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Lottery

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From Wikipedia, the free encyclopedia
Not to be confused with the Mexican game of chanceLotería.
For other uses, seeLottery (disambiguation)andLottery ticket (disambiguation).

A lottery drawing being conducted at the television studio atTexas LotteryCommission headquarters
Lottery tickets for sale, Ropar, India. 2019

Alottery(orlotto) is a form ofgamblingthat involves the drawing of numbers at random for a prize. Some governments outlaw lotteries, while others endorse it to the extent of organizing a national or state lottery. It is common to find some degree of regulation of lottery by governments. The most common regulations are prohibition of sale to minors and licensing of ticket vendors. Although lotteries were common in theUnited Statesand some other countries during the 19th century, by the beginning of the 20th century, most forms of gambling, including lotteries andsweepstakes,were illegal in the U.S. and most of Europe as well as many other countries. This remained so until well after World War II. In the 1960s,casinosand lotteries began to re-appear throughout the world as a means for governments to raise revenue without raising taxes.

Lotteries come in many formats. For example, the prize can be a fixed amount of cash or goods. In this format, there is risk to the organizer if insufficient tickets are sold. More commonly, the prize fund will be a fixed percentage of the receipts. A popular form of this is the "50–50" draw, where the organizers promise that the prize will be 50% of the revenue.[citation needed]Many recent lotteries allow purchasers to select the numbers on the lottery ticket, resulting in the possibility of multiple winners.

Classical history

The first recorded signs of a lottery arekenoslips from the ChineseHan dynastybetween 205 and 187 BC. These lotteries are believed to have helped to finance major government projects like theGreat Wall of China.From the ChineseBook of Songs(2nd millennium BC.) comes a reference to a game of chance as "the drawing of wood", which in context appears to describe the drawing of lots.

The first known European lotteries were held during theRoman Empire,mainly as an amusement at dinner parties. Each guest would receive a ticket, and prizes would often consist of fancy items such as dinnerware. Every ticket holder would be assured of winning something. This type of lottery, however, was no more than the distribution of gifts by wealthy noblemen during theSaturnalianrevelries. The earliest records of a lottery offering tickets for sale is the lottery organized by Roman EmperorAugustus.The funds were for repairs in the City of Rome, and the winners were given prizes in the form of articles of unequal value.

Medieval history

The first recorded lotteries to offer tickets for sale with prizes in the form of money were held in theLow Countriesin the 15th century. Various towns held public lotteries to raise money for town fortifications, and to help the poor. The town records ofGhent,Utrecht,andBrugesindicate that lotteries may be even older. A record dated 9 May 1445 atL'Ecluserefers to raising funds to build walls and town fortifications, with a lottery of 4,304 tickets and total prize money of 1737 florins[1](worth about US$170,000 in 2014).[2]In the 17th century it was quite usual in the Netherlands to organize lotteries to collect money for the poor or in order to raise funds for a wide range of public usages. The lotteries proved very popular and were hailed as a painless form oftaxation.The Dutch state-ownedStaatsloterijis the oldest running lottery (1726). The English word lottery is derived from the Dutch noun "lot" meaning "fate".

The first recorded Italian lottery was held on 9 January 1449 inMilanorganized by theGolden Ambrosian Republicto financethe waragainst theRepublic of Venice.However, it was inGenoathatLottobecame very popular. People used to bet on the name ofGreat Councilmembers,who were drawn by chance,five out of ninety candidates every six months. This kind of gambling was calledLottoorSemenaiu.When people wanted to bet more frequently than twice a year, they began to substitute the candidates names with numbers and modern lotto was born, to which both modern legal lotteries and the illegalnumbers gamecan trace their ancestry.[citation needed]

Early modern history

France, 1539–1836

KingFrancis I of Francediscovered the lotteries during his campaigns in Italy and decided to organize such a lottery in his kingdom to help the state finances. The first French lottery, theLoterie Royale,was held in 1539 and was authorized with the edict ofChâteaurenard.This attempt was a fiasco, since the tickets were very costly and the social classes which could afford them opposed the project.

Between 1757 and 1836, for a period of about 80 years with some interruption during theFrench Revolution,the France state run a profitableLoterie.[3]The project was born out a series of initiatives to fund theÉcole militaire.Instrumental to the birth of the Loterie wereGiacomo Casanovaand the Calzabigi brothers (Giovanni and Ranieri). Casanova defended the project in a series of conversations withMadame de Pompadour,the French mathematicianJean d'Alembert,Joseph de Pâris Duverney, intendent of the École, and the French minister of foreign affair.[3]Unlike modern lotteries where the state can never lose, in the French lottery the state could lose, but a wise choice of the payoff made losses so improbable as to ensure a profit for the state.[3]

England, 1566–1826

An 1809 lottery drawing atCoopers' Hallin London

Although the English probably first experimented withrafflesand similar games of chance, the first recorded official lottery was chartered byQueen Elizabeth I,in the year 1566, and was drawn in 1569. The 400,000 tickets issued cost 10 shillings (£0.50) each (roughly three weeks of wages for ordinary citizens), with the grand prize worth roughly £5,000.[4]This lottery was designed to raise money for the "reparation of the havens and strength of the Realme, and towardes such other publique good workes", including the rebuilding of ports and new ships for the royal fleet. Each ticket holder won a prize, and the total value of the prizes equalled the money raised. Prizes were in the form of both "ready money" and valuable commodities such as silver plate, tapestries, and fine linen cloth. Additionally, each participant was granted immunity from one arrest, "so long as the crime wasn't piracy, murder, felonies, or treason." The lottery was promoted by scrolls posted throughout the country showing sketches of the prizes.[5]

Selling tickets in London for the last government lottery in England

Thus, the lottery money received was an interest-free loan to the government during the three years that the tickets ('without any Blankes') were sold. In later years, the government sold the lottery ticket rights to brokers, who in turn hired agents and runners to sell them. These brokers eventually became the modern-day stockbrokers for various commercial ventures. Most people could not afford the entire cost of a lottery ticket, so the brokers would sell shares in a ticket; this resulted in tickets being issued with a notation such as "Sixteenth" or "Third Class".

Many private lotteries were held, including raising money for theVirginia Company of Londonto support its settlement in America at Jamestown. The English State Lottery ran from 1694 until 1826. Thus, the English lotteries ran for over 250 years, until the government, under constant pressure from the opposition in Parliament, declared a final lottery in 1826. This lottery was held up to ridicule by contemporary commentators as "the last struggle of the speculators on public credulity for popularity to their last dying lottery".

British North America 1612–1783

An English lottery, authorized byKing James Iin 1612, granted theVirginia Company of Londonthe right to raise money to help establish settlers in the first permanent English colony atJamestown, Virginia.

Lotteries in colonial America played a significant part in the financing of both private and public ventures. It has been recorded that more than 200 lotteries were sanctioned between 1744 and 1776, and played a major role in financing roads, libraries, churches, colleges, canals, bridges, etc.[6] In the 1740s, the foundation of Princeton and Columbia Universities was financed by lotteries, as was the University of Pennsylvania by the Academy Lottery in 1755.

During theFrench and Indian Wars,several colonies used lotteries to help finance fortifications and their local militia. In May 1758, theProvince of Massachusetts Bayraised money with a lottery for the "Expedition against Canada".

Benjamin Franklinorganized a lottery to raise money to purchase cannons for the defense of Philadelphia. Several of these lotteries offered prizes in the form of "Pieces of Eight".George Washington'sMountain Road Lotteryin 1768 was unsuccessful, but these rare lottery tickets bearing Washington's signature became collectors' items; one example sold for about $15,000 in 2007. Washington was also a manager for Col.Bernard Moore's "Slave Lottery" in 1769, which advertised land and slaves as prizes inThe Virginia Gazette.

At the outset of the Revolutionary War, the Continental Congress used lotteries to raise money to support the Colonial Army.Alexander Hamiltonwrote that lotteries should be kept simple, and that "Everybody... will be willing to hazard a trifling sum for the chance of considerable gain... and would prefer a small chance of winning a great deal to a great chance of winning little". Taxes had never been accepted as a way to raise public funding for projects, and this led to the popular belief that lotteries were a form of hidden tax.

At the end of theRevolutionary Warthe various states had to resort to lotteries to raise funds for numerous public projects.

German-speaking countries

The first big lottery on German soil was held in 1614 inHamburg.

InAustriathe first lottery was drawn in 1751, during the reign of EmpressMaria Theresia,and was namedLotto di Genovasince it was based on 90 numbers.

Spain, 1763

Spain offers a wealth of lottery games, the majority of which are operated by Loterías y Apuestas del Estado with the remaining lotteries operated by the ONCE and the Catalan government. The first Spanish lottery game was played back in 1763 and, over the last two centuries, playing the lottery in Spain has developed into a tradition.

TheSpanish Christmas Lottery(officially Sorteo Extraordinario de Navidad [soɾˈteo ekstɾaorðiˈnaɾjo ðe naβiˈðað] or simply Lotería de Navidad [loteˈɾia ðe naβiˈðað]) is a national lottery. It is organized every year since 1812 by a branch of the Spanish Public Administration, now called Loterías y Apuestas del Estado. The name Sorteo de Navidad was used for the first time in 1892.

The Spanish Christmas lottery is the second longest continuously running lottery in the world. This includes the years during the Spanish Civil War when the lottery draw was held in Valencia after the Republicans were forced to relocate their capital from Madrid. After the overthrow of the Republican government the lottery continued uninterrupted under the Franco regime.

Ticket gallery

Modern history by country

Main article:Lotteries by country

Notable prizes on different continents are:

Prize

(local currency)

Lottery Country Notable winner Date Notes
$2.04 billion pre-tax Powerball United States One winner 10 November 2022 World's largest jackpot
€230 million or £194 million EuroMillions United Kingdom One ticket holder from the United Kingdom 19 July 2022 Europe's largest jackpot
RMB¥570 million China Welfare Lottery China One ticket holder fromBeijing 12 June 2012 Asian largest prize and the biggest prize taken in China
R$244 million Mega-Sena Brazil Three ticket holders fromFranca(SP),Aparecida de Goiania(GO) andSão Paulo. 31 December 2012 South America's largest prize
A$160 million Powerball (Australia) Australia Three winners 28 October 2022 Australia's highest lottery prize

Australia

Main article:Lotteries in Australia

The first lottery in Australia took place in the 1880s in Sydney. It was a private sweepstakes that was quickly prohibited, despite being moved to other areas such as Queensland and Victoria.[7]In 1916, the Australian government started their own lottery, named the 'Golden Casket Art Union', with the intention of raising money for charities and projects. Its first draw is credited with raising funds for veterans of World War One.[8]

Canada

Lotteries in Canada are administered by five regional organizations; theAtlantic Lottery Corporation(which servesAtlantic Canada),Loto-Québec,theOntario Lottery and Gaming Corporation,theWestern Canada Lottery Corporation(which servesWesternandNorthern Canada,excludingBritish Columbia), and theBritish Columbia Lottery Corporation.The five regional lotteries are members of a consortium known as theInterprovincial Lottery Corporation,which administrates national games, including the flagshipLotto 6/49andLotto Max.The five lotteries offer draw games, scratch cards, andsports betting—the latter primarily under the brandSport Select.

The largest single jackpot record in Canadian lottery history was a Lotto Max drawing on January 7, 2020, for a jackpot of $70 million.[9]

Finland

Finnish lottery tickets

In Finland,Veikkaus[10]began selling lottery tickets in December 1970, and the first draw was televised on January 3, 1971. The lottery turned 40 on January 3, 2011, and by then the lottery had been drawn 2,126 times.[11]Since then, there has been one lottery draw every week. Lottery game time usually ends on Saturday at 9:45 p.m., and the draw is usually held on Saturday at 10:15 p.m. Large public holidays on Saturdays may postpone the draw to Sunday. The lottery has two official supervisors; from 3 January 1971 to 29 September 2013, the lottery was televised onYle TV1,and in October 2013, the lottery draws were postponed onMTV3after ten evening news, because according toFICORA,the sponsorship cooperation between Veikkaus andYlewas illegal.[12]

In the current lottery played in Finland, the player chooses seven numbers between 1 and 40 (initially, until the autumn of 1980, six numbers between 1 and 40 were chosen, then for a few years seven numbers between 1 and 37 and then seven numbers between 1 and 39). In the draw, seven numbers and one (previously three and then two) additional numbers are drawn; the line price is 1 euro. The profit categories were changed, for example, from the 2011 round 41. The main victory at that time was with 7 correct results and the smallest victory with three actual and one additional number, the number of which was reduced from three to two.[13]The lottery return percentage is 41.1.[14]

Another lottery game played in Finland isVikinglotto,which can be played in allNordic countriesas well as inEstonia,LatviaandLithuania.In Vikinglotto, six actual numbers and two additional numbers out of 48 are drawn. There are five winning categories: 6 correct, 5 + extra number, 5 correct, 4 correct and 3 correct.

In Finland, an average of six million euros in winnings go unredeemed each year.[15]

France

Anational lotterywas reintroduced in 1933.

India

There are many lotteries in India. All lotteries are run by state governments but only 13 of the 28 Indian states allow them. The leader within Indian lotteries is theKerala State Governmentthat started their lottery department in 1967 following the country wide ban on private lotteries.

TheKerala State Lotteriesbecame an inspiration for other Indian states that started their own lotteries. As of right now lotteries are available inKerala,Goa,Maharashtra,Madhya Pradesh,Punjab,West Bengal,Assam,Arunachal Pradesh,Meghalaya,Manipur,Sikkim,NagalandandMizoram.

The public ban on lotteries in other states has not been very effective since several lottery providers allow Indians to play online.[16]Indian players can play lotteries from all over the world thanks to online lottery agents and bookkeepers. Some states have tried to combat this with different measures. The state government ofTamil Nadudecided to banGooglePaysince it allows payments to online lotteries and awards its users in India withScratchcards.[17]

Indian lotteries provide a substantial economic boost for the states that provide them. In the fiscal year 2017–2018 Kerala collectedGSTworth Rs 908croreand state revenue of Rs 1,691 crore.[18]

Malaysia

Main article:Sports Toto

Lottery industry start operated in Malaysia on early 1969 byBerjaya Group.Sports Toto Malaysia Sdn Bhdis aMalaysiancompany, which operates in thegamblingsector.

Founded and incorporated by theMalaysian Governmentin 1969, it was focused on the commercialisation of4-Digits–based games. On 1 August 1985, the government in a non-tenderprivatisation,sold the company to businessmanVincent Tanwho merged it into hisBerjaya Group.

Today, Sports Toto is a wholly owned subsidiary ofBerjaya Sports Toto Berhad(MYX:1562), which is listed on the main market ofBursa Malaysia.It claims to be the largest operator in Malaysia of 4D-based games, with 680 sales outlets offering a total of 7 games.

Mexico

National Lottery building located in Mexico City

The MexicanLotería Nacionaldates back to the late 18th century. The goal of the Lotería is to create jobs and to "impulse the wealth redistribution process".[19]The Lotería is also a member of the North American Association of State and Provincial Lotteries.[20]

Spain

See also:Loterías y Apuestas del Estado

As measured by the total prize payout, theSpanish Christmas Lotteryis considered the biggest lottery worldwide. In 2012, if all of the tickets had been sold, the total amount payout of prizes would have been worth €2.52 billion (70% of ticket sales). The total amount of all prizes of the first category called El Gordo ( "the fat one" ) was €720 million which was distributed among 180 winning tickets (billetes) that win €4 million each.

For 2013, due to falling demand, the number of €20 tickets available was reduced from 180 million to 160 million, reducing the potential maximum prize pool to €2.24 billion (70% of ticket sales), with a maximum potential El Gordo of €720 million.

Thailand

A lottery was first held inThailand(then known asSiam) in 1874 during the reign of KingChulalongkorn(Rama V), as part of an international fair organised for his birthday. A lottery was organised in 1917 by the British government with Thai consent to help finance Britain's war effort. Lotteries were held intermittently until 1933, when they became regularised under the finance department.[21]

The presentThai lotteryis managed by The Government Lottery Office, a state enterprise managed by theMinistry of Finance.The drawings take place on the 1st and 16th of each month, with the top price now up to 32 millionbaht.[22]

Shrines oflocal folkloreandpopular religion,such asNang Ta-Khian,are often propitiated in order to be lucky in the Thai lottery draw.[23]

United Kingdom

Main article:National Lottery (United Kingdom)

The principal lottery in the United Kingdom is theNational Lottery,a state-franchised lottery sanctioned by theGambling Commission(formerly theNational Lottery Commission), and established in 1994. It is operated by Allwyn Entertainment Ltd, who took over from the original operatorCamelot Groupin 2024.[24][25]28% of National Lottery revenue, along with all unclaimed prizes, are distributed as grants to charitable causes. 12% of the revenue from the National Lottery is expected to go to the government, 5% goes to lottery retailers, 5% is retained by the operator for operating costs, and 50% remains for the total prize fund of which 5% is diverted to a Super Draw fund, leaving 45% for normal prizes.[26]

Northern & Shellalso operates a commercial lottery known asThe Health Lottery,which distributes its revenue to support health-related charities and causes. To comply with the Gambling Act, which forbids other parties from operating a national lottery, The Health Lottery operates as an umbrella corporation representing a group of 51 society lotteries across the United Kingdom with a common drawing and prize pool. Each drawing is held on behalf of one or more of the society lotteries, whose revenues go to support health-related causes in their respective area. The Health Lottery received criticism on launch for only pledging to donate 20.3% of ticket costs to charity, compared to the National Lottery's 28%, and that the lottery's structure was designed to contravene British law regarding lotteries.[27][28][29]In the UK, winning the lottery is correlated to expressing more preference for theConservative Party.Winning larger prizes results in a larger shift in favor of the Conservative Party.[30]

People's Postcode Lottery is a subscription lottery in the UK.[31]The format was introduced by Dutch companyNovamedia BV:[32]players pay at minimum £10 monthly to play, and winning postcodes are announced daily.[33]In accordance with restrictions under theGambling Act 2005,the maximum amount which can be won by a single ticket is £500,000, or 10% of the total draw proceeds.[34][failed verification]A minimum of 33%[35]of the ticket price from players' subscriptions supports various trusts, which in turn fund local and international charities and community projects. Some £850 million have been donated.[36]People's Postcode Lottery has a number ofcelebrityambassadors, includingDavid Attenborough,Judi Dench,Shobna Gulati,Tim Healy,Stephen Jardine,Ellen MacArthur,Aggie MacKenzie,Carey Mulligan,John StapletonandEmma Thompson.[37]The lottery was the subject of aChannel 4documentary,The Welsh Valley That Won the Lottery,about the residents ofRhymneywho won in May 2022.[38]

United States

Main article:Lotteries in the United States

Lotteries are operated at the state level in the U.S.; 45 states and 3 territories operate state lotteries, and nearly all of them are members of consortiums that operate regional games, and the two near-national gamesMega MillionsandPowerball.In November 2022, Powerball set a record for the largest lottery jackpot in U.S. history, with its 8 November 2022 draw having an estimated jackpot of US$2 billion.[39][40]

The precursor to legal lotteries were the underground "numbers game"of the 1800s, which operated out of" Policy shops "where bettors choose numbers. In 1875, a report of a select committee of theNew York State Assemblystated that "the lowest, meanest, worst form... [that] gambling takes in the city of New York, is what is known as policy playing". The game was also popular inItalianneighborhoods known as theItalian lottery,and it was known inCubancommunities asbolita( "little ball" ).[41]By the early 20th century, the game was associated with poor communities, and could be played for as little as $0.01. The game's attractions to low income and working class bettors were the ability to bet small amounts of money, and that bookies could extendcreditto the bettor. In addition, policy winners could avoid payingincome tax.Different policy banks would offer different rates, though a payoff of 600 to 1 was typical. Since the odds of winning were 1000:1, the expected profit forracketeerswas enormous.[41]

The first modern government-run US lottery was established inPuerto Ricoin 1934,[42]followed byNew Hampshirein 1964.

In 2018, Ohio became one of the first states to offer people a digital lottery option. The technology, developed by Linq3, allows players to play the lottery on their smart phones.[43]

Vietnam

In Vietnam, there are two types of lotteries: traditional lotteries, which are operated at the provincial level, and national electronic lotteries (notablyVietlott).[citation needed]TheMinistry of Financemanages provincial lottery companies,[44]and these lottery companies conduct lottery draws and award the winners.[45]

Accompanying the lottery is thebetting game,an illegal form of lottery among the people, which uses the results of the jackpot of the legal traditional lottery as the prize-winning results. In Hanoi, the "agent" system of the betting game has developed along with traditional lottery stores andiced teastalls, operating quite openly.[46]In addition, some players have switched to online betting.[47]

According to traditional lottery companies, the revenue from the traditional lottery is decreasing day by day because it cannot compete with Vietlott and the betting game.[48][49]

Mathematical analysis

The purchase of lottery tickets cannot be accounted for bydecision modelsbased onexpected valuemaximization. The reason is that lottery tickets cost more than the expected gain, as shown bylottery mathematics,so someone maximizing expected value would not buy lottery tickets. People buy lottery tickets anyway, either because they do not understand the mathematics, or because they find the thrill and fantasy of becoming wealthy to be worthwhile. If this entertainment value and any other non-monetary value is factored into theutility function,a lottery ticket purchase can be considered rational according toexpected utilitymaximization.

Probability of winning

Main article:Lottery mathematics
Chances of matching different numbers of balls in a 6-from-49 lotto
Number of balls matched Probability
6 1 in 13,983,816
5 1 in 54,201
4 1 in 1,032
3 1 in 57
2 1 in 7.6
1 1 in 2.4
0 1 in 2.3

Thechances of winninga lottery jackpot can vary widely depending on the lottery design, and are determined by several factors, including the count of possible numbers, the count of winning numbers drawn, whether or not order is significant, and whether drawn numbers are returned for the possibility of further drawing.

In a simple6-from-49 lotto,a player chooses six numbers from 1 to 49 (no duplicates are allowed). If all six numbers on the player's ticket match those produced in the official drawing (regardless of the order in which the numbers are drawn), then the player is a jackpot winner. For such a lottery, the chance of being a jackpot winner is 1 in 13,983,816.[50]

In bonusball lotteries where the bonus ball is compulsory, the odds are often even lower. In theMega Millionsmulti-state lottery in the United States, 5 numbers are drawn from a group of 70 and 1 number is drawn from a group of 25, and a player must match all 6 balls to win the jackpot prize. The chance of winning the jackpot is 1 in 302,575,350[51]

The odds of winning can also be reduced by increasing the group from which numbers are drawn. In theSuperEnalottoof Italy, players must match 6 numbers out of 90.[52]The chance of winning the jackpot is 1 in 622,614,630.[53]

Most lotteries give lesser prizes for matching just some of the winning numbers, with a lesser prize for fewer matches. Although none of these additional prizes affect the chances of winning the jackpot, they do improve the odds of winning something and therefore add a little to thevalueof the ticket.

Scams and frauds

Main article:Lottery fraud

Lotteries, like any form of gambling, are susceptible to fraud, despite the high degree of scrutiny claimed by the organizers. Numerouslottery scamsexist.

Someadvance fee fraudscams on the Internet are based on lotteries. The fraud starts withspamcongratulating the recipient on their recent lottery win. The email explains that in order to release funds the email recipient must part with a certain amount (as tax/fees) as per the rules or risk forfeiture.[54]

Another form of scam involves the selling of "systems" which purport to improve a player's chances of selecting the winning numbers in a Lotto game. These scams are generally based on the buyer's (and perhaps the seller's) misunderstanding of probability and random numbers. Sale of these systems or software is legal, however, since they mention that the product cannot guarantee a win, let alone a jackpot.

There have also been several cases of cashiers at lottery retailers who have attempted to scam customers out of their winnings. Some locations require the patron to hand the lottery ticket to the cashier to determine how much they have won, or if they have won at all, the cashier then scans the ticket to determine one or both. In cases where there is no visible or audible cue to the patron of the outcome of the scan some cashiers have taken the opportunity to claim that the ticket is a loser or that it is worth far less than it is and offer to "throw it away" or surreptitiously substitute it for another ticket. The cashier then pockets the ticket and eventually claims it as their own.[55]

The BBC TV seriesThe Real Hustleshowed a variation of the lottery scam in which a group of scammers pretended to have won a lottery, but was prevented from claiming the prize as the person who wrote the name on the back of the ticket was supposedly out of the country on that date. They were able to persuade a stranger to put up money as collateral in order to share in the prize pool.

On some occasions, the actual lottery draw itself has been compromised by fraudsters. The1980 Pennsylvania Lottery scandalinvolved weighting balls inThe Daily Number.In theHot Lotto fraud scandalsoftware code was added to theHot Lottorandom number generator allowing a fraudster to predict winning numbers on specific days of the year.[56]

In 2003, Mohan Srivastava, aCanadiangeological statistician, found non-random patterns in "Tic-Tac-Toe" tickets sold by theOntario Lottery and Gaming Corporation."Tic-Tac-Toe" was pulled off the shelves, and became the first game ever recalled by the OLG.[57]

Payment of prizes

Winnings (in the U.S.) are not necessarily paid out in alump sum,contrary to the expectation of many lottery participants. In certain countries, mainly the U.S., the winner gets to choose between an annuity payment and a one-time payment. The one-time payment (cashorlump sum) is a "smaller" amount than the advertised (annuity) jackpot, having regard to thetime value of money,even before applying anyincome taxesto which the prize is subject. While withholdings vary by jurisdiction and how winnings are invested, it is suggested that a winner who chooses lump sum expects to pocket⁠1/3⁠of the advertised jackpot at the end of the tax year. Therefore, a winner of a $90m jackpot who chooses cash can expect $30m net after filing income tax document(s) for the year in which the jackpot was won.

Lottery annuities are often for a period from 20 to 30 years. Some U.S. lottery games, especially those offering a "lifetime" prize, do not offer a lump-sum option. According to some experts, choosing the annuity is better than opting for the lump-sum, especially for those who lack investment experience.

In some online lotteries, the annual payments are only $25,000, with aballoon paymentin the final year. This type of installment payment is often made through investment in government-backed securities. Online lotteries pay the winners through theirinsurancebackup. However, many winners choose lump sum, since they believe they can get a better rate of return on their investment elsewhere.

In some countries, lottery winnings are not subject to personalincome tax,so there are no tax consequences to consider in choosing a payment option. In France, Canada, Australia, Germany, Ireland, Italy, New Zealand, Finland, and the United Kingdom all prizes are immediately paid out as one lump sum, tax-free to the winner. In Liechtenstein, all winnings are tax-free and the winner may opt to receive a lump sum or an annuity with regard to the jackpot prizes.

In the US, federal courts have consistently held that lump sum payments received from third parties in exchange for the rights to lottery annuities are not capital assets for tax purpose. Rather, the lump sum is subject to ordinary income tax treatment.

Some people hire a third party to cash the lottery ticket for them.[58]This can be done to avoid paying income taxes, hide the winnings from being seized forchild support,or formoney launderingof profits from illegal activity; some jurisdictions investigate overly frequent "winners" and may freeze payments to prevent these abuses.[59]

In jurisdictions where public disclosure is required for winners to claim their prizes, some winners may hire an attorney to set up ablind trustfor them so they can claim their prize and remain anonymous. This is done so that winners can avoid scams, jealousy, and other disadvantages that can come with winning a lottery jackpot.

Outcomes for big winners

A study by theNational Bureau of Economic Researchfound that people inSwedenwho won large sums of money from the lottery tended to retain their wealth over a period of 10 years, often kept their jobs but took more vacation, and maintained or increased their happiness and mental health. The same study states that the common anecdote that "70% of people who receive a large influx of money will lose it within a few years" is false, and is falsely attributed to the National Endowment for Financial Education (NEFE). NEFE released a statement disassociating themselves from the claim.[60][61]

Time Magazinementions a "curse of the lottery". Financial consultant Don McNay provides anecdotes supporting this claim in his book,Life Lessons from the Lottery.[62][63]

See also

References

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Further reading

  • A History of English Lotteries, by John Ashton, London: Leadenhall Press, 1893
  • Fortune's Merry Wheel, by John Samuel Ezell,Harvard University Press,1960.
  • Lotteries and Sweepstakes, 1932 by Ewen L'Estrange
  • The Lottery Encyclopedia, 1986 by Ron Shelley (NY Public Library)
  • Fate's Bookie: How The Lottery Shaped The World by Gary Hicks, History Press, 2009
  • Brickman, Philip; Coates, Dan; Janoff-Bulman, Ronnie (August 1978), "Lottery winners and accident victims: is happiness relative?",Journal of Personality and Social Psychology,36(8): 917–927,doi:10.1037/0022-3514.36.8.917,PMID690806,S2CID10199675
  • Kaplan, H. Roy (1987), "Lottery winners: The myth and reality",Journal of Gambling Studies,3(3): 168–178,doi:10.1007/BF01367438,S2CID23173995
  • Arvey, Richard D.; Harpaz, Itzhak; Liao, Hui (September 2004), "Work centrality and post-award work behavior of lottery winners",The Journal of Psychology,138(5): 404–420,CiteSeerX10.1.1.568.6208,doi:10.3200/JRLP.138.5.404-420,PMID15529735,S2CID6253750
  • Lau, Christoph; Kramer, Ludwig (2005),Die Relativitätstheorie des Glücks. Über das Leben von Lottomillionären (The Relativity of Luck: About the Life of Lottery Millionaires)(in German), Herbolzheim: Centaurus,ISBN978-3-8255-0605-6
  • Gardner, Jonathan; Oswald, Andrew J. (January 2007), "Money and mental wellbeing: A longitudinal study of medium-sized lottery wins",Journal of Health Economics,26(1): 49–60,CiteSeerX10.1.1.233.6258,doi:10.1016/j.jhealeco.2006.08.004,PMID16949692,S2CID79613
  • Larsson, Bengt (January 2011), "Becoming a Winner But Staying the Same: Identities and Consumption of Lottery Winners",American Journal of Economics and Sociology,70(1): 187–209,doi:10.1111/j.1536-7150.2010.00768.x,PMID21322898

External links

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