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Tennessee lottery winner sues state

Tennessee LotteryTennessee Lottery: Tennessee lottery winner sues state

A woman who won a Tennseess Lottery scratch-off ticket worth over $1 million has sued the state for preventing her from assigning some of her winnings to a financial company in return for a lump sum payout.

Like other instant lottery winners, Ethel Newberry of Palmrya wasn't given the option to get the bulk of her winnings in cash up front. Instead, she gets annual payments of about $52,000 a year for a minimum of 20 years.

Newberry is asking the Davidson County Chancery Court to allow her to transfer half her payments, or 10 years worth, to Prosperity Partners Inc. of Lake Park, Fla. That would give her about $500,000 in cash to buy a house "equipped to accommodate the unfortunate disability of her son and fit her home for his long-term use," the suit states.

Newberry's attorneys contend she complied with state law by obtaining approval from Montgomery County Chancery Court. But the state Education Lottery Corp. refused to comply after the state Attorney General's office's advised it that state law prohibits the voluntary assignment of lottery prizes.

The suit seeks a court interpretation of an issue that is spelled out in some state lotteries, but is not clear-cut in Tennessee's two-year-old gaming law.

Prosperity Partners' Chief Operating Officer Tom Balletta said his company - one of several in the discount cash-flow industry - buys annuity payments from lottery winners all over the United States. This is the first time Prosperity has been in a position to challenge Tennessee's policy.

"Currently there is specific legislation in about 34 states that allow that transfer [of winnings], and that transfer requires a court order," he said.

"The law in Tennessee does not allow for voluntary transfers, except with an appropriate judicial order," he added. "We've got the appropriate judicial order. So far, the lottery commission has refused to abide by it."

Newberry's attorney, David Silvus, and Kym Gerlock, vice president of communications for the lottery, declined to comment about the case.

The suit states that Newberry won the lottery's "Win for Life Instant Game Prize," in July of last year.

Though Gerlock would not comment on the specific case, she said the top prize for "Win for Life" is $1,000 a week for life, a minimum of $1 million.

Two people have won that top prize in Tennessee, she said. The procedure calls for winners to get paid through yearly checks of $52,000, minus federal taxes, for as long as they live. The money can be passed onto their estate if they die.

The suit states that Newberry was informed by the lottery that she was entitled to $1.04 million to be paid in annual installments of $52,000 for 20 years. She proposes to transfer to Prosperity her annual checks from July 5, 2006 to July 2015.

Since the state lottery began in January 2004, officials have introduced more than 80 games, including five "online" games in which participants must wait until a state drawing before finding out whether they have the winning numbers.

Of those, only the Powerball, the multi-state game, allows a choice between a lump sum and installments, Gerlock said. On the other hand, some of the smaller cash games only have a one-time payment with no options for installments.

Balletta says almost all states with a lottery allow the winner a choice on lotto drawings. Typically, scratch-off winnings are only paid out in annuities, he said.

Companies like his cater to people with long-term cash flow, such as lottery and insurance payments, that are paid by recognizable, solid payers like a state or insurance company. If people need it, the company will provide the cash and basically trade places, accepting the annual payments as an investment.

Prosperity acts as a middleman, selling the annuities to insurance companies, which are happy to have a safe income stream that can earn predictable interest over the long-term, Balletta said.

Nashville City Paper

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19 comments. Last comment 11 years ago by CASH Only.
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mylollipop's avatar - Trek STLOGO6.png

United States
Member #24380
October 21, 2005
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Posted: February 14, 2006, 12:07 pm - IP Logged

Before you play, know the rules.  In Louisiana, the state lottery was sued and won because the winner did not want an annuity.  Now LA state lottery players have a choice: Lump Sum or Annuity.  The starting base for the jackpot and amount it would roll over was lowered and changed after that lawsuit.  Might happen in Tennessee---just depends on how their law was written in regards to pay out options for that particular game.  IF the game is not what you want, DON'T play it and try to change it!Dead

    Avatar

    United States
    Member #972
    December 30, 2002
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    Posted: February 14, 2006, 12:14 pm - IP Logged

    I dislike "annuity only" winnings, but the rules were posted when she bought the ticket - if you don't accept the rules buy Powerball. I dislike 3rd party payouts even more - why give part of your winnings to shady companies when the state can and should write you a check? I especially dislike sore winners for whom even an extra $52,000 a year isn't enough - how would she have bought a house like that if she didn't win? Count your blessings, lady, think of the caretakers of the disabled who don't have an extra $52,000 a year coming in. 


      United States
      Member #379
      June 5, 2002
      11296 Posts
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      Posted: February 14, 2006, 1:07 pm - IP Logged

      I sure hope TN isn't looking to join the coming numbers game Lose for Life. ALL winners (numbers or scratch; fixed annuity or lifetime) SHOULD have the option of collecting in lump sum.

        Avatar
        NY
        United States
        Member #23835
        October 16, 2005
        3475 Posts
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        Posted: February 14, 2006, 2:26 pm - IP Logged

        I dislike "annuity only" winnings, but the rules were posted when she bought the ticket - if you don't accept the rules buy Powerball. I dislike 3rd party payouts even more - why give part of your winnings to shady companies when the state can and should write you a check? I especially dislike sore winners for whom even an extra $52,000 a year isn't enough - how would she have bought a house like that if she didn't win? Count your blessings, lady, think of the caretakers of the disabled who don't have an extra $52,000 a year coming in. 

        What makes her a sore winner? Just like most people, she's essentially trying to borrow money against her future income. Why she's trying to do it through the company instead of simply getting a mortgage is puzzling, though. Current rates are  low enough that I'm skeptical that she'd get a better deal through the outfit she's using, especially after adding the expense of a lawsuit.


          United States
          Member #379
          June 5, 2002
          11296 Posts
          Offline
          Posted: February 14, 2006, 4:16 pm - IP Logged

          Before you play, know the rules.  In Louisiana, the state lottery was sued and won because the winner did not want an annuity.  Now LA state lottery players have a choice: Lump Sum or Annuity.  The starting base for the jackpot and amount it would roll over was lowered and changed after that lawsuit.  Might happen in Tennessee---just depends on how their law was written in regards to pay out options for that particular game.  IF the game is not what you want, DON'T play it and try to change it!Dead

          Isn't Louisiana Lotto now all-cash? AFAIK it went from annuity-only to cash only.

            mylollipop's avatar - Trek STLOGO6.png

            United States
            Member #24380
            October 21, 2005
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            Posted: February 14, 2006, 4:20 pm - IP Logged

            Yep, it sure is.  The state lotto is all cash only.  And you know, the jackpot rarely reaches $1,000,000.00 Unhappy

              starchild_45's avatar - spherewall2
              kent, washington
              United States
              Member #3509
              January 26, 2004
              465 Posts
              Offline
              Posted: February 14, 2006, 4:58 pm - IP Logged

              just in case there are any other lotto winners here with an annuity. i can do the same thing for them. plug plug plug. i am a cash flow consultant too.

                Avatar

                United States
                Member #972
                December 30, 2002
                465 Posts
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                Posted: February 15, 2006, 9:52 am - IP Logged

                I dislike "annuity only" winnings, but the rules were posted when she bought the ticket - if you don't accept the rules buy Powerball. I dislike 3rd party payouts even more - why give part of your winnings to shady companies when the state can and should write you a check? I especially dislike sore winners for whom even an extra $52,000 a year isn't enough - how would she have bought a house like that if she didn't win? Count your blessings, lady, think of the caretakers of the disabled who don't have an extra $52,000 a year coming in. 

                What makes her a sore winner? Just like most people, she's essentially trying to borrow money against her future income. Why she's trying to do it through the company instead of simply getting a mortgage is puzzling, though. Current rates are  low enough that I'm skeptical that she'd get a better deal through the outfit she's using, especially after adding the expense of a lawsuit.

                I guess I said that because happy winners usually don't sue the lottery, they just cash their checks.  I agree, it is puzzling. What she says and what she actually does with the money may be two different things.  Her willingess to accept the loss of money on the annuity transaction and the loss of money to legal fees are a sign that she urgently needs a pile of cash for some reason, but only she knows exactly what that is.

                  Avatar
                  Sparta, NJ
                  United States
                  Member #18331
                  July 9, 2005
                  1977 Posts
                  Offline
                  Posted: February 15, 2006, 2:39 pm - IP Logged

                  I dislike "annuity only" winnings, but the rules were posted when she bought the ticket - if you don't accept the rules buy Powerball. I dislike 3rd party payouts even more - why give part of your winnings to shady companies when the state can and should write you a check? I especially dislike sore winners for whom even an extra $52,000 a year isn't enough - how would she have bought a house like that if she didn't win? Count your blessings, lady, think of the caretakers of the disabled who don't have an extra $52,000 a year coming in. 

                  What makes her a sore winner? Just like most people, she's essentially trying to borrow money against her future income. Why she's trying to do it through the company instead of simply getting a mortgage is puzzling, though. Current rates are  low enough that I'm skeptical that she'd get a better deal through the outfit she's using, especially after adding the expense of a lawsuit.

                  I guess I said that because happy winners usually don't sue the lottery, they just cash their checks.  I agree, it is puzzling. What she says and what she actually does with the money may be two different things.  Her willingess to accept the loss of money on the annuity transaction and the loss of money to legal fees are a sign that she urgently needs a pile of cash for some reason, but only she knows exactly what that is.

                  Her rational is:

                  Newberry is asking the Davidson County Chancery Court to allow her to transfer half her payments, or 10 years worth, to Prosperity Partners Inc. of Lake Park, Fla. That would give her about $500,000 in cash to buy a house "equipped to accommodate the unfortunate disability of her son and fit her home for his long-term use," the suit states.

                  Pretty good reason.  If there are other ways, she choose the one that works for her.  Remember, money doesn't make you smarter. 

                  Cheers

                  |||::> *'`*:-.,_,.-:*''*:--->>> Chewie  <<<---.*''*:-.,_,.-:*''* <:::|||

                  I only trust myself - and that's a questionable choice

                    Avatar

                    United States
                    Member #972
                    December 30, 2002
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                    Posted: February 15, 2006, 4:41 pm - IP Logged

                    She *says* that is the reason, but after she gets the money it might be a different story.

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                      Sparta, NJ
                      United States
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                      July 9, 2005
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                      Posted: February 15, 2006, 6:57 pm - IP Logged

                      She *says* that is the reason, but after she gets the money it might be a different story.

                      OR - might still be the reason.  Be positive!  Not everyone speaks like a politician.

                      Cheers

                      |||::> *'`*:-.,_,.-:*''*:--->>> Chewie  <<<---.*''*:-.,_,.-:*''* <:::|||

                      I only trust myself - and that's a questionable choice

                        JAP69's avatar - alas
                        South Carolina
                        United States
                        Member #6
                        November 4, 2001
                        8790 Posts
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                        Posted: February 15, 2006, 7:12 pm - IP Logged


                        And a one time big Federal income tax is going to come out of the big check too.
                        I would think a financial advisor would have been the one to see first to figure it out.
                        How much the lawyers gonna get too.

                        MAGA

                          Littleoldlady's avatar - basket
                          Clarksville
                          United States
                          Member #487
                          July 15, 2002
                          17638 Posts
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                          Posted: February 15, 2006, 7:21 pm - IP Logged

                          She should have gotten a financial advisor first..but people from these parts only think lawyer, lawyer, lawyer..when he finishes ..she won't have squat..probably the reason for only 10 years worth is by the time they finish with her, that is all she'll have left.

                          If you know your number is going to hit, have patience and then KILL IT!

                          You never know when you will get another hit.

                            Avatar
                            Sparta, NJ
                            United States
                            Member #18331
                            July 9, 2005
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                            Posted: February 15, 2006, 7:28 pm - IP Logged

                            Too bad she doesn't have any firends looking out for her.  Makes you wonder why she doesn't have some one to guide her.  Luckily I have some GOOD friends who have no problem slapping the back of my head!

                            Cheers

                            |||::> *'`*:-.,_,.-:*''*:--->>> Chewie  <<<---.*''*:-.,_,.-:*''* <:::|||

                            I only trust myself - and that's a questionable choice