Members Login
Username 
 
Password 
    Remember Me  
Freeze-Frame Radio -> Freeze-Frame Radio Lounge -> Lottery SCAM or what?
Post Info TOPIC: Lottery SCAM or what?
Jeremy Riggs


2011 Super Bowl Champions!

Status: Offline
Posts: 29950
Date:
Lottery SCAM or what?
Permalink  

Alright, I had to drag my sorry butt from the couch to the computer just to ask this question.

I was watching the winners of the lottery accept their check and I was wondering if anyone knows the actual details of just how this scam works?

Here's what I DO know. The back of the lottery slip says roughly 60% of money played goes to the prize fund.

Now, I'll assume that only 50% goes to the Jackpot, because obviously they also pay off some smaller prizes (not that I would know).

So as we've discussed before, that means they collected roughly $720 million to offer the $360 million dollar prize (which would then be taxed down to around $220, meaning the governments and states get 500, you get 220). But now here's the thing.

Why/How do they get away with the option of a lump sum payout of only $170 million (about 55% of the offered jackpot)? They collected all the money, why would you receive less if you take it in one shot? Is this some kind of check floating scam on a government level?

These guys took the lump sum so each of them got a check for 22.1 million, but after taxes they'll each get 15.5, totalling $124 million in a final payout.

WHERE DID THAT $365 MILLION DOLLAR PRIZE GO EXACTLY?

I'm serious, if anyone knows what the deal is here I'd like to know what i'm missing.

Now I'm going back to my couch

__________________
JD The Jazz Doctor


Grand Poobah

    



Status: Offline
Posts: 36897
Date:
Permalink  

I am not sure where that money goes- probably to the state supported mafia(s?) which will kick back half to the govenor for his re-election campaign.


BUT


I know I would take the lump sum. I would not trust any entity to promise me a yearly payment for X amount of years. Things happen. Gimme my money right now.



__________________
"And like Web, I enjoy throwing JR under the bus.  Problem is, it's usually under the special bus that I ride every day". Ghostdancer 12-18-09
Susan


Chairwoman Of The Board

Status: Offline
Posts: 695
Date:
Permalink  

I'm w/you JD - I want my $$ NOW!  Let me have it all!


As for the scam - you would think by taking the lump sum you would get a better payoff than if you took it in installments.  Weird! 


But any way you look at it, it's still MILLIONS OF DOLLARS!!



__________________
Always smile ~ it makes everyone wonder what you're up to.
JD The Jazz Doctor


Grand Poobah

    



Status: Offline
Posts: 36897
Date:
Permalink  

true!


I am sure that is a SOLID base to generate enough interest or investment income to more than compensate for taking the lump some vs the installements!


know what would be nice, would be if you could mix it up- say take 75% lump and then installments on the last 25% beginning in 5 or 10 yrs.....just in case you are a complete dumb@ass and (ooh look that links lol) lose all your money, well you got to eat soup and beans for a year, but don't worry another $5 mill is on the way starting next year....and the year after... 



-- Edited by JD The Jazz Doctor at 11:44, 2006-02-22

__________________
"And like Web, I enjoy throwing JR under the bus.  Problem is, it's usually under the special bus that I ride every day". Ghostdancer 12-18-09
Sparky


Phat Cat EL Presidente

    



Status: Offline
Posts: 12975
Date:
Permalink  

Not to mention if you did take the payments, if you die the money would revert back to the state.

__________________
Sometimes, when i'm lonely... i crawl into a laundry basket and tickle my ears. But, Some times I don't...
Susan


Chairwoman Of The Board

Status: Offline
Posts: 695
Date:
Permalink  

Here's a what if?


If you die and still are owed installments - do they go to your next of kin?  or do they mail the check to the cemetary?



__________________
Always smile ~ it makes everyone wonder what you're up to.
confuzzed


Permanent State of Confusion

Status: Offline
Posts: 27006
Date:
Permalink  

Okay, more numbers. Way to go.


The annunity portion of the jackpot is bigger (conversely the cash option is smaller, generally about half of the annuity value) due to time value of money. Those in the financial world know what I am talking about. It has to do with interest rates and payment dates. It can be quite messy. But it allows states to invest the money and also to use the interest to pay future winners. Should you choose the annuity, you do not receive the interest generated on your prize. Similar to people who receive large tax refunds, that leads us back to you providing the government an interest free loan.


Simple version: you need to calculate whether you are able to draw a better interest rate in the open market now, or what the rate may be later. If you are able to invest the proceeds so that you will generate more interest now that later, take the cash. I just want the cash so I can spread it around.


After taking a large amount of cash, such as this prize, you will pay federal taxes of 35%. That is the top bracket. It may be different on the state level. I know here in PA my PA lottery winning are not state taxable. However, if I were to win the NJ lottery, I would have to pay tax. And each state has a different rate. And don't forget about the AMT, which always bites you later when you file your return.


I know  



__________________

Stop trying to be what you see. Be what you ought to be.
confuzzed


Permanent State of Confusion

Status: Offline
Posts: 27006
Date:
Permalink  

I believe if you die and are owed payments they are passed onto your estate.

__________________

Stop trying to be what you see. Be what you ought to be.
Susan


Chairwoman Of The Board

Status: Offline
Posts: 695
Date:
Permalink  

Wow, Fuzzy!  Thanks for the info.  I'm scared tho - I understood what you were saying......... (darn numbers are educating me.....LOL)

__________________
Always smile ~ it makes everyone wonder what you're up to.
Sparky


Phat Cat EL Presidente

    



Status: Offline
Posts: 12975
Date:
Permalink  

I always understood it wouldn't go to your estate?

__________________
Sometimes, when i'm lonely... i crawl into a laundry basket and tickle my ears. But, Some times I don't...
Woo Hoo


The Chosen Woo

Status: Offline
Posts: 21048
Date:
Permalink  

I thought that too.

__________________
"Am I speaking in a language you're not getting here?"
Sparky


Phat Cat EL Presidente

    



Status: Offline
Posts: 12975
Date:
Permalink  

Fuzzy's right! In SD anyways?


 42-7A-34.   Prize paid to holder of winning ticket--Deceased winner's prize paid to representative--Right to prize nonassignable--Prizes subject to taxation--Disposition of unclaimed prize--Liability of lottery after payment of prize. The prize to be paid or awarded for each winning ticket shall be paid to the person who is adjudged by the executive director to be the holder of such winning ticket. However, the prize of a deceased winner shall be paid to the duly appointed representative of the estate of such winner or to any other person claiming the prize pursuant to the provisions of chapter 30-11A. The right of a person to a prize drawn or awarded is not assignable. All prizes awarded shall be taxed as South Dakota source income and are subject to federal income tax laws and regulations. Unclaimed prize money shall be retained for a period deemed appropriate by the executive director and if no claim is made within such period, then such unclaimed prize money shall be added to the prize pools of subsequent lottery games. The State of South Dakota, members of the commission and employees of the South Dakota Lottery are discharged of all further liability upon payment of a prize pursuant to this section.



-- Edited by Sparky at 12:17, 2006-02-22

__________________
Sometimes, when i'm lonely... i crawl into a laundry basket and tickle my ears. But, Some times I don't...
confuzzed


Permanent State of Confusion

Status: Offline
Posts: 27006
Date:
Permalink  

It may depend on your state. To each his own.

__________________

Stop trying to be what you see. Be what you ought to be.
Page 1 of 1  sorted by
 
Quick Reply

Please log in to post quick replies.
Freeze-Frame Radio -> Freeze-Frame Radio Lounge -> Lottery SCAM or what?
Tweet this page Post to Digg Post to Del.icio.us


Create your own FREE Forum
Report Abuse 		Powered by ActiveBoard