Image: Couple with winning lottery check © Exactostock, SuperStock

The odds of winning millions in the lottery are extraordinarily low. When the Powerball jackpot reached $587 million in late 2012, a player had a one in 175 million chance of winning the whole thing. Despite the odds, the owners of two tickets took home astronomical sums.

In fact, state governments pay out an enormous amount of money each year. More than $42 billion in prize money was paid out by state lotteries last year alone. Using data provided by the North American Association of State and Provincial Lotteries, 24/7 Wall St. identified the 10 states with the highest lottery payouts in 2012.

Not surprisingly, the states with the largest payouts tend to be among the most populous states in the country. The two more populous states, Texas and California, have the fifth and sixth highest payouts, respectively. These states have huge payouts since more people play the lottery -- more tickets sold translates to a bigger purse. With the exception of only two states, all those on this list are among the top 10 in both total lottery sales and population.

States have seen profits from lottery increase by a sizable margin in the past several years. In 2012, state lotteries netted $18.7 billion, up from $16.7 billion in 2009. NASPL executive director David Gale explained that lotteries are earning more because they increased the variety of games they offer, especially in the form of instant win games. There has also, he explained, been an abnormally large number of high jackpots in the Powerball that have spurred interest in the lottery as a whole.

The increase in lottery sales have benefitted many government programs. Most states' lottery commissions funnel profits to education -- particularly K-12. Many states, such as New York and California, direct 100% of the profits to education. There are exceptions to this, however. Some states, such as Rhode Island, place all the money raised by the lotteries in the general fund to be used at the state's discretion. Proceeds are also used to help support veterans, senior citizens, and conservation programs.

Based on figures provided by NASPL, 24/7 Wall St. identified the states with the largest lottery jackpots. For each state, we looked at sales, payouts and state profit for the state lottery for the past five fiscal years. In addition, we also looked at sales among the variety of games available, such as instant win games, Powerball, Mega Millions and Video Lottery Terminal, or VLT. In the case of two states -- Rhode Island and Oregon -- the total annual sales figure listed excludes VLT because the state did not report a gross VLT sales figure. However, total payout and profit for all states, including Rhode Island and Oregon, included VLT sales. Finally, we looked at the public projects the profits are appropriated to in each state.

No. 5:Texas

Prizes paid: $2.63 billion
Ticket sales: $4.19 billion
State profit from sales: $1.16 billion
Government use: Education, general fund

With its first ticket sold in 1992, the Texas Lottery has quickly expanded to become the fifth-largest system in the country, grossing more than $4 billion in sales in 2012. On February 5, 2010, a Texas resident won the biggest payout ever awarded by the state lottery commission, winning $144 million in a Mega Millions drawing. Before 1997, proceeds from the lottery were placed into the state's general fund. Since then, however, the majority of funds raised by the Texas Lottery go to the state's Foundation School Fund -- used to support school districts. The fund has received over $15 billion since 1997.

No. 4: Florida

Prizes paid: $2.75 billion
Ticket sales: $4.45 billion
State profit from sales: $1.32 billion
Government use: Education

The Florida Lottery first began selling tickets in January 1988. Since then, it has raised more than $24 billion and made 1,200 players millionaires. In the 2012 fiscal year, the Florida Lottery paid out $2.75 billion in prizes, while transferring more than $1.3 billion to the Education Enhancement Trust Fund. These proceeds help the state fund its Bright Futures Scholarship Program to send students to college, as well as fund school construction, repair and renovation projects statewide. In fiscal 2012, the state led the U.S. in both Powerball ticket sales, at just over $500 million, and winnings, at just above $230 million.

No. 3: Rhode Island

Prizes paid: $2.91 billion
Ticket sales: $250 million (excl. VLT sales)
State profit from sales: $378 million
Government use: General fund

Rhode Island is one of a few states that allow residents to play using video lottery terminals. In addition, charitable organizations have the option to participate in a Million Dollar Raffle and pull-tab games not available to the general public. Rhode Island is among a minority of states that don't funnel lottery profits to go directly into education. All of the profits of the state's lottery are placed in the state's general operating fund. In fiscal 2012, the state paid out $2.91 billion in prizes, the vast majority of which were to those playing VLTs.

No. 2: Massachusetts

Prizes paid: $3.40 billion
Ticket sales: $4.72 billion
State profit from sales: $834 million
Government use: Cities and towns

The Massachusetts State Lottery has sold over $90 billion in tickets in the last 40 years, with more than $4.7 billion in tickets sold in fiscal 2012. The proceeds are predominantly returned as aid to the state's towns, with the state distributing $833.9 million to localities last year. The state generated most of its revenue from local games, rather than multi-state ones. Massachusetts' Powerball and Mega Millions sales ranked just 19th and 12th, respectively, among all states. However, given the states small size, it is surprising that the state has had several major winners, including a $294 million Mega Millions winner in 2004.

No. 1: New York

Prizes paid: $4.13 billion
Ticket sales: $8.44 billion
State profit from sales: $2.89 billion
Government use: Education

The New York Lottery made a profit of nearly $2.9 billion in 2012, more than double the profits of the second-most profitable state lottery system. This was, however, less than the 2011 profit of more than $3 billion. Although the instant win games sold more than any other game, the video lottery sold more than $1.4 billion, far more than any other state that offers VLTs. Lottery proceeds go toward funding public education in the state. Since the lottery's founding in 1966, more than $45 billion in profits were transferred to schools in the state.

See the entire list of 10 states with the biggest lotto jackpots at 24/7 Wall St.com.

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