Mega Millions, a U.S. lottery spanning 42 states plus the District of Columbia and the U.S. Virgin Islands, drew quite a bit of attention towards the end of March owing to its record-breaking jackpot of more than $650 million. The chances are you were not one of the lucky holders of the winning numbers, but rest assured you are not alone. A recent analysis performed by Bloomberg, using U.S. Census data, suggests that of the estimated $50 billion spent on lottery tickets in 2010, only $32.8 billion was returned in prize money. Using data from this analysis, we take a look at the states that spend the most on lottery tickets and which states see the highest and lowest payout ratios.

Massachusetts Reigns Supreme
With almost $4.5 billion in total ticket sales, Massachusetts ranks second when measured by absolute dollars spent on lottery tickets relative to the 43 states measured (the only state whose residents spend more on lottery tickets is New York, where lottery ticket sales are estimated at $6.8 billion). Due to differences in states' populations, annual lottery spending per adult offers a bit more insight into which states have more active lottery players. Interestingly enough, Massachusetts ranks the highest in terms of annual lottery spending per adult with an average $860.70 dropped on lottery tickets during a year. Georgia ranks second, with an average of $470.73 spent on lottery tickets per year, while New York ranks third, at $450.47. New Jersey and Maryland round out the top five with $387.28 and $386.05, respectively.

North Dakota Not Keen on Lottery Tickets
Residents of North Dakota are among the most frugal when it comes to the lottery, spending a paltry $46.72 per year, or only around 5% of the average amount spent in Massachusetts. Montana and Oklahoma are also among the lowest lottery spenders. Of the 43 states surveyed, residents in these states spend an average of $61.18 and $70.79, respectively, on lottery tickets during a year. Indeed, residents of certain states appear to be more inclined towards lottery spending.

Massachusetts Has the Highest Prize Payback Ratio
In addition to spending the most on lottery tickets, lottery players in Massachusetts also enjoy the highest prize payback ratio, at 71.9%. That is, of the almost $4.5 billion in total annual ticket sales, roughly $3.2 billion, or 71.9% of total annual ticket sales is returned to lottery participants in the form of prize money. With a payout ratio that high, it's no wonder residents of Massachusetts spend the most on lottery tickets.

In terms of prize payback ratio, Louisiana is the lowest ranked state, with only 51% of lottery ticket sales returned to lottery players as prize money. North Dakota ranked second-to-last, with a prize payback ratio of 51.8%, which perhaps explains the state's status as the lowest ranked state in total annual lottery spending per person.

The Bottom Line
Participating in state lotteries offers quite a bit of excitement for many people, largely due to the prospect of winning potentially life-changing amounts of prize money. If you are in it to win it, think about playing the lottery in states with a high prize payback ratio – it may end up paying off quite handsomely.

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