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NY Lottery says it goofed: Mahopac winner got $31 million after taxes

New York LotteryNew York Lottery: NY Lottery says it goofed: Mahopac winner got $31 million after taxes
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The New York State Lottery has acknowledged that it made a $14 million mistake when it announced the amount of last week's Mega Millions award to a Putnam County man at Grand Central Terminal.

The winning ticket bought by William James Albertson from Mahopac actually brought him an after-tax prize of $30.7 million. At the big announcement, presided over by Lottery Director Gordon Medenica and Lottery announcers Yolanda Vega and Ralph Buckley, Lottery staff told reporters that Albertson would receive slightly more than $45 million once taxes were deducted.

Lottery officials continued to insist that was the correct amount even after The Journal News questioned the accuracy of that figure later that day and again Tuesday morning.

"It's a simple discrepancy," Lottery spokesman John Charlson said this week.

The Lottery did tell Albertson that he would get $14 million less than the announced lump-sum figure, Charlson said. Albertson could not be contacted yesterday.

Charlson said the mistake was made when someone in his office prepared a news release and the error was then picked up by others on the Lottery staff. When the figure was questioned by a reporter, Charlson said he may have simply checked the news release.

Charlson said the lottery usually touts the larger payout that could be received over 25 years rather than the immediate cash value because winners have the option of allowing New York State to invest their winnings for them. In this case, the "jackpot prize" is considered $75 million.

One local economist takes issue with this.

Farrokh Hormozi, an economics professor at Pace University in White Plains, said it was more accurate to describe the prize money in terms of what it is worth today because even a low inflation rate will dramatically reduce the value of money one or two decades in the future.

"The old saying of a bird in hand is worth two in the bush applies here," Hormozi said.

Lottery prize winners do not need New York state to invest their winnings to produce the kind of payout the state talks about, Hormozi said. The most conservative investment - U.S. Treasury Bonds -have reliably produced 4 percent annual returns, the same interest figure that the Lottery uses to produce the long-term value of its prizes.

A slightly more risky investment strategy would produce a bigger return than is possible by taking the long-term payout.

Hormozi said lotteries describe their jackpots in terms the longer term value because the talk of huge prizes drives people to buy lottery tickets.

"When the prizes rise, you see people standing in long lines for hours, people who would never go to the lottery," Hormozi said. "You have to make this so attractive and the stakes high so that they will participate."

The Red Mill Market in Mahopac Falls, where Albertson purchased the winning ticket, is festooned with posters that say the $75 million Mega Millions ticket was sold there.

Store manager Nick Capalbo said yesterday that he was surprised to hear Albertson had won $30.7 million after taxes, especially with all the signs proclaiming the higher amount. Capalbo, an education student at Pace University, said the $45 million lump-sum prize value seemed to be a more accurate way to describe the winnings.

Though the Lottery might be guilty of a little verbal manipulation, Capalbo said, $30.7 million is still a lot of money. "I'd be happy with $30 million," he said. "When you are talking about that much, it's a lot of money."

Journal News

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20 comments. Last comment 7 years ago by KY Floyd.
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JAP69's avatar - Lottery-053.jpg
South Carolina
United States
Member #6
November 4, 2001
8511 Posts
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Posted: November 16, 2007, 8:38 pm - IP Logged

Proclaim big prizes when the actual cash value is a lot less.

Lotteries should be made to announce the cash value and not the long term annuity value.

Either That they should announce both in their advertising.

Stats hunting: Type

    LOTTOMIKE's avatar - cash money.jpg
    Tennessee
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    October 15, 2004
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    Posted: November 16, 2007, 8:44 pm - IP Logged

    cash only was from mahopac if i remember correctly.

      gocart1's avatar - lighthouse
      da bronx,city island,n.y.
      United States
      Member #30516
      January 17, 2006
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      Posted: November 16, 2007, 9:25 pm - IP Logged

      Proclaim big prizes when the actual cash value is a lot less.

      Lotteries should be made to announce the cash value and not the long term annuity value.

      Either That they should announce both in their advertising.

      i agree with JAP69that lotteries should announce the cash values .after looking at the breakdown of the taxes ,seen here ,on the lottery post,its EXTREMELY missleading.its almost freudualant. but ,then again i could use a few million bucks.

        Todd's avatar - Cylon 2.gif
        Chief Bottle Washer
        New Jersey
        United States
        Member #1
        May 31, 2000
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        Posted: November 17, 2007, 12:51 am - IP Logged

        i agree with JAP69that lotteries should announce the cash values .after looking at the breakdown of the taxes ,seen here ,on the lottery post,its EXTREMELY missleading.its almost freudualant. but ,then again i could use a few million bucks.

        Here's the actual values, after taxes, for both Powerball and Mega Millions.  USA Mega is the originator of the Jackpot Analysis feature, which shows the after-tax value for every state each game is played in.

        The analysis pages are updated immediately after either of the jackpots change.

        Mega Millions: http://www.usamega.com/mega-millions-jackpot.htm

        Powerball: http://www.usamega.com/powerball-jackpot.htm

         

        Check the State Lottery Report Card
        What grade did your lottery earn?

         

        Sign the Petition for True Lottery Drawings
        Help eliminate computerized drawings!

          Avatar
          NY
          United States
          Member #23835
          October 16, 2005
          2838 Posts
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          Posted: November 17, 2007, 2:30 am - IP Logged

          This is far more than a simple "goof". Somebody screwed up big time, and I wouldn't be surprised if some heads roll. The $45 million figure was the lump sum cash value, and as near as I can tell it's strictly against NY lottery policy to tell the public what the cash value is.

          Staying truer to form, the "correct" "after tax" amount they've announced is actually the after withholding amount. The true after tax amount will almost certainly be about $4 million less.

            tnlotto1's avatar - logo
            nashville
            United States
            Member #49896
            February 18, 2007
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            Posted: November 17, 2007, 3:29 am - IP Logged

            Here's the actual values, after taxes, for both Powerball and Mega Millions.  USA Mega is the originator of the Jackpot Analysis feature, which shows the after-tax value for every state each game is played in.

            The analysis pages are updated immediately after either of the jackpots change.

            Mega Millions: http://www.usamega.com/mega-millions-jackpot.htm

            Powerball: http://www.usamega.com/powerball-jackpot.htm

            thanks for Todd i didnt know usa mega had this feature.

              spy153's avatar - maren

              United States
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              December 15, 2005
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              Posted: November 17, 2007, 9:05 am - IP Logged

              cash only was from mahopac if i remember correctly.

              Ooooooh!   You think it was?  Oh, I hope you are right.  That would be very encouraging.

              voir-vous dans mes reves!Cool

                fja's avatar - gnome1

                United States
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                January 19, 2002
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                Posted: November 17, 2007, 10:07 am - IP Logged

                Proclaim big prizes when the actual cash value is a lot less.

                Lotteries should be made to announce the cash value and not the long term annuity value.

                Either That they should announce both in their advertising.

                Well its not like its a big secret to any regular lottery players.....cash value breakdown is posted in all state lottery websites I believe,,,,

                Next thing you'll know is that people would want all the shopping stores to put a disclaimer sign next to the Santa Claus the kids take a picture with....

                "Everybody has to believe in something...I believe I'll have another beer!"   = W.C.Fields                      

                  Todd's avatar - Cylon 2.gif
                  Chief Bottle Washer
                  New Jersey
                  United States
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                  Posted: November 17, 2007, 11:26 am - IP Logged

                  Good one!  LOL

                   

                  Check the State Lottery Report Card
                  What grade did your lottery earn?

                   

                  Sign the Petition for True Lottery Drawings
                  Help eliminate computerized drawings!

                    Avatar
                    NY
                    United States
                    Member #23835
                    October 16, 2005
                    2838 Posts
                    Offline
                    Posted: November 17, 2007, 12:48 pm - IP Logged

                    Well its not like its a big secret to any regular lottery players.....cash value breakdown is posted in all state lottery websites I believe,,,,

                    Next thing you'll know is that people would want all the shopping stores to put a disclaimer sign next to the Santa Claus the kids take a picture with....

                    It may not be a big secret to most regular players, but what does that have to do with whether or not it's the ethical way to do it? $1 paid over 25 years is not $1, but that's how annuitized prizes are always advertised.  Nobody eats their rice straight out of the box, but it's illegal to advertise a one pound box of rice as 3 pounds even if there's a disclaimer that the weight refers to the cooked weight.  Why shouldn't advertising for the lotteries have to follow the same rules that apply to other advertisers? Better still, why can't our governments be honest about something that isn't a big secret, even if the law doesn't require them to?

                    As far as finding a cash breakdown on all state lottery websites, what you believe is wrong.  Most of them do offer the information, but some don't.

                      fja's avatar - gnome1

                      United States
                      Member #91
                      January 19, 2002
                      10151 Posts
                      Offline
                      Posted: November 17, 2007, 1:17 pm - IP Logged

                      It may not be a big secret to most regular players, but what does that have to do with whether or not it's the ethical way to do it? $1 paid over 25 years is not $1, but that's how annuitized prizes are always advertised.  Nobody eats their rice straight out of the box, but it's illegal to advertise a one pound box of rice as 3 pounds even if there's a disclaimer that the weight refers to the cooked weight.  Why shouldn't advertising for the lotteries have to follow the same rules that apply to other advertisers? Better still, why can't our governments be honest about something that isn't a big secret, even if the law doesn't require them to?

                      As far as finding a cash breakdown on all state lottery websites, what you believe is wrong.  Most of them do offer the information, but some don't.

                      Why shouldn't advertising for the lotteries have to follow the same rules that apply to other advertisers?

                       

                      Follow the same rules:

                       like all those weight loss miracle pills, hair restorers, instant paint removers, body enhancment gels,lotions and pills, anti aging make-up,  grass restorers, pain relief for anything that bothers you in one magic bottle. products they claim to improve gas milage, as well as all those gizmos and gadgets, cheap knock-off jewelry, gems and stones, that inundate the advertising world......and don't really work, or is usually crap. or how about the clever play on words by all those lottery program distributors?

                      You mean those rules that they follow? 

                       

                       

                       

                      "Everybody has to believe in something...I believe I'll have another beer!"   = W.C.Fields                      

                        justxploring's avatar - villiarna
                        Wandering Aimlessly
                        United States
                        Member #25360
                        November 5, 2005
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                        Posted: November 17, 2007, 1:36 pm - IP Logged

                        Very few people take annual payments. Let's say someone really goofed (not on purpose) and added a zero. Wouldn't you be thrilled to win $10 million even if you thought it was going to be $100 million? 

                        Another way to look at this "deception" (although it's really not, because you do have the option of taking the annuity) is that it helps boost the jackpot by attracting more players, so that's better for us - right?  I mean, if only serious lottery players bought tickets, the jackpots wouldn't grow so quickly.  Hype gets people excited, especially those who don't realize the payout is so much less. 

                        Some hype is really bad, like the media reporting events that didn't happen or twisting them to get a reaction from the public.  But in this case, I don't think it's a big deal.  Anyone who follows a game should know approximately what it's going to pay anyway, and taxes are a no-brainer.

                          justxploring's avatar - villiarna
                          Wandering Aimlessly
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                          Posted: November 17, 2007, 2:21 pm - IP Logged

                          I wrote:  "Very few people take annual payments. Let's say someone really goofed (not on purpose) and added a zero. Wouldn't you be thrilled to win $10 million even if you thought it was going to be $100 million?"

                           

                          I want to clarify - I was talking about a reporter on the news, not the lottery.  If the lottery kept advertising $100 million prize and it was "only" $10 million, I would consider that to be fraud!

                            gocart1's avatar - lighthouse
                            da bronx,city island,n.y.
                            United States
                            Member #30516
                            January 17, 2006
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                            Posted: November 17, 2007, 4:24 pm - IP Logged

                            Here's the actual values, after taxes, for both Powerball and Mega Millions.  USA Mega is the originator of the Jackpot Analysis feature, which shows the after-tax value for every state each game is played in.

                            The analysis pages are updated immediately after either of the jackpots change.

                            Mega Millions: http://www.usamega.com/mega-millions-jackpot.htm

                            Powerball: http://www.usamega.com/powerball-jackpot.htm

                            hello todd,, and thats why i love this webpage...keep up the great work ...i hope you didn't think i was knocking you .i was knocking the states lottery pages........................