Where Does the Money Go?

Reply #9

GoldenWhun — Fri, 21 Aug 2009 23:33:19 GMT

I understand now, thanks for the answers.

Reply #8

Stack47 — Fri, 21 Aug 2009 16:04:20 GMT

It took the Ohio Lottery about 4 years until they began offering a pick-3 game and another 4 years before there had a lotto game. They couldn't start off with a $1 million cash prize without the means to pay off so they had to stretch it out over 20 years. I'm not sure if it was an annuity or just the 5% interest, but it wasn't until the volume of play reached a certain level where they could offer cash payments.

At one time we had to check either cash or no cash payment on the play slips and... [ More ]

Reply #7

time*treat — Fri, 21 Aug 2009 07:47:03 GMT

i don't even know why they cant just market the cash

Because one does not sell more roses by promoting the thorns.

Reply #6

RJOh — Wed, 19 Aug 2009 08:12:42 GMT

When most lotteries first started, annuities were the only option. It has just been in the last 10 years that most of them started offering the cash option but they continue to advertise the jackpots as they did before the change.

Reply #5

joshuacloak — Wed, 19 Aug 2009 07:28:51 GMT

in short like these nice people before me said

they flat out lie to you, their is no pb 250m jackpot, its all in their heads!

their is thro $124,800,000 jackpot , they just do magic with numbers and double the amount to get you to buy a ticket

hell by the lotto ad marketing team logic

i can turn a 124m jackpot in to a 1,000m jackpot, and sell it as such

just give me like 500 years to do it, and i be like in 500 years, you have 1000m :D

LOL

pb 30 years is way to... [ More ]

Reply #4

BobP — Wed, 19 Aug 2009 07:00:28 GMT

Even though the annuity earns interest, the whole thing is structured to close/end with zero on the final payment.

I wonder what the annuity is invested in and whether the current low rate of return is having an effect on the advertised lottery prize. After all an annuity based on 2% (current CD rate) should be less than one based on 5%.

BobP

Reply #3

Longarm — Wed, 19 Aug 2009 03:20:40 GMT

This description may not be strictly correct in all the technicalities, but it can give a general idea of how this works.

The cash value is the amount of money in the prize pool. For simplicity, let's assume one person wins the jackpot. If he selects the cash value option, he receives the cash value amount, which is money already held by the lottery commission.

If the winner selects the annuitized payment option, he receives the first annual payment, and the rest (of the cash value) is dep... [ More ]

Reply #2

rburton — Tue, 18 Aug 2009 23:40:15 GMT

I found this out recently. I read the cash value is in a trust fund of some sort, example PB starts at $20M, only 10M is placed in the fund. I also read most of the monies accumulated is interest, PB puts little, if any more into the fund, which I dont believe. What you get is the cash value of whatever is in the fund. If you take the yearly payments you get the interest the money earns.

Reply #1

Coin Toss — Tue, 18 Aug 2009 22:58:40 GMT

If you mean the $170 millions was the advertised jackpot and the $105 is the cash option, the other 65 million never existed.

That's one of the things I learned here at LP, there's a thread about this somewhere.

PB and MM are both pumped up right now, but the advertised jackpot amounts do not exist, the cash is not on hand. The advertised amount is what the winner would get over the course of an annuity.

Where Does the Money Go?

GoldenWhun — Tue, 18 Aug 2009 22:39:32 GMT

Ok say you win a 170 Million dollar Jackpot and decide to take the Lump sum. The Lotto gives you 105 Million BEFORE Federal and State taxes are taken. Where does the other 65 million go to