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Compromising on cash/annuity

Topic closed. 6 replies. Last post 10 years ago by Todd.

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United States
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June 5, 2002
11296 Posts
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Posted: January 12, 2007, 1:07 pm - IP Logged

How the US has paid lottery winners (compared to other countries, including Canada) over the years has of course generated much controversy, and discussion.

In 1998, President Clinton signed a bill that, for lottery players, saw (for the most part) the end of having, in advance, to choose either lump sum or annuity payments if they win the lottery (as it turned out, the new rules had no effect here in NY-ironically, now the Clintons' home.) Unfortunately, the bill did not go far enough; numerous games, including MA Megabucks and various scratches, plus the recent online "lifetime" payout games, are still annuity-only.

I propose the following compromise: there should be a new law that would go much further than the 1998 legislation. All US lottery games (you can add other forms of gambling, even Reader's Digest sweepstakes; ironically RD is down the road from Bill & Hillary) that are annuity-only (except "lifetime" games) would have to be changed to all cash or include a cash option. However, "lifetime" games can remain annuity-only (and can even eliminate, for example, VA's cash option in Win for Life). Going further, all states would have to give players the 60-day option (NY and Texas could continue "requiring" players to choose in advance, but winners in these two states choosing annuity would be allowed to switch to cash).

This way, the rights of lottery players are protected, while companies that make money from selling annuities to lotteries could continue to do so via "lifetime" games. The one possible drawback would be if such companies encourage US lotteries to offer more "lifetime" games.

    Coin Toss's avatar - shape barbed.jpg
    Zeta Reticuli Star System
    United States
    Member #30470
    January 17, 2006
    10344 Posts
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    Posted: January 12, 2007, 2:18 pm - IP Logged

    CASH Only

    "This way, the rights of lottery players are protected, while companies that make money from selling annuities to lotteries could continue to do so via "lifetime" games."

    That's part of your problem right there. "John Q. Public" doesn't really have a whole lot of sympathy for "the rights of lottery players", especially big winners (unless of course old John Q. becomes one). 

    If someone hits a jackpot and starts kvetching about payoff structure or anything, the public just thinks, "See how they are." 

    Those who run the lotteries love it when players look for consistency in something that's designed not to have any.

    Lep

    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.

      JAP69's avatar - alas
      South Carolina
      United States
      Member #6
      November 4, 2001
      8790 Posts
      Online
      Posted: January 12, 2007, 2:45 pm - IP Logged

      The way I see it is that all lottery games should have cash or annuity option.

      My complaint is when a winner chooses annuity they and their heirs are locked in to annuity.

      They hould have options after taking annuity.
      At some point after taking annuity the reciever or their heirs of the annuity should have an option to turn the annuity in to cash value with no penalties on the principal remaining.

      There are many annuity buyers out there who buy from receivers of annuities at a large discount from the principal value. I do not like that scenario.

      The receiver of an annuity may pass away leaving the annuity balance to the heirs. There are inheritance taxes that become due on the principal of the annuity. The heirs have no funds available to cover the tax.  The heirs can not cash the annuity at it's source to cover these taxes. They may resort to selling the annuity to discount annuity buyers.

      Same point if the heirs desire to have the cash instead of annuity payments.

      My theory comes down to that an annuity should be cashable at the annuity source with little or no penalty.

      WHATT


        United States
        Member #379
        June 5, 2002
        11296 Posts
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        Posted: January 12, 2007, 3:01 pm - IP Logged

        The way I see it is that all lottery games should have cash or annuity option.

        My complaint is when a winner chooses annuity they and their heirs are locked in to annuity.

        They hould have options after taking annuity.
        At some point after taking annuity the reciever or their heirs of the annuity should have an option to turn the annuity in to cash value with no penalties on the principal remaining.

        There are many annuity buyers out there who buy from receivers of annuities at a large discount from the principal value. I do not like that scenario.

        The receiver of an annuity may pass away leaving the annuity balance to the heirs. There are inheritance taxes that become due on the principal of the annuity. The heirs have no funds available to cover the tax.  The heirs can not cash the annuity at it's source to cover these taxes. They may resort to selling the annuity to discount annuity buyers.

        Same point if the heirs desire to have the cash instead of annuity payments.

        My theory comes down to that an annuity should be cashable at the annuity source with little or no penalty.

        I, of course, feel the same way that, theoretically, all lottery annuities should have a cash option. Realistically, various US lotteries do not see it that way. But with all games with fixed annuities, the cash value can easily be determined. Lifetime annuities, admittedly, are a bit different.

        Likewise, those who are already receiving lottery annuity payments should have a cash-out option, at any time, but, that's another ball of wax.

        This is not quite "pro-choice" v "pro-life". I think there CAN be a reasonable compromise as far as respecting the rights of lottery players v companies that sell annuities. OK, it does get thorny when it comes to those who are already receiving lottery annuity payments. But we have to start somewhere.

          Coin Toss's avatar - shape barbed.jpg
          Zeta Reticuli Star System
          United States
          Member #30470
          January 17, 2006
          10344 Posts
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          Posted: January 12, 2007, 4:53 pm - IP Logged

          CASH Only

          "Lottery players rights" just might be something you're assuming. I'm not sure there is such a thing.

          I'm pretty sure that simply by playing a ticket you are agreeing to things the way that particular lottery has them set up.

          In some states, when people do win, they are surprised to find out that the back of the ticket (not the playslip, the actual ticket) includes a consent form to a press release, and they have to sign the back of the ticket to claim their winnings. 

          Those who run the lotteries love it when players look for consistency in something that's designed not to have any.

          Lep

          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.

            fja's avatar - gnome1

            United States
            Member #91
            January 19, 2002
            11906 Posts
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            Posted: January 12, 2007, 6:17 pm - IP Logged

            How the US has paid lottery winners (compared to other countries, including Canada) over the years has of course generated much controversy, and discussion.

            In 1998, President Clinton signed a bill that, for lottery players, saw (for the most part) the end of having, in advance, to choose either lump sum or annuity payments if they win the lottery (as it turned out, the new rules had no effect here in NY-ironically, now the Clintons' home.) Unfortunately, the bill did not go far enough; numerous games, including MA Megabucks and various scratches, plus the recent online "lifetime" payout games, are still annuity-only.

            I propose the following compromise: there should be a new law that would go much further than the 1998 legislation. All US lottery games (you can add other forms of gambling, even Reader's Digest sweepstakes; ironically RD is down the road from Bill & Hillary) that are annuity-only (except "lifetime" games) would have to be changed to all cash or include a cash option. However, "lifetime" games can remain annuity-only (and can even eliminate, for example, VA's cash option in Win for Life). Going further, all states would have to give players the 60-day option (NY and Texas could continue "requiring" players to choose in advance, but winners in these two states choosing annuity would be allowed to switch to cash).

            This way, the rights of lottery players are protected, while companies that make money from selling annuities to lotteries could continue to do so via "lifetime" games. The one possible drawback would be if such companies encourage US lotteries to offer more "lifetime" games.

                            Man Law? 

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              Todd's avatar - Cylon 2.gif
              Chief Bottle Washer
              New Jersey
              United States
              Member #1
              May 31, 2000
              23259 Posts
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              Posted: January 12, 2007, 9:52 pm - IP Logged

              Another new law?

              I have a better idea:  Just put a mark in the "Cash Option" square when you buy the ticket.

               

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