery portfolio
Although progressive jackpot lotto games are prevalent in the U.S. market, numerous jurisdictions also offer smaller, fixed top prize options at the state level. In these cases, the top prize amount remains constant—if it is $100,000, it will always be $100,000. These games typically experience more stable and predictable sales patterns compared to their progressive counterparts.
A progressive jackpot lotto has a jackpot that grows over time. It starts with a “seed” amount, and each drawing without a winner adds a set boost to the top prize. In many cases, that cycle continues until player excitement about the large jackpot starts to rise, and then sales are off to the races, which fuels even larger jackpot increases.
This type of lotto creates a lot of variability as it requires player excitement. On the bright side, it can create huge windfalls for the state. Powerball had no billion-dollar jackpots in FY25 and generated about $3.7 billion in sales. In September 2025, it had its first billion-dollar jackpot since April 2024. Sales reached $2.7 billion in the third quarter alone.
State Lotto Example
With variability comes uncertainty; however, when player excitement takes too long, the game can die. It takes a full coterie of tools to assess if a lotto is healthy or not, and then what to do about it. To illustrate, I have invented a fictional example. Say hello to “State Lotto.” We’ll use a single matrix to keep things simple: players just have to pick six unique numbers between 1 and 45. There’s a 50% prize payout, and a progressive jackpot kicks off at $1,000,000, and it jumps up by $100,000 every time there’s no winner, until the pool is fully funded. After that, any extra rolls are based on the total jackpot pool.
Over the last three years, State Lotto tickets, priced at $1, have been selling great, but they’re starting to taper off, and the lottery wants to know why. The first step I would break out is Monte Carlo simulations, which are a powerful analytical tool for predicting the range of probable outcomes of a game over a specific period. By comparing historical per-draw sales with all the key variables mentioned above, the models give a statistical map of potential outcomes.
I can build a simulation that provides a large number of possible scenarios for how State Lotto will perform. For this demonstration, I’m going to walk you through a positive scenario and a negative scenario. For the “healthy” scenario, I’m using sales data from three years ago. For the “unhealthy” scenario, I’m using the most recent, not-so-great sales numbers. In the graphs, we will examine the prize payout range in 90% of the simulated scenarios.
Scenario 1—Healthy State Lotto game
The models predict that there is a 90% chance the prize payout is between 50% and 53%, an indication of a healthy game.
Scenario 2—Unhealthy State Lotto game
The models predicts that there is a 90% chance the prize payout is between 50% and 56%, an indication that the game’s performance is becoming more volatile.
So, if I’m staring down an “unhealthy” scenario like the second State Lotto example, I would recommend taking further exploratory steps by analyzing the game’s matrix size, jackpot fatigue levels, and player engagement.
Matrix analysis helps identify optimal configurations that maximize player interest while effectively managing risk. The number of possible combinations can significantly impact product performance. State Lotto’s 6-out-of-45 matrix has roughly 8.1 million possible combinations. If we want to increase or decrease those combinations, we can change the number of balls (6) players must pick or the pool of numbers (45) they pick from. If we want to drastically increase the difficulty of winning, we could add a second matrix, turning it into a multi-matrix game. (For instance, we could make them pick 5 unique numbers out of 45, and then a sixth number from 1 to 10. This multi-matrix would have 12 million combinations, despite the sixth ball only being 1 to 10!)
Assuming the same population, the more combinations there are, the harder it is to win, but the more likely the jackpot will roll. The bigger the jackpot, the more likely we are to generate earned media and player chatter. But games with a limited number of annual jackpot hits often exhibit heightened year-over-year volatility. State Lotto’s matrix may need to be reduced to return it to healthy territory.
Then we need to analyze our current level of jackpot fatigue, which occurs when players need larger jackpots before purchasing. A $50 million jackpot once generated the same level of excitement as a $1 billion jackpot does today. As a result, sales can slump at lower jackpot levels, creating risk for lotteries if the jackpot is hit before it’s fully funded.
By tracking engagement throughout extended rollovers, we can see when players begin to get excited. Here is a graph of all the Powerball jackpot rolls in 2025.
As you can see, they all start out identically, except for 9/8/2025, which gets an extra boost from the 6/2/2025 run. You can also see that the 9/8/2025 run may have experienced some jackpot fatigue because it takes almost five more draws before it is won, and the jackpot increases by smaller increments.
It’s tough to dramatically reduce jackpot fatigue. You could consider capping the top prize, as Canadian lotteries do with Lotto Max, but that comes with its own challenges. More often, the better play is timely intervention, like launching a stronger marketing push a few rolls before sales would take off to generate some early buzz.
Then we need to understand player engagement. It’s critical that we track both player trends quantitatively and qualitatively over time. We can analyze metrics such as average ticket cost by play type and Quick Pick versus manual selections to assess how players interact with a game. Then we can put the spreadsheets down and chat with the players. Nothing beats hearing those unfiltered, sometimes hilarious, sometimes brutally honest opinions straight from the source.
Sometimes, the secret sauce for boosting sales is a fresh marketing campaign, while other times there’s no choice but to make significant game changes.
Innovation Needs A Plan
I’ve found that lotto game management is truly a blend of science, art, and gut feel. It’s about getting to a point where we’re offering a compelling product without high levels of performance risk. I’m a huge believer in regularly checking in on game performance. Sometimes an unhealthy lotto jackpot keeps rolling, and the annual sales and profit numbers look great. You might be tempted to pat yourself on the back for keeping things stable. But here’s the twist: those figures sometimes hide what’s really happening. Every so often, the real results stray from what the stats and models predict, and if you’re not careful, you might end up with some pretty wild expectations for the future.
One frequent oversight I see is introducing innovations to lotto-style products without establishing ongoing support plans. Instead, when considering innovations, lotteries should routinely monitor key performance metrics such as average ticket cost trends, primary sales drivers, and the impact of promotions on player engagement.
Thorough long-term planning enables lotteries to align their efforts with system vendors early, ensuring effective and timely implementation of portfolio changes. But if you let too much time pass without giving the games a little facelift, player excitement tends to fizzle out. And trust me, convincing someone to come back after they’ve wandered off to other fun things? That’s a whole quest on its own.
With draw-based games available across every channel, I must stay one step ahead and guess how all those extra sales might shake up the overall health of the game. With proper management and strategic efforts, I see lotto games continuing as the bedrock of the lottery portfolio for years to come.
Who is Brad Heathcote
Brad brings 15 years of expertise in the lottery industry, having directed the development of numerous products across both ongoing projects and successful market introductions. His expertise encompasses all major lottery segments: digital, draw-based, and instant scratch-off games. He has played a pivotal role in broadening the U.S. content portfolio by introducing innovative offerings and elevating existing products through unique features and game mechanics. His contributions to the draw-based portfolio include implementing new mechanics and strategically innovating existing products.