Lotto winners more prone to bankruptcy than lotto losers: study
The pitfalls and controversies surrounding government-run lotteries come in no small number.
Not only is there damning evidence that state-backed lotteries prey on low income families in a way that’s akin to drug and alcohol abuse, but for every lotto success story you see on the news, there seems to be about five horror tales of other winners who were ruined by a lucky ticket.
(Perhaps the most damning story: a 2002 Powerball winner, despite his $315 million payout, fell into gambling and alcohol addictions and was blamed for his granddaughter’s drug overdose death two years later.)
Yet for all of that, pinning down just how many lotto winners run into serious financial trouble wasn’t all that easy. There were estimates floating around the Internet – about one in three lotto winners were “in serious financial trouble or … bankrupt within five years,” said one ambitious post from the Consumerist – but we just didn’t know for sure.
Well, along comes this nice, new report from Mint.com, and all of a sudden we can offer some perspective on the harrows (okay, relative harrows) of the risks involved with winning the lottery.
According to numbers Mint sourced from the University of Kentucky, a good starting figure for estimating lotto winner bankruptcies – at least on the small scale – is five per cent. About five per cent of winners studied by the university were insolvent within five years of winning their prize.
Now, there are flaws to this data, sure. Only lotto winners of jackpots up to $150,000 were noted in the study, so who’s to say these people weren’t poor when they cashed in, then went right back to being poor when the money was gone?
Still, there is some cachet to this five per cent figure, which suggests consumers might be more likely to go bankrupt winning the lottery then actually shelling out the cash for the thousands of tickets they’d need to buy to do so.
A few more intriguing stats from the Mint.com study:
1) As a general rule, the survey found, about 30 per cent of all advertised lotto winnings is taxed immediately at payout
2) In the U.S., in Texas, California, Florida and select other states, lotteries account for more than $750 million annually in public revenue
3) Thirty years ago, worldwide lottery ticket sales accounted for about $3 billion. In 2008, the latest data available, that figure had multiplied by more than 17 times, to $53 billion.
By Jason Buckland, MSN Money