The North Carolina Lottery collected a record $1 million during the past year from prize winners who were also debtors.
The lottery scans big winners against a list of people who owe child support, back taxes, hospital bills and student loans. So as you dream about spending the piles of money you plan to win in the lottery, don't forget those bills you never paid.
The big collection comes in a record year for lottery sales, which topped $1.4 billion, a 10 percent increase from the previous year. And of the $835 million paid in prize money last year, $1 million is a relatively small amount. The debts can be as small as $50. Some are thousands of dollars. Lots of those winners are happy to finally be able to pay their debts.
"Many of them are relieved," said lottery Executive Director Tom Shaheen. "Hopefully they still get to walk out with some cash."
The lottery's debt program is similar to a program that allows governments and agencies to collect their debts through withholding from the state's income tax refunds. Lottery collections are tiny compared with those efforts.
In Wake County, phone calls from miffed lottery winners were a major clue that collections were up this year, said Susan Campen, an administrator in the county's revenue department.
"This is the first year we had calls of complaints," she said.
Debt owed to county and local governments accounted for the largest category of debts collected by the lottery last year. In 966 such cases, the lottery withheld $359,000 from winnings plus another $4,800 in fees to satisfy debts to local governments. In Wake County those most often came from vehicle property taxes, but could also be for real estate taxes or unpaid bills for ambulance trips.
For local governments, the collections can help ease the pressure on already tight budgets.
Taking from lottery winnings is often more palatable to government officials because the money isn't coming out of wages or a tax refund, said John E. Whitehurst, a project manager for the Association of County Commissioners, who helped set up the debt clearinghouse that provides the database and does the collections for local governments. Still, winners can be shocked. Last year, one winner had $8,000 taken out of a $20,000 prize.
"That was traumatic, I'm sure," Whitehurst said.
Taxpayer information is confidential, and officials declined to name those who have had winnings withheld.
Some say the program doesn't go far enough.
More slipping through
Bill Brooks, president of the anti-lottery N.C. Family Policy Council, said he would support requiring screenings for customers who buy a certain amount of tickets at one time. "If they collect a million dollars, my guess is there's probably another $10 million out there more that could be collected or is probably owed by people who are playing the lottery," Brooks said.
Winnings of less than $600 can be cashed in at any lottery retailer on the spot. Tickets worth more than $600 must be claimed at lottery offices across the state. Those winners have their Social Security numbers run against a database of debtors.
Debts to the state's court system and UNC hospital system were also big categories for collections. Child support accounted for nearly $102,000 in 111 cases.
Sherry Bradsher, director of the state Division of Social Services, said it's unfair to assume that because someone owes child support he or she is a deadbeat.
"Perhaps you just got behind. There's a lot of different situations," Bradsher said, adding that many people might complain that anyone who owes child support shouldn't be buying lottery tickets.
"I understand those judgments, and we just encourage everyone who owes to pay," she said. "For those that won and owe, we're glad for the kids."
Thanks to M Fox for the tip.