How does the California jackpot drop from 141 million to 42 million?

[Red Dawn]

If you were to invest $42 Million Dollars in Real Estate, especially in the Bay Area, I would think that you would make much more than $141 Million in 26 years.

 

[KrispyKremer]

Lotteries - aka voluntary taxes. Like we don't get taxed enough as it is...

 

[Bozo Galora]

Lets do it this way:

Say 41 million people bought an average of 3+ lottery tickets ea.
The State of Ca. lottery commission gets $141 million cash infusion.
The media loudly proclaim "there is a record $141 million jackpot", which is a bald faced lie of course. There is actually a $141 million jackpot POOL for many hands to grab at.
If they gave ALL the money to the winner as a lump sum there would be nothing left. Right?
Well, theres a company (some say mob connected) that got the very lucrative right to "run" the lottery FOR the state. When it was found out they "won" that right with no competitive bidding, a new "competition" was opened, and two other companys submitted "sealed" bids. The other two still dont know what the "winner" bid. Guess who was awarded the contract the second time around? Can you say campaign contribs? Cash in an envelope?
O.K. they get their cut, then theres the bureaucratic overhead for the Lottery Commission (those TV ads are expensive - so is the ad agency.
A certain percentage is allotted to the public school system by law. This is how they passed the gambling measure, by selling it as good for the kiddies. Another percentage goes to misc items stipulated.
O.K. the schools, and roads, get their cut.
So the State gives the winner about half, after THEIR 'expenses'. THIS HAS NOTHING TO DO WITH TAXES!!
The State and FEDS then add their respective taxes.
But it gets worse. If you take the 20/26 year annual pay route, the State simply buys an annuity from an insurance company, for about a third or fourth of the total payout due. So for a "full jackpot" annual payout they buy it for about $36 mill. Remember, they started with $141 mill!!! And if you think you win this way, think again: at a 6% inflation, your purchasing power looses 60% in 26 years - if you live that long.
(So if you want to screw them, you take one lump sum.)
The big question is where the hell is all these BILLIONS of "profit" going? The schools are as terrible as ever, the roads worse.
A big gigantic boondoggle ripoff.

 

[EagleKeeper]

One must take into account your age when the decision is made for the type of payoff.

Annual payments for lottery may not get treated as part of your estate. Therefore if you kick the bucket after 5 years for example, the state keeps the last 21 years.

For a 70 year old person, chances are not good that they will reach more than half the amount. By taking the lump sum, that amount can be transfered to the heirs.

It is up to each state to determine if they tax lottery as income.

In USA you can not give away more than $10K to an individual with trigger a gift tax.

 

[Michael]

The billions from the lottery keep taxes lower. It's just another revenue source for the government.

Michael