As featured in The Wall Street Journal, Money Magazine, and more!
     

Playing the Lottery: Tips for Ten New Mega Millions Winners

This article was written by in Personal Finance. 10 comments.


Do you play the lottery? I’ve always considered lotteries to be a method of “taxing the poor,” as the saying goes. While no one is forced to play the lottery, those who do are more often than not people who believe society has left them with only one “reasonable” option for becoming financially comfortable — sheer luck against massive odds. Another class plays the lottery: people who pool their money with others in a corporate-type office, dreaming of leaving their cubicles behind.

I admit that since I accepted a new job a few years ago, I have occasionally been contributing one dollar when a co-worker decides the latest jackpot is high enough to justify the group purchase. It’s not often. Perhaps I’ve contributed twenty dollars over the past three years. I never expect this cash outlay to pay off for me, and with this expectation, I have not yet been let down. Why do I bother play, with my full understanding of the odds? Chipping in for lottery tickets with co-workers benefits my team socially more than financially. Is it financially smart? Probably not, but it gives us an excuse to maintain good working relationships with each other. I’m willing to pay twenty dollars over three years for that benefit.

For a group of ten employees at Chubb in New Jersey, pitching in to play the lottery did pay off. They, not we, won the $216 million jackpot for the “Mega Millions” game. After taking the cash payout, each employee will walk away with $14 million. “Walk away” may not be the term they prefer; according to their interview with the media, they will not be leaving their jobs.

If these winners are like many others, they will quickly burn through their new-found wealth, or what is left after taxes. During this process of spending and perhaps investing, I hope they choose worthy recipients and uses for the funds.

When you win the lottery, you are required to speak to the media. With your name in the open, long-lost friends and relatives, charities, and scam artists will be knocking down your door. Here are some basic tips to make sure you aren’t harassed as much as you would be otherwise:

  • Change your phone number.
  • Hire a lawyer.
  • Find a financial adviser through a recommendation from a trusted friend.
  • Talk to the a bank to open account within which you can accept a large wire transfer.
  • Set aside enough for taxes. Lottery winnings are taxed as regular income.

If you have more tips, share them here with other Consumerism Commentary readers.

Updated September 3, 2010 and originally published March 5, 2009. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

Email Email Print Print
avatar
Points: ♦127,500
Rank: Platinum
About the author

Luke Landes is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .

{ 10 comments… read them below or add one }

avatar Grampa Ken

Gambling is a sick tax
Why do some governments actively promote gambling for a source of revenue when it is known to be so harmful to so many of its people? It is common knowledge that gambling can be addictive and destroy or take lives. When they report the income from gambling they should balance the books with the loss to players, their citizens.

Glossy commercials show how wonderful it will be when you win an enormous amount of money. “Play now and get super rich”.

As if to justify this they post warnings: “Know your limit. Play within it.” “Gambling can lead to financial and legal problems, loss of career and family, and other serious issues.” No kidding! Well cease and desist!

“Call this help line if you have a gambling problem”. It’s too late if you have lost everything!

Reply to this comment

avatar Matt Sullivan

How many headlines have we seen where “overnight” millionaires lives are ruined. I agree that the lottery is a tax on the poor. So many times I have seen the guy at the gas station buying dozens of scratch off tickets. He then rushes to his car and rubs off the tickets to see if he has won. Meanwhile, he has several kids in the back watching him. The better advice is to not play the lottery at all. You are right, your $20 is not a big deal, but it is a big deal to those kids who are watching their dad throw away their money.

Matt Sullivan

Reply to this comment

avatar Rassah

I believe a lot of the “poor” people out there are poor because they don’t know how to manage their finances. What’s to say they will be able to manage them any better if they do win a few mil?

Reply to this comment

avatar KC

I’ve always said if I win big bucks in the lottery, which is nearly impossible since I rarely play, that I probably wouldn’t tell anyone. I’d tell my spouse, of course. But as far as close friends and family, I’d be very selective to the ones I know could keep a secret and who are mature enough to handle the relationship with their newly wealthy friend. I just wouldn’t want my life to change much, but the more people you tell the more it would change. If I did tell people I’d probably downplay it. Even if I won a few million I’d probably say I only won a quarter million or something of that nature.

I used to live in Memphis, TN, which is very near Tunica, Mississippi. You’d see big billboards with winners first names and last initial and the amount won plastered all over the city. Even if I only won $5k I wouldn’t want that information on a billboard.

I think it would be best to do the things you’ve recommended as well as keep quiet. If you don’t you’ll have “charities”, “religious leaders”, “friends”, and “family” coming out of the woodwork looking for you to share your prosperity. If I decide to help MY charities, church, friends, and family I’d rather do it on my own terms.

Reply to this comment

avatar SJ

I did not know they required you to speak to the media; I totally would have gone the route of KC…

A while back when I was on my “lucky streak”, having won 2-3 raffles in a row (one of which was an ipod nano) my roomie joked that I should go buy lottery tickets… I told him if I won I didn’t think I’d tell anyone if I won; including my parents

As for your 20 dollars, I think it’s fine for you to ignore the expected negative returns and just treat it as being “social” “professional”, such as eating out w/ co-workers, being obliged to dress up, etc…

I think I’ve done some scratch and wins once after I turned 18 when my friend asked me to do it… (again ignoring gain/odds, treated as social gambling + milestone)

Reply to this comment

avatar Luke Landes ♦127,500 (Platinum)

SJ: I’m still looking into this; some states may require you to speak to the media while others will allow you to remain anonymous. I’ll update the article if I can find any definitive information.

Reply to this comment

avatar Craig

When bored I always play the dream game in my head if I won the lottery. Sure you may upgrade your lifestyle a bit but you shouldn’t change as a person because of it. Set aside money for taxes, take a certain amount and go crazy, the rest stick in the bank and diversify on investments.

Reply to this comment

avatar GeekMan

I look at winning the lottery as the same thing as any other windfall. The two best tips for anyone who finds themselves in possession of a large windfall are remain as anonymous as possible and have an ironclad plan for the money BEFORE you claim your winnings. That means, talk to an attorney and a financial planner before you accept your winnings and have a thought out and well defined plan for where every dime of that money will go as soon as you get the check. That way the money will immediately work FOR you instead of being thrown away.

Reply to this comment

avatar RollWithIt!

One of the best ways to keep “PRIVATE” about your winnings and NOT have every long lost relative, friend or scam artist come out of the wood work is to set up a BLIND TRUST PRIOR to claiming your winnings. THIS also means YOU need to STAY QUIET as SOON as you WIN — I know this will be the hard part! Then take time to let the excitement of winning dissipate BEFORE you start purchasing “THINGS” You WILL have a much better chance of holding on to your money AND your friends and family if you take it slow and easy and DEFINITELY set up the BLIND TRUST! Have a plan BEFORE you WIN — and you will be better prepared to handle it! GOOD LUCK!!! :)

Reply to this comment

avatar Tony Mcneil

I disagree with the beginning of this article. It is not just the poor and employee pools playing the lottery. It has been shown over and over again that lottery games are played by people across economic lines. As proof one only has to look at some of the winners. Jack Whitaker was already a millionaire when he wone. Also, their was a news producer in California who won last year. These people did not feel they were left behind by society, They like so many others simply enjoy games of chance with the promise of a financial windfall. What happens from there is completely up to the individual person.

Reply to this comment

Leave a Comment

Connect with Facebook

Note: Use your name or a unique handle, not the name of a website or business. No deep links or business URLs are allowed. Spam, including promotional linking to a company website, will be deleted. By submitting your comment you are agreeing to these terms and conditions.

Notify me of followup comments via e-mail. You can also subscribe without commenting.

Previous post:

Next post: