The "El Nino" (The Child) lottery is held each Feast of the Epiphany on Jan. 6, and the 400 top prize tickets, each worth USD 237,935, were all sold in Leganes, a southwest Madrid working-class suburb.
"Horns are blowing, the phone doesn't stop ringing, it's crazy and a huge, huge joy because it has all been sold among neighbors in a very working class district," said lottery seller Gustavo Fernandez whose shop sold tickets amounting to USD 95 million in prize money.
The lottery's name refers to the baby Jesus, who according to tradition was visited this day by three wise men bearing gifts.
Lottery tickets cost USD 23.8 and the pot is divided among thousands of ticket-holders, limiting the jackpot size but spreading winnings more widely.
Spain's most lucrative lottery, "El Gordo" (The Fat One), is held Dec 22 and distributed USD 3 billion in prize money last month.
Spain is recovering from two recessions, the last of which ended in late 2013 and quarterly unemployment surveys showed the jobless rate was 24 per cent in the third quarter 2014.