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N.Y.State lottery answer my question

Topic closed. 6 replies. Last post 13 years ago by WILLSELL.

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megamillionaire's avatar - Sphere animated_small_ neg2.gif
Queens, NY
United States
Member #245
April 15, 2002
451 Posts
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Posted: November 8, 2003, 11:08 am - IP Logged

I asked the N.Y. State Lottery Commission why they didn't give the cash value amount for the lottery jackpots. Below is their answer. If other states and the Multi-State lotteries can I still think they should be able to.

From: "Questions" <questions@lottery.state.ny.us>
To: <swright3@nyc.rr.com>
Subject: RE: Contact Us Form
Date: Wednesday, November 05, 2003 11:10 AM

Unfortunately, the New York Lottery cannot determine what the cash value is until after a drawing has been "hit." The advertised LOTTO jackpots are based on a sales trend from this time last year, not the sales of the current drawing. The advertised LOTTO jackpot is also the pre-tax amount that would be received over the 25-year payment period.

The calculating of the "cash value" process works like this; The morning after the jackpot has been hit, the Lottery's Financial unit calls brokerage firms and asks, "How much cash will I need today to invest into government bonds to make $X amount of dollars over 25 years (x = the advertised annuity jackpot)? The brokerage firm with the lowest bid is the amount that is used for the cash value. Depending on how the current interest rates are will determine the cash value. These discounted figures are pre-tax figures.

The New York Lottery invests in treasury securities, which have the 100% guarantee of the United States Government.

To see the current and past cash value payouts, check out the "Winners News," "Draw Game Winners" to see what some Lottery winners have received for their lump sum:
http://www.nylottery.org/ny/nyStore/cgibin/ProdSubEV_Cat_333574_NavRoot_303.htm

NYL Press & Community Relations
- Please include original inquires when responding for additional information-



 

Megamillionaire

Time is a wonderful teacher, but it kills all its students.

A man must consider what a rich realm he leaves when he becomes a conformist.

    Todd's avatar - Cylon 2.gif
    Chief Bottle Washer
    New Jersey
    United States
    Member #1
    May 31, 2000
    23273 Posts
    Online
    Posted: November 8, 2003, 7:59 pm - IP Logged

    It's great that NY gave an answer to this question, but I believe their answer is wrong.

    Lotteries take in cash, then after the draw they divide up the total cash received into a number of buckets.  One bucket would be for the prize pool, one for administrative costs, one for paying the lottery agents, etc., etc.  As Cash Only has pointed out several times, for New York, the total percentage allocated to the prize pool is 40% of gross receipts.

    Therefore, the actual jackpot prize is given a fixed percentage of the total cash received from players.  The annuity value is then calculated based on the cash on-hand for the jackpot prize pool.

    If this was not the case, let's say the lottery sold more tickets than anticipated.  Therefore, they would have more cash on-hand than was necessary to fund the annuity jackpot.  What would they do with the excess cash?  The answer is that they don't run into that situation, because the payout is calculated based on a fixed percentage of cash received, as I described above, not the way the NY Lottery responded.

     

    Check the State Lottery Report Card
    What grade did your lottery earn?

     

    Sign the Petition for True Lottery Drawings
    Help eliminate computerized drawings!

      Jorli D's avatar - nw saucyelf2.jpg
      Michigan
      United States
      Member #2448
      October 4, 2003
      25905 Posts
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      Posted: November 8, 2003, 9:59 pm - IP Logged

      Lottery is a state game that is taxable.  Anything being taxed is open to public inquiry and should be published.  Their explanation is suspect and certainly leaves room for corruption or financial mismanagement.  If you truly want to know the payout amounts, and you should if you play the NY Lottery and you are interested in how the lottery helps New York as well as the New York school system, my advice would be to start a small group of 10 to 15 people, not all lottery players, but people interested in how lottery spends the money (schools, restructured sites, the state budget, etc) and rally lottery players and vendors to demand the payouts be published.  There is also the press.  You might be able to find an interested reporter who finds justification in your inquiry for the right to know.

        dvdiva's avatar - 8ball

        United States
        Member #2338
        September 17, 2003
        2063 Posts
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        Posted: November 9, 2003, 12:34 am - IP Logged

        that sounds really suspicious to me. i wouldn't just drop it. at least in washington its pretty open what the cash prize is for the state lottery (half, period) although i still dont know what the cash value is in the megamillions nor does megamillions post the cash value -one more reason i like powerball more


          United States
          Member #60
          October 28, 2001
          455 Posts
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          Posted: November 9, 2003, 12:27 pm - IP Logged

          I for


            United States
            Member #379
            June 5, 2002
            11296 Posts
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            Posted: November 10, 2003, 9:22 am - IP Logged

            The NY Lottery had, if no longer has, a reserve fund. However, since NY Lotto returns a maximum of 40% (of sales) to players, I would avoid this game.

              WILLSELL's avatar - chi
              NJ
              United States
              Member #1924
              July 28, 2003
              113 Posts
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              Posted: November 10, 2003, 5:14 pm - IP Logged

              The nebulous answer was really the method they use to fund a payoff. Not necessarily how they determine the payout.

              Still it sounds shaky.