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Annuity Option

DoctorEw220's avatar - alien helmet.jpg

Something I have thought about recently is how you don't see many jackpots being paid out in annuities.  Now granted lotteries still offer them, but almost every lottery winner (Thanks to MA, it isn't 100%) has taken the cash option.  I can understand both sides here (Instant gratification vs. Financial security, Waiting for the next payment vs. Going broke quickly), but I think that the annuitized jackpot may become a thing of the past soon.  As much as I would like the idea of getting an annual income without having to go to work, or in the event that a winner dies before getting all the money, knowing that the estate is left with piece of mind, I have a feeling that the annuitized jackpot may not be around much longer.

Jack-C's avatar - us
In response to DoctorEw220

This is one of the subjects that has been discussed many, many, many times on LP.  After a lot of pages of discussion, most of the people agree that the best option is to take the cash.  Even those that didn't feel that way in the beginning often change their minds after much discussion and examples. 

megamanX's avatar - mega man_x_sprite-9629.jpg
In response to DoctorEw220

I voted, "no." Only because it allows the lotto to advertise larger jackpots. A 100 million annuitized jackpot is going to generate more buzz than a much smaller present day amount. Granted it's the same amount but 100 million looks so much better in the newspapers and will attract more casual players. More players means an even bigger jackpot if no one wins and the jackpot rolls over.

I completely disagree with your characterization of taking the lump sum payment. Taking the present day value, depending on the person, may have nothing to do with "instant gratification" and it will not always result in "going broke quickly."

The lump sum will allow a person greater control of protecting their money. With the annuities you are putting your faith in the lotto institution and with state and federal government and hoping they will be run properly. Most states are deeply in debt with little hope in sight. Google "Illinois tax increase" just to get an example of how desperate states are becoming.

Also our leaders in Washington seem determined to redistribute wealth.

If someone took the lump sum they could take steps to protect the buying power of their money.

dallascowboyfan's avatar - chi

I voted "no" I think it depends on your situation.....

rcbbuckeye's avatar - Lottery-062.jpg

Funny, I was just reading about this on Tx Lottery website the other day. Reading the Commissioner's meeting minutes, they are implementing a rule change regarding the cash option. Right now, if a person buys a QP at a self service terminal, unless cash option is specified, it defaults to the annuity option. At some point in the future, (soon, not sure when) the default will be the cash option, because they realize that the majority of winners choose the cash option. In Texas, a person must choose cash or annuity at the time of purchase. It can not be chosen after purchasing a ticket. That is one of the few things that really bug me about the Texas lottery. I believe, (could be wrong here), that Texas is the only state that requires this.

megamanX's avatar - mega man_x_sprite-9629.jpg
In response to rcbbuckeye

that is so lame they don't let people pick which option they want after they win. Most states give winners two months after claiming the prize to decide. I can just imagine waiting in a long line at the 7-11 while someone is trying to decide if they want the annuity or cash for a lotto they have a one in 176 million chance of winning. Come on Texas lotto get with the program.

Jack-C's avatar - us
In response to rcbbuckeye

California used to have that rule, but not now.

savagegoose's avatar - ProfilePho

yeah as megamanx points put, the states get to advertise a bigger , and i mean MUCH BIGGER jackpot with annuities. cant see them ever forgoeing that sort of free advertising. and hey if they did get rind of annuities, it might mean the euro lotto has bigger jackpots.

and we couldnt have that,

ttech10's avatar - blobdude
In response to rcbbuckeye

That's odd the self-service ones are annuity by default as with the clerks computers they are cash option by default (I think they still have to hit a button to confirm but unless you state otherwise they will select cash option).

Personally having to choose at the time of purchase is no big deal, but I wouldn't see a problem with it being like every other state.

hearsetrax's avatar - alien on_computer.jpg

haha

rdgrnr's avatar - walt

I don't think the Annuity Option will ever go away simply because of the higher JP advertising capability it provides.

I would never opt for it though because of the way the government handles other people's money. Not a very good track record.

I wouldn't want them deciding where it went and wouldn't want to risk them reclaiming or cancelling it due to a state or national "emergency".

They can advertise anyway they want but I'll take the cash.

ameriken's avatar - 33ojew2

I agree, the advertising value is too great to get rid of the annuity option. Even if most people never take it, there is no reason to dump it. As far as I know, having the annuity as an option isn't costing the commission any money and a $100,000,000 jackpot is still going to cause more excitement than a $50,000,000 jackpot.

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