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A customer, who did not want to be identified, displays the $200.00 worth of Mega Millions tickets he bought at Downtown Plaza convenience store in Oklahoma City, Tuesday, Oct. 23, 2018. (AP Photo/Sue Ogrocki)

A customer, who did not want to be identified, displays the $200.00 worth of Mega Millions tickets he bought at Downtown Plaza convenience store in Oklahoma City, Tuesday, Oct. 23, 2018. (AP Photo/Sue Ogrocki)


In this Monday, Oct. 22, 2018 photo, drivers on the Broken Arrow Expressway pass a sign with the Powerball and Mega Millions jackpot numbers as they drive toward downtown Tulsa, Okla., Monday, October 22, 2018. (John Clanton/Tulsa World via AP)


Lotto players wait in line to purchase lottery tickets for the Mega Millions lottery at Lichines Liquor & Deli, Tuesday, Oct. 23, 2018, in Sacramento, Calif. Lottery players will have the chance at winning an estimated $1.6 billion in Tuesday's Mega Millions drawing. (AP Photo/Rich Pedroncelli)


$1.537 billion Mega Millions ticket sold in South Carolina

By JACK JONES and MICHAEL WARREN

Associated Press

Wednesday, October 24

COLUMBIA, S.C. (AP) — Lottery officials say someone bought a ticket in South Carolina to win the Mega Millions jackpot with a final total of $1.537 billion, shy of the all-time world record.

The earlier Mega Millions estimate of $1.6 billion would have been a world record for lotteries, but actual sales came in below the $1.586 billion Powerball jackpot prize shared by winners in California, Florida and Tennessee in January of 2016.

The ticket sold Tuesday is worth about $877.8 million in a lump-sum cash payment, which most winners choose to take, rather than collect the full amount in annual payments over three decades.

“The final total was less than the $1.6 billion estimate,” said Carol Gentry, a spokeswoman for the Maryland Lottery, which leads a consortium of state lotteries participating in the Mega Millions jackpot.

“Estimates are based on historical patterns,” she explained Wednesday morning in a phone interview with The Associated Press. “The jackpot’s been rolling since it was hit in July in California, but there are few precedents for a jackpot of this size. Typically, about 70 percent of sales occur on the drawing day, so forecasting precise numbers in advance can be difficult. That’s why we always use the term estimate.”

It’s possible the world will never know who bought the ticket that matches all six numbers in Tuesday night’s drawing.

South Carolina is one of eight states — along with Delaware, Georgia, Kansas, Maryland, North Dakota, Ohio and Texas — where winners can remain anonymous.

“Our board has a policy to protect the winner because of all the risk associated with having that much money,” South Carolina Education Lottery Director William Hogan Brown told ABC’s “Good Morning America.”

South Carolina’s previous record-holder — someone who bought a $400 million Powerball ticket in the Columbia area in 2013 — never wanted to be identified.

Holli Armstrong, spokeswoman for the South Carolina Education Lottery, said the retailer will get a $50,000 payout. Brown said the store’s identity should be revealed by mid-day on Wednesday, once state authorities have law-enforcement resources in place to help with the attention.

The biggest Mega Millions jackpot winner prior to this was a $656 million ticket sold back in 2012, Gentry said, “so it’s a record for Mega Millions and it came very close to breaking the world record of all the jackpots.”

The winning numbers were 5, 28, 62, 65, 70 and Mega Ball 5. The lucky player overcame miserable odds: The chance of matching all six numbers and winning the top prize is 1 in 302.5 million.

Mega Millions is played in 44 states as well as Washington, D.C., and the U.S. Virgin Islands.

It will likely be days or even weeks before the ticket-holder steps forward to claim the prize.

Lottery officials and financial managers encourage people to take time to map out a strategy for investing their hundreds of millions of dollars, and winners must deal with security concerns befitting someone who suddenly is immensely wealthy. Depending on the state, winners have from 180 days to a year to claim their prize.

The Mega Millions jackpot grew so large because it had been nearly three months since a player had matched all six numbers and won the top prize. The last time that happened was July 24, when 11 co-workers from California won a $543 million prize.

Although Tuesday’s jackpot was extraordinarily large, it’s no fluke. It reflects a trend toward ever-growing lottery prizes due to changes in the game that worsened the odds with hopes that bigger jackpots would result in better sales.

Officials with the Powerball game were the first to make that move in October 2015 when changing the odds of winning the jackpot from 1 in 175 million to 1 in 292.2 million. Mega Millions followed suit in October 2017, resulting in the odds worsening from 1 in 259 million to 1 in 302.5 million.

While most attention has been on the Mega Millions game, Powerball also has been soaring. The estimated prize for Powerball’s annuity option in Wednesday night’s drawing is $620 million, with a cash prize of $354.3 million.

Warren contributed from Atlanta.

This story has been corrected to show that the Mega Millions lottery won Tuesday night was the second-largest based on actual sales, not the world’s largest-ever lottery grand prize, based on final details provided by the lottery.

For the AP’s complete coverage of the lottery: https://apnews.com/Lottery

Lottery office pools increase odds and possibly headaches

By SCOTT McFETRIDGE and HANNAH GRABENSTEIN

Associated Press

Wednesday, October 24

DES MOINES, Iowa (AP) — A group of New Jersey construction workers noticed that the sixth member of their lottery pool had abruptly left work. Turns out, he had a lottery ticket worth $38.5 million and claimed he bought the winning ticket separately with his own money.

With the Mega Millions jackpot now at a record $1.6 billion, it may seem like perfect sense to pool money with co-workers or friends to increase the chance of winning a giant payday. But “with this many zeros attached to it, it is a recipe for disaster,” said Rubin Sinins, the attorney for the five jilted construction workers in that 2009 case.

Sinins said such plans can turn into a protracted legal fight, hard feelings and court orders — like in the case of his clients, who eventually won a jury verdict and split the lottery winnings . But if you do venture down that road, he and other experts have some advice: draw up an agreement.

“Document precisely who is part of the lottery pool so that there’s no misunderstanding later,” he said.

Other attorneys and lottery officials agree, though they acknowledge it can seem silly to draw up agreements and copy ticket stubs given the dismal odds of actually winning . The odds for Tuesday night’s Mega Millions jackpot are 1 in 302.5 million, while there’s a slightly better chance — 1 in 292.2 million — of winning the $620 million Powerball prize Wednesday night.

If there’s no winner Tuesday night, lottery officials said the estimated jackpot would jump again for Friday night’s drawing, to $2 billion.

Mary Neubauer, a spokeswoman for the Iowa Lottery, said the key is to put a few rules into writing. That includes details about how any prize would be divvied up, members of the group, and what should happen if a regular player is away and didn’t chip in for a specific drawing.

And always make copies of group tickets — including identifying numbers on the back of tickets — before the drawing so everyone is aware of the potential winnings numbers.

“You’re thinking about a best case scenario of winning, but you’re taking precautions about a worst case of fighting over the winnings,” Neubauer said.

The Missouri Lottery recommends people also have a plan for notifying group members if they win, figuring out who would be the group spokesperson and maybe even decide what outsider would serve as financial planner.

Despite its importance, it’s understandable that such planning can seem unnecessary, acknowledged Christopher Burns, a tax and estate attorney in Minneapolis.

“Laying the groundwork is important, but most people would not bother to fully lay the groundwork because the odds are so small,” Burns said. “People aren’t going to typically expend the time or the effort to have anything in writing or take other steps because the odds are so remote.”

Jennifer Volpert is among those going with the pool idea, but noted she and her co-workers in the Arkansas Department of Finance and Administration would be prepared if they won the record jackpot .

Volpert bought seven Mega Millions tickets during her lunchtime Tuesday at a Little Rock convenience store. She planned to draw up a contract and have everyone sign when she returned, specifying the prize would be split seven ways.

“We all said we’d turn in our resignation at the same time,” she said, laughing.

About 20 people at Todd Murphy’s media monitoring company in Omaha, Nebraska, also formed an office pool to buy Mega Millions tickets, but first they had to sign a contract that included a stipulation: “If we win, you’ll work 60 days after winning so we can replace you.” Murphy, the company’s CEO, said no one objected.

Of course, group lottery purchases aren’t for everyone. Mark Maddy, who works in a machine shop in Champlain, New York, said the nine people who work at the company love betting: “We’ll bet on anything,” he said, “even the first snow flake.”

But not lottery jackpots.

“We’re all too greedy,” Maddy said. “We buy our own tickets.”

Grabenstein reported from Little Rock, Arkansas.

For the AP’s complete coverage of the lottery: https://apnews.com/Lottery

The Conversation

Got the winning lottery ticket? An economist explains what to do with all that money

October 25, 2018

Author

Jay L. Zagorsky

Adjunct associate professor, Boston University

Disclosure statement

Jay L. Zagorsky does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

Partners

Boston University provides funding as a founding partner of The Conversation US.

A yet-to-be-identified person in South Carolina recently won the Mega Millions jackpot of almost US$1.537 billion. Meanwhile, the Powerball’s prize continues to grow and is currently at $750 million.

This begs a question: What should you do if such a windfall falls into your lap, whether a jackpot, a large inheritance or huge profit from selling a business?

I have pondered this for years as an economist researching personal finance issues. I also ask my undergraduates every semester what they would do if they suddenly got $1 billion. The standard student response is to pay off their sizeable college debts and travel the world.

While college is expensive and traveling to exotic places is fun, neither will use up much of a billion dollars. But yet somehow many people manage to win big and squander it quickly.

Here are a few tips based on research for how to handle an unexpected windfall.

Finding self-control

The urge to spend is a huge problem.

As I noted in a recent article, people who come into large sums of money end up bankrupt. My own research found that the average person in their 20s, 30s and 40s who was given an inheritance or large financial gift spent or lost half the money relatively quickly. A 2011 paper found that people who won mid-sized prizes in the Florida lottery were more likely to file for bankruptcy than small lottery winners.

The data suggest it takes time and experience to radically adjust to a different lifestyle. Given these problems of self-control, my advice is simple. If you win the lottery, do not take the lump sum payment. In the case of the Mega Millions jackpot, that allowed a winner to receive $878 million immediately – before taxes.

Instead, take the option to receive annual payments over 30 years, which is still an incredible amount of money each year. And if you happen to have issues with self-control and spend the entirety of your first and perhaps second payment on fancy homes and cars, you still have 28 or 29 years of additional payments – which get larger over time – to get your financial house in order.

If your windfall came by another means, such as inheritance, it’s still easy to handle a self-control problem. Many insurance companies and brokerage houses sell annuities, which operate just like that 30-year lottery payment option.

An immediate annuity is a simple contract. You give a certain amount of money to an insurance company and in return it gives you a periodic payment, which factors in inflation, for either a fixed term or for your entire life.

You can buy happiness

And so what’s the best way to spend that money?

Social science researcher Michael Norton has good news for lottery winners: You can buy happiness by spending money. Just not in the way you might think.

He found that the best way is not to spend money on yourself. Instead, spend it on other people by giving money to charity and provide small sums for helping others.

Norton suggests small gestures like buying other people coffee will make you happier. If you have a large windfall, walk into a coffee shop and pay for everyone who is in line. If you are out having a beer, treat the entire bar to a round.

His research suggests this will make you happier.

Dealing with loved ones

But a trickier issue is how to deal with relatives and friends. Once you hit the jackpot, many people will likely come calling, even those you have not seen in years. Suddenly, you’re the dearest person they know.

My suggestion is to make your friends, family and other loved ones as happy as possible. And to do that, you could give them a share of your winnings – but research on money and happiness suggests not too much.

Psychologists Andrew Jebb, Louis Tay, Ed Diener and Shigehiro Oishi studied thousands of people around the world and found that having an income in North America of about $105,000 per year maximized happiness. Getting more didn’t make people happier.

Based on this research, if you are going to dole out cash to your friends and family, keep it to about $100,000 per year for each person. If you want to help people in your life for a long time, then buy them an annuity that pays $100,000 a year for the rest of their lives.

Giving them more may do more harm than good.

The Conversation

How winning $1.6 billion in Mega Millions could still lead to bankruptcy

October 19, 2018

Author

Jay L. Zagorsky

Adjunct associate professor, Boston University

Disclosure statement

Jay L. Zagorsky does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

Partners

Boston University provides funding as a founding partner of The Conversation US.

The U.S. Mega Millions lottery jackpot swelled to a record US$1.6 billion after the 25 drawings held since the end of July – including the latest on Oct. 19 – failed to yield a winner.

That ties it for the largest lottery grand prize the world has ever seen. The jackpot for the rival Powerball game also reached $1.6 billion in 2016.

The odds of winning are very small, or about 1 in 303 million. You are about 400 times more likely to be hit by lightning. If every adult in the U.S. purchased just one ticket, each with a different number, there would still be a good chance – about 7 percent – that no winner emerges at a given drawing and the pot would grow even larger.

But once a winner is declared, a more interesting question arises: What happens to all that money and the lucky ticket holder? As research by myself and others shows, it’s often not what you’d expect.

A smaller prize than it seems

The first thing to bear in mind is that while the jackpot is eye-wateringly large, the actual payout will be much less.

If someone happens to claim it in the latest drawing, the winner would not actually receive $1.6 billion in one big check the next day. Assuming just one person wins it, he or she can either choose a lump sum payment that amounts to about $905 million or receive $1.6 billion worth of annual payments that get progressively higher over 30 years.

After that, the taxman gets to take a big bite. If the winner comes from a state without a lottery tax like Florida or Texas and chooses a lump sum, the federal government will take about $217 million of that, leaving $688 million. But if he or she is unlucky enough to live in New York City – one of only two cities that have their own tax – that dwindles to about $573 million.

That jackpot is starting to look a lot smaller, though it’s still a fair chunk of change.

Where windfalls go

The conventional wisdom is that winning the lottery will change your life. While that’s probably always true, research suggests not always in the way you might hope.

Economists Guido Imbens and Bruce Sacerdote and statistician Donald Rubin showed in a 2001 paper that people tend to spend unexpected windfalls. Looking at lottery winners approximately 10 years after winning showed they saved just 16 cents of every dollar won.

In my own research, I found that the average person in their 20s, 30s and 40s who was given an inheritance or large financial gift quickly lost half the money through spending or poor investments.

And other studies have found that winning the lottery generally didn’t help financially distressed people escape their troubles and instead only postponed the inevitable bankruptcy. One found that a third of lottery winners go bankrupt.

It’s not easy to blow it all

So how exactly could a lottery winner blow through hundreds of millions of dollars so quickly? It’s not easy.

Demographic research on lottery players’ characteristics shows that lottery playing peaks when people are in the 30-39 age range and actually falls as people get older. And the average person in the U.S. lives to age 79.

So that means, assuming the winner is in her 30s, she would have about 45 years or so to spend the lump after-tax sum of, let’s say, $900 million. That means she would have to spend a bit less than $20 million a year or roughly $55,000 per day to burn through it all – even more when you factor in interest accrued while it sits in the bank.

In addition, really blowing it all means the winner has no assets to show for it. If he uses the money to buy luxury homes, Banksy paintings and Ferraris and Aston Martins, his net worth wouldn’t actually change and he’d be able to retire with his wealth intact – assuming the investments kept their value or rose.

Blowing through the money, which leads to bankruptcy and low savings rates, means the winner has nothing to show for his spending besides a good time.

Riches to rags

And that’s basically what a man named Huntington Hartford did.

Hartford, who lived from 1911 to 2008, was the heir to the Great Atlantic & Pacific Tea Company fortune. This company, which started just before the Civil War, is better known as the A&P supermarket chain. A&P was the first U.S. coast-to-coast food store, and from World War I to the 1960s was what Walmart is for today’s American shoppers.

Hartford inherited approximately $90 million when he was 12. Adjusting for inflation means he was given over $1.3 billion as a child, after taxes. Yet Huntington declared bankruptcy in New York in 1992, approximately 70 years after being handed one of the largest fortunes in the world.

Hartford had the reverse Midas touch. He lost millions buying real estate, creating an art museum and sponsoring theaters and shows. He combined poor business skills with an exceptionally lavish lifestyle. After declaring bankruptcy, he lived as a recluse with a daughter in the Bahamas until he died.

May the odds be ever in your favor

Hartford’s life story, coupled with academic research, shows that coming into a windfall of cash doesn’t always have a happy ending. Squandering that money is easier than it seems.

If you’re planning to play, I wish you good luck. If you play on winning, I wish you even more luck.

Nevertheless, one key lesson, whether you play or not, is that when you get a windfall or win the lottery, plan ahead and resist the all-too-human temptation to spend all the money.

This is an updated version of an article originally published on Jan. 12, 2016.

The Conversation

The Mega Millions jackpot is now more than $1 billion – where does all that lottery profit really go?

Updated October 20, 2018

Author

Liberty Vittert

Visiting Assistant Professor in Statistics, Washington University in St Louis

Disclosure statement

Liberty Vittert does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

The Mega Millions jackpot drawing on Oct. 23 has soared to US $1.6 billion.

In the middle of the 20th century, when lotteries first started in the U.S., they were sold to states as a way to benefit the American public. That suggests that bigger and bigger jackpots should mean more tax dollars to spend on public services like education. But that isn’t happening. So what’s really going on?

First, let’s look at how lottery jackpots got so big. This particular jackpot started at $40 million in July, and week after week, no one drew the winning numbers, but the tickets keep getting bought.

You too have the chance to win the biggest Mega Millions jackpot ever with the simple purchase of a $2 ticket. However, your chances are pretty slim. With a 1 in 300 million chance of picking the matching numbers, you are three times more likely to be killed by a vending machine. An easier way to really wrap your head around your chances: It’s like flipping a coin and getting heads 30 times in a row.

About half of Americans play the lottery today, compared to almost 70 percent in the 1980s. That means the lottery needs to extract more money from fewer people – a worrying trend for lottery runners.

Mega Millions decided to decrease each person’s chances of winning, in order to grow the jackpots bigger. Before 2017, players picked five numbers between 1 and 75 and then one number between 1 and 15. Now, each player now picks five numbers between 1 and 70 and then one number between 1 and 25. This increases your chances of matching five numbers and receiving some sort of prize, while decreasing your chances of winning the whole shebang. What’s more, the price of a ticket has doubled.

Apparently, as the jackpot gets bigger, more people are willing to buy a ticket. So the jackpots are getting bigger and people are spending more money – to the tune of $223 per year by the average American, according to a survey by online marketplace LENDedu.

Mega Millions profits are split between 46 lottery jurisdictions – 44 states, D.C. and the U.S. Virgin Islands. Overall, 27 states earmark some or all lottery revenue for education. In D.C., the lotto dollars go to a general fund; in Colorado, the funds go environmental protection; and in Kansas, some of the money pays for juvenile detention facilities.

The lottery was promoted as a way to create more money for education – but most state legislatures haven’t been using the money as additional funding. Instead, they use the lottery money to pay for the education budget, spending the money that would have been used on education if there wasn’t a lottery budget on other things. As a result, public schools rarely get a budget boost.

An April study from the North Carolina Center for Public Policy Research showed that many states – including California, Florida and Michigan – simply substitute lottery revenues for normal appropriations. As of 2016, North Carolina devoted a smaller portion of its total budget to education than it did before starting the lottery.

With states like New York getting $3.3 billion in revenue from the lottery in 2016, that is a pretty darn big bait and switch.

This doesn’t necessarily mean that it’s time to ax the lottery. But it does beg the question: Is lottery money a good thing for a state? It does fund some government services, but it isn’t always clear what. And the harm of gambling addiction must be taken into account somehow.

For now, I’m off to buy a ticket for this Mega Millions jackpot. I mean, someone’s gotta win…

A customer, who did not want to be identified, displays the $200.00 worth of Mega Millions tickets he bought at Downtown Plaza convenience store in Oklahoma City, Tuesday, Oct. 23, 2018. (AP Photo/Sue Ogrocki)
https://www.sunburynews.com/wp-content/uploads/sites/48/2018/11/web1_121633650-3a7ab9df0e6646b08c19b9ae5eecc4d1.jpgA customer, who did not want to be identified, displays the $200.00 worth of Mega Millions tickets he bought at Downtown Plaza convenience store in Oklahoma City, Tuesday, Oct. 23, 2018. (AP Photo/Sue Ogrocki)

In this Monday, Oct. 22, 2018 photo, drivers on the Broken Arrow Expressway pass a sign with the Powerball and Mega Millions jackpot numbers as they drive toward downtown Tulsa, Okla., Monday, October 22, 2018. (John Clanton/Tulsa World via AP)
https://www.sunburynews.com/wp-content/uploads/sites/48/2018/11/web1_121633650-f6cb58f858e94e6b861c40d0edf3d5c9.jpgIn this Monday, Oct. 22, 2018 photo, drivers on the Broken Arrow Expressway pass a sign with the Powerball and Mega Millions jackpot numbers as they drive toward downtown Tulsa, Okla., Monday, October 22, 2018. (John Clanton/Tulsa World via AP)

Lotto players wait in line to purchase lottery tickets for the Mega Millions lottery at Lichines Liquor & Deli, Tuesday, Oct. 23, 2018, in Sacramento, Calif. Lottery players will have the chance at winning an estimated $1.6 billion in Tuesday’s Mega Millions drawing. (AP Photo/Rich Pedroncelli)
https://www.sunburynews.com/wp-content/uploads/sites/48/2018/11/web1_121633650-9f6dba74827146369622427002a9d487.jpgLotto players wait in line to purchase lottery tickets for the Mega Millions lottery at Lichines Liquor & Deli, Tuesday, Oct. 23, 2018, in Sacramento, Calif. Lottery players will have the chance at winning an estimated $1.6 billion in Tuesday’s Mega Millions drawing. (AP Photo/Rich Pedroncelli)
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