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Merry Christmas indeed! Lucky N.Y. lottery player wins $49M

Topic closed. 31 replies. Last post 6 years ago by ellardfam.

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Posted: December 27, 2010, 2:25 am - IP Logged

"It would make more sense to me if cash option winners received the full (1/2) of sales and annuity winners received an even larger amount"

 

Isn't that how it is though? If you choose annuity you get an even larger amount than the people who chose lump sum (who do get the full amount of the money). I don't know, that's the way I see it.

First of all, I need to correct my original statement.  The Jackpot part of the Powerball payback is not really 1/2 of sales, it is more like 1/3 of sales.  The other 17% (or so) is paid back to the winners of the lesser prizes.

You're correct that annuity recipients DO get more than the lump sum people, over 20 or 30 years.  But the lump sum is NOT the full 1/3 of sales, as I think it should be.  It is 1/2 of 1/3 of sales.  Check some of the results and I think you'll see that the lump sum is always about 1/2 of the announced "Jackpot," and the "Jackpot" is about 1/3 of all the money taken in selling Powerball tickets since the last jackpot payout.  My estimates here might not be precisely correct, but I think they're in the ballpark.

    ttech10's avatar - blobdude
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    Posted: December 27, 2010, 4:41 am - IP Logged

    First of all, I need to correct my original statement.  The Jackpot part of the Powerball payback is not really 1/2 of sales, it is more like 1/3 of sales.  The other 17% (or so) is paid back to the winners of the lesser prizes.

    You're correct that annuity recipients DO get more than the lump sum people, over 20 or 30 years.  But the lump sum is NOT the full 1/3 of sales, as I think it should be.  It is 1/2 of 1/3 of sales.  Check some of the results and I think you'll see that the lump sum is always about 1/2 of the announced "Jackpot," and the "Jackpot" is about 1/3 of all the money taken in selling Powerball tickets since the last jackpot payout.  My estimates here might not be precisely correct, but I think they're in the ballpark.

    I think we both just have different thoughts on this. I really don't see a problem with the announced jackpot being about twice as much as the lump sum as they tell you it's the annuity amount (at least at the places I see the jackpot amounts) and also because any jackpot win would be enough for me so don't see an issue with jackpots not being high enough.

      dpoly1's avatar - driver
      PA
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      Posted: December 27, 2010, 9:24 am - IP Logged

      And the NY and Federal Tax Grinch's get their rotten hands on the winner's money! Red Devil

      Jackpots should be tax free, then the economy would actually be stimulated!

      Bash this is me trying to pound some sense into a liberal politician! Big Grin

      Congrats to the winner!

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        Abdi's avatar - Lottery-008.jpg
        Nairobi
        Kenya
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        September 8, 2008
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        Posted: December 27, 2010, 1:41 pm - IP Logged

        this christmass gift could not have come at a better time than this.

        I Agree!

        There are no born heroes or winners........it takes a hammer a chisel,a vision and a will to suffer the blows and be carved into one!..........

          freeobama's avatar - Lottery-057.jpg
          Sunny part of town
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          Posted: December 27, 2010, 5:26 pm - IP Logged

          Concrads to NY and their first powerball win,After spending $200 a week faithfully on mega million or powerball for the past 5years maybe i can win a dollar in this sorry state i love and live in!

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            December 27, 2010
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            Posted: December 27, 2010, 6:25 pm - IP Logged

            The lump sum payout is simply the present value of an future annuity. Generally, you could take the lump sum and give it to someplace like Peachtree. Then they could structure the lump sum into an annuity if you should change your mind.

             

            One thing I agree on, there is not much transparecy with the present value calculation done by the lotteries. Interest rates are so low right now that you would think the lump sum payouts would be increased from years past

              ttech10's avatar - blobdude
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              Posted: December 27, 2010, 7:35 pm - IP Logged

              The lump sum payout is simply the present value of an future annuity. Generally, you could take the lump sum and give it to someplace like Peachtree. Then they could structure the lump sum into an annuity if you should change your mind.

               

              One thing I agree on, there is not much transparecy with the present value calculation done by the lotteries. Interest rates are so low right now that you would think the lump sum payouts would be increased from years past

              You have to look at how the lottery invests though in comparison to how we would. They have companies bidding over who gets to be in charge of the investing which keeps the interest rates higher than you will find most anywhere else (at least during these times).


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                Posted: December 28, 2010, 12:13 am - IP Logged

                The lump sum payout is simply the present value of an future annuity. Generally, you could take the lump sum and give it to someplace like Peachtree. Then they could structure the lump sum into an annuity if you should change your mind.

                 

                One thing I agree on, there is not much transparecy with the present value calculation done by the lotteries. Interest rates are so low right now that you would think the lump sum payouts would be increased from years past

                Batiatus,

                We're not too many "pages" away from each other on this.  Take a rough hewn example:

                $100,000,000            Total Sales since last jackpot payoff

                  $17,000,000            Payouts for Powerball, 1WB + PB, 2WB + PB,,,,, 5WB

                  $50,000,000            Lottery's Advertized "Cut"

                  $33,000,000            Announced "Jackpot" Amount

                Here is where we differ...

                You accept the Lottery's calculation that allows them to get away with giving [about] $16,500,000 to some place like Peachtree in exchange for them guaranteeing the winner $33M over the next 20 years.  And with the same rationale offering a cash option winner a lump sum of $16.5M.  I don't accept this!  In both cases, Jackpot winners are only getting 1/2 of what they should receive.  If the Lottery's "cut" is going to be 66.5% of their gross sales, then they should be forced to advertize this fact, rather than the 50% they claim.

                Another way to look at this is:  Since all sales are CASH, when they announce a "Jackpot" of $33M, how can they support the claim that a cash option winner is only entitled to $16.5M? 

                --Jimmy4164

                  dpoly1's avatar - driver
                  PA
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                  Posted: December 28, 2010, 10:08 am - IP Logged

                  I used to wish that some young man would win the PA Lottery in the 1970's .............

                  ............ now I am hoping that some old man has a Happy New Year's Gift of about $80,000,000 after taxes Tonite!

                  Thumbs Up

                  that Grey Violet Bentley that I like is still available for one grand mid-life crisis!


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                    Posted: December 28, 2010, 2:23 pm - IP Logged

                    The lump sum payout is simply the present value of an future annuity. Generally, you could take the lump sum and give it to someplace like Peachtree. Then they could structure the lump sum into an annuity if you should change your mind.

                     

                    One thing I agree on, there is not much transparecy with the present value calculation done by the lotteries. Interest rates are so low right now that you would think the lump sum payouts would be increased from years past

                    Batiatus,

                    After a second reading I see that in my earlier response to your post I misstated your position.  I said that you agree with the lottery's calculation, when clearly, you are at least questioning it when you say, "there is not much transparecy with the present value calculation done by the lotteries."

                    Sorry about that.

                    I hope you'll continue in this discussion at:

                    http://www.lotterypost.com/thread/223792/1894878

                    --Jimmy4164

                      RJOh's avatar - chipmunk
                      mid-Ohio
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                      Posted: December 28, 2010, 2:44 pm - IP Logged

                      First of all, I need to correct my original statement.  The Jackpot part of the Powerball payback is not really 1/2 of sales, it is more like 1/3 of sales.  The other 17% (or so) is paid back to the winners of the lesser prizes.

                      You're correct that annuity recipients DO get more than the lump sum people, over 20 or 30 years.  But the lump sum is NOT the full 1/3 of sales, as I think it should be.  It is 1/2 of 1/3 of sales.  Check some of the results and I think you'll see that the lump sum is always about 1/2 of the announced "Jackpot," and the "Jackpot" is about 1/3 of all the money taken in selling Powerball tickets since the last jackpot payout.  My estimates here might not be precisely correct, but I think they're in the ballpark.

                       But the lump sum is NOT the full 1/3 of sales, as I think it should be. Thumbs Up

                      Have you discussed your concerns with the PowerBall people?  They may have a reasonable explanation.

                       * you don't need to buy more tickets, just buy a winning ticket * 
                         
                                   Evil Looking       

                        HaveABall's avatar - rocket

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                        Posted: December 28, 2010, 2:47 pm - IP Logged

                        First of all, I need to correct my original statement.  The Jackpot part of the Powerball payback is not really 1/2 of sales, it is more like 1/3 of sales.  The other 17% (or so) is paid back to the winners of the lesser prizes.

                        You're correct that annuity recipients DO get more than the lump sum people, over 20 or 30 years.  But the lump sum is NOT the full 1/3 of sales, as I think it should be.  It is 1/2 of 1/3 of sales.  Check some of the results and I think you'll see that the lump sum is always about 1/2 of the announced "Jackpot," and the "Jackpot" is about 1/3 of all the money taken in selling Powerball tickets since the last jackpot payout.  My estimates here might not be precisely correct, but I think they're in the ballpark.

                        Jimmy, and others who like to run calculations with your calculator ... if you are referring to Powerball, the annuity payments are completed at the 30th payment (over 29 years time).  Were you aware that the last time that a jackpot winner chose the ANNUITY option was October 10, 2007?  That is a long time, and should make you think! 

                        Most of these jackpot winning CASH OPTION recipients (even after paying the apx. 35% federal taxes plus their state's taxes) are able to obtain the SAME amount of money -- only within 12 years -- as the originally advertised annuity jackpot the date they won.  They simply performed weekly/monthly invest or stay put, in the safest options trading with as close to 90% insurance and also other stock ownership investments (and several FDIC insured accounts under $200K would only be used for, say $1,500,000 dollars total of their windfall!). You must understand that all winners almost instantly become 'part-time weekly investors'.  It's an empowering job to have though, and even if a winner was forced to take the "annuity" payments, they'd still have to become the same type of 'part-time weekly investor.' The difference is that: the winner would be divvying less money into less accounts, would not be able to gift much money to others, and they probably would be forced to ONLY live off of their interest for at least the first 10 years, depending on how well their options trading performed.

                        Lastly, another reason that almost 100% of people choose the CASH OPTION is because they don't want the lottery headquarters office and database to have their new checking account and routing # for the annual electronic transfers nor the new address they move to after they have claimed the checking account and old address on their "claim form."  After all, would you want the lottery headquarters, journalists, news wire service staffers, hackers, etc. easily accessing your bank information, address, city, and or state of residence for the following 29 years?

                        Congratulations to this CHRISTMAS day, net multi-million dollar Powerball lottery jackpot winning ticket holder or holders!!!  A tidy toasty and warm winter win!

                        Big Grin SantaNoelSantaSmiley SantaSnowmanChristmas

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

                        Disney


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                          Posted: December 28, 2010, 3:36 pm - IP Logged

                          Jimmy, and others who like to run calculations with your calculator ... if you are referring to Powerball, the annuity payments are completed at the 30th payment (over 29 years time).  Were you aware that the last time that a jackpot winner chose the ANNUITY option was October 10, 2007?  That is a long time, and should make you think! 

                          Most of these jackpot winning CASH OPTION recipients (even after paying the apx. 35% federal taxes plus their state's taxes) are able to obtain the SAME amount of money -- only within 12 years -- as the originally advertised annuity jackpot the date they won.  They simply performed weekly/monthly invest or stay put, in the safest options trading with as close to 90% insurance and also other stock ownership investments (and several FDIC insured accounts under $200K would only be used for, say $1,500,000 dollars total of their windfall!). You must understand that all winners almost instantly become 'part-time weekly investors'.  It's an empowering job to have though, and even if a winner was forced to take the "annuity" payments, they'd still have to become the same type of 'part-time weekly investor.' The difference is that: the winner would be divvying less money into less accounts, would not be able to gift much money to others, and they probably would be forced to ONLY live off of their interest for at least the first 10 years, depending on how well their options trading performed.

                          Lastly, another reason that almost 100% of people choose the CASH OPTION is because they don't want the lottery headquarters office and database to have their new checking account and routing # for the annual electronic transfers nor the new address they move to after they have claimed the checking account and old address on their "claim form."  After all, would you want the lottery headquarters, journalists, news wire service staffers, hackers, etc. easily accessing your bank information, address, city, and or state of residence for the following 29 years?

                          Congratulations to this CHRISTMAS day, net multi-million dollar Powerball lottery jackpot winning ticket holder or holders!!!  A tidy toasty and warm winter win!

                          Big Grin SantaNoelSantaSmiley SantaSnowmanChristmas

                          HaveABall,

                          There isn't much I can disagree with in your post, but it doesn't address my original concern.  Using my example from above, you're telling us that a cash option winner will eventually receive the entire $33M after 12 years of smart investing.  My question is WHY should a Jackpot winner have to wait at all, and be a savvy investor to boot, to be paid THE MONEY THAT WAS JUST RECENTLY DEPOSITED IN A BANK FROM PROCEEDS OF CASH TICKET SALES!

                          --Jimmy4164

                          p.s.  I hope there weren't any jackpot winners who bought up a lot of high priced real estate right before the bubble burst a couple years ago!


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                            Posted: December 28, 2010, 3:48 pm - IP Logged

                             But the lump sum is NOT the full 1/3 of sales, as I think it should be. Thumbs Up

                            Have you discussed your concerns with the PowerBall people?  They may have a reasonable explanation.

                            I doubt if their explanation, if they would be willing to respond with one, would be any more than a run around to cover the fact that they are simply withholding 66.5% of ticket sales, and not 50%.  Have you ever called the posted phone number of a lottery commission office?  My experience calling PA regarding the Millionaire Raffle was a complete waste of my time.  I'm hoping someone here has heard or read an official position on this.


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                              Posted: December 28, 2010, 11:51 pm - IP Logged

                               But the lump sum is NOT the full 1/3 of sales, as I think it should be. Thumbs Up

                              Have you discussed your concerns with the PowerBall people?  They may have a reasonable explanation.

                              RJOh, Batiatus, HaveABall,

                              Thanks for your interest in this question.  It turns out, the answer is at the Link I've been tacking onto my (Summaries) postings every week!

                              http://en.wikipedia.org/wiki/Powerball

                              Scroll down to the section entitled "Winning Expectation."  It's all spelled out there.  The table even details examples of various cash and annuity amounts.  I was correct that about 1/3 of ticket sales is what the cash option should be, and wrong in assuming it is not, because  IT IS!  If I had payed more attention to this article I would have noticed that the advertized "Jackpot" is 2X the cash option, and is what you end up with after 29 years.  So, unless you think you're a savvy enough investor to do better than doubling your cash payout in 29 years, or you're afraid the Lottery might go belly-up before you get all your money, it looks like the annuity option isn't such a bad deal after all.

                              --Jimmy4164