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Audit finds 'ticket cashers' remain problem for Mass Lottery

Dec 23, 2010, 4:50 pm

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Massachusetts LotteryMassachusetts Lottery: Audit finds 'ticket cashers' remain problem for Mass Lottery

Allow winners to avoid paying taxes, support

The Massachusetts State Lottery continues to have a widespread problem with "ticket-cashers'' who claim prizes valued at millions of dollars, apparently allowing the actual winners to avoid taxes on their winnings, the state auditor said yesterday.

An audit released yesterday, as well as prior reports, found numerous instances in which certain people were claiming "hundreds of prizes worth millions of dollars,'' State Auditor A. Joseph DeNucci's office said.

The State Lottery Commission said it is required to pay prizes to anyone who has a winning ticket. "By law, the MSLC is obligated to pay the bearer of a winning ticket the amount owed,'' the commission said yesterday.

"If, in the future, legislation is enacted that restricts customer cashing activities, then the MSLC will act accordingly,'' the commission added in an official response contained in the audit.

The Globe reported in 2003 that ticket-cashers would buy winning tickets at a 10 percent discount. The winners agreed to the arrangement because the amount they would lose by selling their tickets at a discount would be less than if they had to pay federal and state taxes. The ticket-cashers are professional gamblers who can write off gambling losses against winnings.

The audit released yesterday, which covered the period from July 1, 2007, to June 30, 2008, said the use of ticket-cashers allowed winners to avoid paying taxes and child support.

Auditors found that in 2007, one person cashed 1,492 tickets worth about $2.6 million. Another person cashed 1,120 tickets worth about $1.6 million. Overall, the top 10 ticket-cashers in 2007 cashed in 5,938 tickets for $9.3 million, slightly less than the year before.

Auditors called for the practice to be minimized and eventually eliminated.

DeNucci said the lottery had taken corrective action to address previous issues identified by his office, but still must address issues such as ticket-cashers.

"The State Lottery has made a number of significant improvements in response to my audit recommendations,'' DeNucci said in the statement released by his office, "but there is still more to be done to further protect this very important gaming operation that brings in nearly $5 billion a year in revenue.''

Lottery officials said information on frequent cashers of winning tickets was forwarded regularly to agencies such as the US Internal Revenue Service and the state Revenue Department.

"Outside critiques such as reviews by the state auditor's office are valuable and welcome parts of our business plan,'' officials said in their statement.

Boston Globe

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15 comments. Last comment 10 years ago by time*treat.
Page 1 of 2

United States
Member #10720
January 23, 2005
933 Posts
Posted: December 23, 2010, 5:10 pm - IP Logged

It's a shame that for every dollar played by the average player, 50 cents of it is returned and that's before taxes. That takes about 1/3 of the winnings. So every dollar on a taxable jackpot such as Pick 4 STR returns only about 35 cents.

    ttech10's avatar - blobdude
    United States
    Member #92326
    June 5, 2010
    887 Posts
    Posted: December 23, 2010, 5:18 pm - IP Logged

    I really don't know how to feel about this.


    The winner of the ticket gets their money that's due and the lottery still gets to take out their chunk of change to go towards their "charity" (usually education). It doesn't seem to really hurt any part of the lottery, just the main government, which really is just being greedy and reaching into your pocket (and I say that because of the other countries whose governments don't tax the winnings).


    I guess there's some good and bad feelings in this and if anyone is really getting hurt it's the people cheating the system because instead of getting their debts taken care of they go on and (most likely) use it for things that will just increase their debt.

      RJOh's avatar - chipmunk
      United States
      Member #9
      March 24, 2001
      20272 Posts
      Posted: December 23, 2010, 5:53 pm - IP Logged

      How can buying winning lottery tickets as less than their face value and cashing them in for their face value be considered gambling while buying lottery tickets with odds of 1:10 or worst or winning anything is not?  Seems like the state needs to change their definition of gambling.

       * you don't need to buy every combination, just the winning ones * 

      Thumbs Up       

        Coin Toss's avatar - shape barbed.jpg
        Zeta Reticuli Star System
        United States
        Member #30469
        January 17, 2006
        11483 Posts
        Posted: December 23, 2010, 6:19 pm - IP Logged

        Mass. has also had a lot of "wiseguys" hit jackpots.

        The OP says "certain people" keep cashing these tickets in.


        Those who run the lotteries love it when players look for consistency in something that's designed not to have any. So many systems, so many theories, so few jackpot winners. 


        There is one and only one 'proven' system, and that is to book the action. No matter the game, let the players pick their own losers.


          United States
          Member #26329
          November 16, 2005
          330 Posts
          Posted: December 23, 2010, 6:41 pm - IP Logged

          It's the state of Mass fault for having such huge taxes .....People will always figure out a way to avoid paying too much taxes.  These type of people see ALL MONEY as the GOV'T's MONEY first....How dare these greedy people take the Gov'ts money!  When it's the Gov't and their programs that waste money are STEALING from the American People.   They can change the laws all that want people will still figure out a way to avoid paying..... It's funny that these same people never figure out that by LOWERING taxes MORE money flows into the Treasury....

            United States
            Member #75356
            June 1, 2009
            5345 Posts
            Posted: December 23, 2010, 8:08 pm - IP Logged

            It always amuses me when I hear the Govt. complaining about corruption....lol

              sully16's avatar - sharan
              United States
              Member #81738
              October 28, 2009
              75588 Posts
              Posted: December 23, 2010, 9:05 pm - IP Logged

              It always amuses me when I hear the Govt. complaining about corruption....lol

              I Agree! Yep.

              Hi LP family, won't be posting for a couple days, Hurt my right arm.

                Monkey Butt, USA
                United States
                Member #54567
                August 23, 2007
                1124 Posts
                Posted: December 23, 2010, 9:13 pm - IP Logged

                Bottom line here is what's on the books. The Massachusetts State Lottery is in the process of putting a law on the books that will limit the number of winning tickets a person can cash. So if you are a lucky S.O.B. then get ready to limit the number of your wins.

                  Goalisamillion's avatar - Lottery-046.jpg
                  Cary, Nc
                  United States
                  Member #84638
                  January 1, 2010
                  1376 Posts
                  Posted: December 23, 2010, 9:45 pm - IP Logged

                  So are they going to audit all the people who lose thousands of dollars every year and give them back a complete refund or make gambling loses a complete TAX write off???????????????

                   Come on, let me hit a jackpot and find an honest(funny isnt it)person who will  pay me a % of my ticket so UNCLE SLAM your pockets wont take their unneccesary share. I would not have no problem selling my tickets !!!!


                  IVEY(This is the best poker player in the world, Phil IVEY!!!)

                  Take's a POSITIVE vision to get to that  MILLION !

                  Always play where/when YOU have the advantage !!!!!

                    Nino224's avatar - Lottery-013.jpg
                    Miami, FLA
                    United States
                    Member #62791
                    July 9, 2008
                    686 Posts
                    Posted: December 24, 2010, 6:59 am - IP Logged

                    Bottom line here is what's on the books. The Massachusetts State Lottery is in the process of putting a law on the books that will limit the number of winning tickets a person can cash. So if you are a lucky S.O.B. then get ready to limit the number of your wins.

                    Get ready for pets showing up to cash winning tix, lol!!

                    "...a chance to push everything aside, the circumstances that've controlled our lives, and do it our way now. Good, bad or otherwise. You'll maybe get lost in it, tied up in it a little bit, but if you work your way through that the real you shows up, I think. Maybe what's at your core deep down, maybe that comes out. Maybe that's what it's about." Mike Pace 

                      HaveABall's avatar - rocket

                      United States
                      Member #72446
                      March 18, 2009
                      1301 Posts
                      Posted: December 24, 2010, 9:28 am - IP Logged

                      Wow, being a "ticket cashier" sounds like an interesting business.  How do they obtain clients, does one simply create a website and offer a competitive rate (perhaps 8-10% of the pre-taxed jackpot) to cash a client's winning ticket? 

                      After setting the appointment to meet the potential winning ticket holder, how does a "ticket cashier" determine, during the appointment, that the ticket is authentic (even the lottery headquarters admit having to administer several tests on a submitted ticket before they will pay-off on it, receiving exquisite forgeries has occurred there before)?  I'd presume that this "ticket cashier" would have to pay the ticket owner cash (although, how would the ticket owner know it wasn't counterfeit cash?), yet how does the "ticket cashier" obtain a receipt so that the IRS doesn't accuse business owner of "gifting" over their lifetime limit of $1,000,000 to individuals; maybe "gifting" isn't issue if the "ticket cashier" is an official incorporation, such as an LLC?

                      It appears "ticket cashier" is a complex business model and tax filing LLC endeavor, yet probably highly competitive within each U.S.A. state.


                      Having several millions of dollars in my financial accounts means receiving several valuable services each day!


                        JonnyBgood07's avatar - Patriots logo1.jpg
                        United States
                        Member #61621
                        May 29, 2008
                        20581 Posts
                        Posted: December 24, 2010, 9:42 am - IP Logged

                        I can't believe they whine....they get their cut regardless.The Lottery Comission is permanently in a win win situation

                        ..I've heard here in Connecticut alot of folks just use their grandparents 68 or older)to cash their winning as they get it tax free.

                        "No matter how bad things may get, I'd like to thank my middle finger

                        for always sticking up for me.."


                          Jake's avatar - animal bird.jpg

                          United States
                          Member #2217
                          September 1, 2003
                          1068 Posts
                          Posted: December 24, 2010, 10:23 am - IP Logged

                            This is the tip of an iceburg that will eventually melt down, I believe, and wreak havoc for lottery players.  As far as the official designation "professional gambler" - you don't have to choose this.  Win the right amount, and the IRS will happily sign you up!   So, the govt creates a problem and now has to get creative and get out of it.  Absolute power indeed.

                            My opinion on the coming meltdown:  I believe ultimately lottery states are going to require the winner of every lottery ticket to sign/address the ticket at presentation for payment - not just lottery jackpots but play-3, play-4, and scratch-offs.    Logistically, it might create a paper pileup for the state, but if you were a fed or state auditor and you spent free time tooling around LP, you'd find one state in particular has players claiming to win thousands upon thousands of dollars every week by playing multiple tickets on the P3 or P4.  I'm not even good in math, but I can see the potential for some agent looking to make his/her bones pointing out - Hey, we got someone claiming to have won xxx amount this year, all untaxable... let's see if they've paid their taxes on their winnings.

                          Before anyone jumps on the soapbox about what "someone says" here at LP, obviously anyone can say just about anything on the WWW and can be simply lying or inflating the truth.   True or lie, the info is out there to draw the interest of those who will take every penny possible from our winnings.  If you believe no one from the fed or state is keeping an eye on sites like LP, well let's just say that's a wager I'd like to get in on. 

                          But this is just my opinion.  After all, playing the lottery is for amusement only.  Right.  J

                            Mil$Winner!'s avatar - Lottery-029.jpg
                            New Member
                            United States
                            Member #102702
                            December 24, 2010
                            20 Posts
                            Posted: December 24, 2010, 10:28 pm - IP Logged

                            As an admitted liberal, I see nothing wrong with tax avoidance. Of course, people will try to minimize their tax liability. There's nothing illegal about that, nor should it be illegal. Avoiding child support payments is entirely different. People should take care of their little ones.