Paying a jackpot over 26 years is too long of a time frame

Reply #42

RJOh — Fri, 07 Mar 2008 00:47:53 GMT

Car dealers do advertise cars the same way. Haven't you ever read New cars,$200 down and $199 a month . The details like a big balloon payment after a couple of years and etc. are in the fine print or are only mentioned once you're committed to buy. It could be six or more years before you payoff the loan.

Reply #41

JWBlue — Fri, 07 Mar 2008 00:31:51 GMT

Advertising that the jackpot will pay the annuity amount without stating the number of years in bold print next to the dollar amount is equivalelent to a car dealer advertising that he will sell a Lamborghini Diablo without the engine. The time value of money is a basic premise. As is selling a car with an engine it. It is misleading not advertising the cash amount.

Reply #40

rubberbandman — Thu, 06 Mar 2008 16:13:18 GMT

not really

Reply #39

savagegoose — Thu, 06 Mar 2008 16:01:52 GMT

this is prob too complicaqted a link

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

but it sorta wshow how your 1 mill a year isnt worth 1 mil lin 20 years, and the formual people use to work how much a lump summ is going to be

Reply #38

ThatScaryChick — Thu, 06 Mar 2008 15:53:02 GMT

I've actually never heard of that term or program before. Thank you for the link time*treat! I think I will bookmark that page.

Reply #37

mken32 — Thu, 06 Mar 2008 15:50:12 GMT

I like CDARS......... even that article is about 4 years old

Reply #36

rubberbandman — Thu, 06 Mar 2008 14:33:38 GMT

try playing powerball its 30 years

Reply #35

Coin Toss — Thu, 06 Mar 2008 13:45:07 GMT

Good example of the$30 million, Floyd.

_________________

This discssion brings the infamour Yugo automobile to mind. For those of you too young to know the story, Yugoslavia was selling a car in the U.S. called the Yugo- the first models had no reverse on them.

As time went on, Yugo got more and more aggressive with their advertising, to the point where they were advertising free service for life, all you do is pay for oil changes- and then they said they'd pay for the oil changes, too.... [ More ]

Reply #34

benmas — Thu, 06 Mar 2008 08:29:47 GMT

sometimes one cannot advertise everything in one shot (because of time, space, cost constraints etc)so they advertise the most outstanding feature of the deal...if you want to get into the deal (new car, mortgage, lottery) you have the responsability to get informed or ask for all the details involved and how it works...

For the ones that say false advertising...it is not..it is legally correct but of course the fine print will reveal all the other details...so the advertiser will not go ahea... [ More ]

Reply #33

KY Floyd — Thu, 06 Mar 2008 07:50:33 GMT

Not telling you the rules, or heavily promoting one thing while not promoting the rules is misleading.

If you don't understand the rules you haven't been mislead. The number of possible outcomes that result in losing is meaningless without knowing how many outcomes result in winning, because odds are based on the ratio of the two numbers.

1. If you flip a coin and need heads to win there's only one possible result that will cause you to lose, but there's a 50% chance of losing.

2. If yo... [ More ]

Reply #32

KY Floyd — Thu, 06 Mar 2008 07:31:23 GMT

In general, what makes an ad false or misleading is the claims that are made, not how believable or unbelieveable they are. Consumers are expected to have general knowledge, so an advertiser doesn't need to have disclaimers about things that are (or should be) general knowledge. Consumers aren't expected to have more specialized knowledge, so advertisers do have to provide information on some of those things. Just because most people here know about annuity values doesn't mean that's common know... [ More ]

Reply #31

justxploring — Thu, 06 Mar 2008 04:40:18 GMT

Before I sign off tonight, I just want to apologize to the board for one of the sentences in my last post. I don't even like the word moron because we all make stupid mistakes. My only point was that you can bring up a million cases of deceptive advertising. Everytime they show a commercial for junk food, should they warn people that if you eat too much you'll get fat or have a heart attack?

Yes, there's a lot of deceptive advertising. It's not just the advertising, but sometimes the people w... [ More ]

Reply #30

Guru101 — Thu, 06 Mar 2008 04:22:46 GMT

I've already resolved that it's not misleading. Also, they don't post the after taxes estimate because they would need to list 50 of them, 1 for each state that plays that game.

Reply #29

lottocalgal — Thu, 06 Mar 2008 01:22:49 GMT

Thanks for this information time*treat.

I'm stacking up all information I can. Just in case.

Reply #28

pacattack05 — Thu, 06 Mar 2008 01:21:42 GMT

I find it rather interesting how some people can be blinded by their so called knowledge of the real world. They think that there is nothing going on behind closed doors and everything is honky dory.

Of course it's MEANT to be misleading. My opinion is that the real issue here is not whether people are so dumb as to know the true value amount they get is the net and not the gross, but because these advertisers are getting away with it, and they don't like it.

Just like the dealership that... [ More ]

Reply #27

Stack47 — Thu, 06 Mar 2008 01:02:24 GMT

It's sort of like politics! LOL People often vote for the guys who talk the talk and have the most charisma.

But not in Ohio, Texas, and Rhode Island yesterday.

Reply #26

justxploring — Thu, 06 Mar 2008 00:52:19 GMT

KY Floyd writes: if all they advertise is at least $5000 for any trade then the advertising is false and misleading.

I usually would be the last person to defend a car dealership, but I disagree with you that this is false advertising. Someone would have to be a complete moron to think an old beater that isn't even running is worth a trade-in value of $5,000. Still, wouldn't it be nice if truth in advertising and truth in lending were really enforced? From my personal experience in sales, man... [ More ]

Reply #25

justxploring — Thu, 06 Mar 2008 00:30:27 GMT

If it is not misleading why don't they post after taxes estimate?

I agree...I'd be very happy too. And as I said before, there's no point in debating this issue if we all have different ways of looking at things.

However, your last comment struck me as odd. If you apply for a job and are told We'll give you $600 a week do you expect to get a check for $600 on Friday?

All income is taxed, including prizes.

Reply #24

sirbrad — Wed, 05 Mar 2008 23:48:30 GMT

At this rate no taxes are going to matter to me. It is so much money I don't really care. However as I already said I am a lump sum guy, but would take the annuity at this level with no complaints if I had to. If it is not misleading why don't they post after taxes estimate? Because it IS misleading that is why.

Reply #23

JackpotWanna — Wed, 05 Mar 2008 21:55:07 GMT

No problem. Let me win $173 million today and I'll pay all the taxes the government requires of me and more.

Reply #22

BaristaExpress — Wed, 05 Mar 2008 20:14:31 GMT

I look at it this way in the long run and I hope it makes sense to the rest here on the LP. I see $1,441,666 going out 30 times to Uncle Sam, which comes to $43,249,980 verses the one time payment of $21,425,000 that one year only!

Now think about it for a few minutes, taxes never go down (most of the time they go up) and you actually still owe another 10% at todays tax rate at the end of the year every year for the next 30 years on your winnings! But if you invest any of those winnings your

Reply #21

Guru101 — Wed, 05 Mar 2008 16:17:00 GMT

It's not misleading. It's up to the player to read the rules of the game. The lottery doesn't have some magic telepathy machine to send brain waves to everybody's brain to tell them the rules. Being the lottery, I don't care if a person doesn't read the rules, but just because they don't, doesn't mean they can complain when they find out there is a cash option.

Reply #20

JackpotWanna — Wed, 05 Mar 2008 14:46:26 GMT

More than plenty for me. WOW! 173m over 30 years baby

Reply #19

Badger — Wed, 05 Mar 2008 12:05:27 GMT

Thanks for the information, Time*Treat.

Reply #18

KY Floyd — Wed, 05 Mar 2008 07:14:16 GMT

I agree that the advertising makes the jackpot seem very inflated, but it's like the ad in the newspaper that says chairs from $99.

I'd say it's more like a car dealer promising they'll pay at least $5000 for any trade. When you come in, or if you look carefully at the website, they disclose the details and tell you that the $5000 will be paid as $50 per month for 100 months. That means it isn't fraud, but if all they advertise is at least $5000 for any trade then the advertising is false an... [ More ]

Reply #17

dvdiva — Wed, 05 Mar 2008 06:58:56 GMT

Sadly the US hasn't joined the rest of the world in lottery jackpots. In Canada, Europe, Australia, etc when a prize is listed as $20M (or in whatever currency) that's what you win. No income tax and the prize is in cash. Too bad we can't import that idea.

Reply #16

justxploring — Wed, 05 Mar 2008 05:41:19 GMT

Thanks, time*treat. On another thread I said banks work with partners but I couldn't think of the name. Someone brought it up a few months ago and I found a few banks in my local area who are on the network. The site says CDARS only covers up to $50 million total, if I'm reading it correctly. Well, I don't have to worry about it for now! LOL

http://www.cdars.com/index.php

Reply #15

sirbrad — Wed, 05 Mar 2008 05:24:54 GMT

Year Gross Payment Federal Taxes State Taxes Net Payment

1 $3,084,607 $771,152 $0 $2,313,455

2 $3,207,991 $801,998 $0 $2,405,994

3 $3,336,311 $834,078 $0 $2,502,233

4 $3,469,764 $867,441 $0 $2,602,323

5 $3,608,554 $902,139 $0 $2,706,416

6 $3,752,896 $938,224 $0 $2,814,672

7 $3,903,012 $975,753 $0 $2,927,259

8 $4,059,133 $1,014,783 $0 $3,044,349

9 $4,221,498 $1,055,374 $0 $3,166,123

10 $4,390,358 $1,097,589 $0 $3,292,768

11 $4,565,972 $1,14... [ More ]

Reply #14

sirbrad — Wed, 05 Mar 2008 05:21:58 GMT

yes the jackpot value is very misleading. But keep in mind the lottery does pay it, and are not the IRS. We pay the actual amount listed they told me a long time ago in an email. But of course they know it is not actual amount. and sadly most peopel think you get the advertised amount.

I am a lump sum guy, but if the jackpot is as high as it is now I would not have a problem taking annuity if I had to. I would never even spend the principle if I tried, and no worries about investing and taxes... [ More ]

Reply #13

Guru101 — Wed, 05 Mar 2008 05:19:18 GMT

He had a case? You do realize it doesn't matter what someone is sueing you for right? Anybody can sue anybody for anything. Whether or not it's foolish, worthy, or cut and dry will be determined by the judge. Why do you think the judge ruled in the lottery's favor? When you play a game, you read the rules. It's common sense. Granted, being this is the lottery, most people haven't bothered reading the rules. They're just looking for a way to get rich, but they don't have nothing to complain about... [ More ]

Reply #12

time*treat — Wed, 05 Mar 2008 05:15:33 GMT

What you do with that kind of money, before you get to the investment stage, is park it in a special program the banks have called CDARS (pronounced cedars ). What they do is in effect spread your money out into $100K blocks across many banks, but to you it looks and acts like one account. You aren't, in that case, required to physically go to every bank and open those accounts. more info.

The largest (in terms of the amounts you can put in) option is U.S. treasury notes bonds. Treasury paper... [ More ]

Reply #11

Coin Toss — Wed, 05 Mar 2008 04:35:09 GMT

Since the lottries adveretise a specific cash value, or Cash value approximatley 50% , it isn't false advertising.

Badger

Good question, but I don't think people with multi-millions deal only with banks (and banks have a ceiling on much cash they keep on hand, too much and all the regulations change, and the bank examiners set up cots!). Like Justxploring said, you'd go to an attorney (hopefully one that wouldn't take off to Switzerland with your winnings!) and the attorney would probably... [ More ]

Reply #10

tiggs95 — Wed, 05 Mar 2008 03:47:01 GMT

If I was like in my 20's or 30's I'd take payments over 26 years and lock it in so I could not get the rest in a buy out..At my age I'd take a lump sum payment..When your young you can be more foolish then when your older IMO..

Reply #9

JWBlue — Wed, 05 Mar 2008 03:31:29 GMT

When it comes to the law, nothing should be assumed. It can be still be false advertising even if it is in the rules of the game.

As I mentioned above, someone sued when he found out his jackpot winnings were annual payments. He had a case.

Reply #8

Guru101 — Wed, 05 Mar 2008 02:06:09 GMT

I don't think it's misleading. It's a jackpot game, therefore it should be assumed the advertised amount will be paid in annuity. Plus, at the end of the day, it's in the rules of the game, which the person can read.

Reply #7

justxploring — Tue, 04 Mar 2008 23:39:14 GMT

Well, I won't dwell on it, since last time it got me into some kind of weird debate with someone who went besserk, but it's only misleading if people don't read the rules which are printed on the cards and lottery web site which states a cash option.

I agree that the advertising makes the jackpot seem very inflated, but it's like the ad in the newspaper that says chairs from $99. The store might have only 1 chair that is $99 and every other chair is $599. As long as they have the $99 chair,... [ More ]

Reply #6

JWBlue — Tue, 04 Mar 2008 23:29:35 GMT

My point is that it is significantly less than advertised. Getting only close to half as much up front is toeing the line of false advertising.

I remember a few years ago, someone won about $25 million in a lottery. When he found out the cash value up front was about half as much, he sued the lottery commission for false advertising, asking for the full amount up front. The judge ruled in favor of the lottery commision and told the player that he could have the money he paid for th ticke... [ More ]

Reply #5

justxploring — Tue, 04 Mar 2008 23:12:28 GMT

Coin Toss, this is one case where I (sort of) disagree with you. Why not? It's an internet board. LOL Anyway, it's true that the advertised dollar amount is very misleading if someone is unaware that the numbers mean over a period of XX years Remember the poor guy who won a 20 year payout on a scratch-off and had cancer? But the reason he wasn't able to collect is because he was never misled into believing he'd be receiving a million dollars. The games always state the rules. Just because many p... [ More ]

Reply #4

Badger — Tue, 04 Mar 2008 23:10:45 GMT

Coin Toss, you always seem to be knowledgable about this sort of thing. So here's a question....

I usually don't think about it, because I have a real obstacle in getting my mind around an actual figure like $85.7 M in cash. I gues its because I can't imagine that much real money in one place with my name on it.

But say you win, and you take that cash option. They give you a check for it. Now, what do you do with it until you can figure out how to invest it? You can't put it in the bank. T... [ More ]

Reply #3

Coin Toss — Tue, 04 Mar 2008 22:49:58 GMT

JWBlue

Among the many things you can learn here at LP one of them is that when a lottery advertises a jackpot the cash option is usually around 50% of the stated prize or less, and the advertised amount does not exist.

Right now the Powerbal site says

Curent estimated jackpot is $173 million

$85.7 million cash value.

If somone hits hit and opts fopr cash, and it's a solo hit, they'll get the $85.7 million, less tax.

The cash option is half the stated jackpot because the $173 m... [ More ]

Reply #2

justxploring — Tue, 04 Mar 2008 22:25:40 GMT

I agree, but it's better than the graduated 30 yr payout offered by Powerball. When the Florida Lotto had a 20 year annuity, at least the payout was 5% ($50K a year for every million) but then it changed to 30 years which means you're getting even a lower rate of interest. Our 20 year game (MegaMoney) has a much higher cash payout, however - often as high was 70%. The last person who won $2M got a lump sum of $1.4M so taking the annual payments would be foolish IMO.

I think it depends on you... [ More ]

Reply #1

RJOh — Tue, 04 Mar 2008 22:01:57 GMT

You're not the only one to think that way. Most winners opt to take the cash value and invest it on their own terms. If you ever win a similar jackpot, you'll have the same option.

Paying a jackpot over 26 years is too long of a time frame

JWBlue — Tue, 04 Mar 2008 21:27:58 GMT

I am starting to belive that the time period of 26 years for the major lotteries to pay jackpots is too long of a time frame. I can tell a friend that I am going to give him a $1 million dollars. Then tell him I will pay him over 1 million years. That million dollars then becomes essentially worthless. I know that is extreme comparing it to the time frame that the lotteries give winnings, but 26 years seems too long.

The jackpot amounts are somewhat misleading.