It's not taxes... well not all of it. The lotto advertises its prize as the sum total of a 30 year annuity. Currently Powerball has an estimated Jackpot of 163 Million. You can take the lump sum up front though. At present that lump sum is 73.9 million. After you get that, then you get taxed on it, reducing it to probably something like 40-50 million.

[–] [email protected] 27 points 5 days ago (3 children)

That seems incredibly scammy to me. They're pretending the prize is double what it actually is and then claim even more of that back as taxes. If the actual prize money is only 20% of what you're advertising that's dishonest at best.

Where I am lottery winnings are tax-free and without an insane hidden 50% "claimed your winnings" fee. What they advertise is what you get if you win.

[–] [email protected] 19 points 5 days ago (1 children)

That seems incredibly scammy to me

Of course it does, it's the lottery

[–] [email protected] 4 points 5 days ago

A lottery isn't necessarily inherently a scam, at least no more than gambling is in general. In practice the odds of winning are pretty poor compared to alternatives but as long as they're up front about the odds of winning I wouldn't call that a scam. Eg, this lottery lists the odds of winning each prize, though it would definitely be better if they published those on the main page rather than in the terms. A fairer lottery is possible pretty easily by adjusting the prize values, range of numbers to select, or how many numbers the gambler selects. This would kind of defeat the purpose of most lotteries to raise money for government, but personally I'm for more progressive taxes anyway.

Advertising one prize when the real prize is significantly lower is just lying and not an inherent trait of lotteries.

[–] Maggoty 8 points 5 days ago

The US doesn't advertise taxes included generally whereas other countries do. Americans don't expect tax to be included on any price or income advertised. There are people who say we should change that, but we're stuck in the 1800's in so many ways.

[–] Stern 10 points 5 days ago (1 children)

On one hand, it does feel a bit scammy. On the other, I'm not gonna lose a lot of sleep if I only took home 50 million dollars from a 150 million jackpot. It's still a "Work? Sorry, I'm unfamiliar with peasant slang." amount of cash.

[–] [email protected] 1 points 5 days ago (2 children)

You're walking down the street and see a sign in a new sandwich place saying they have a three-for-one deal on, buy any one sandwich and get two sandwiches completely free. Sounds like a great deal, it might be a bit much but you skipped breakfast today and you can always keep one for later anyway, right? So you head inside and think about what you want, maybe you're cutting back on red meat and you're tired of chicken so you go with a tuna or cheese sandwich. You get to the counter to pick up your tuna+cheese sandwich, the worker hands over your two freebies and you walk out. Turns out you're hungrier than you thought so you practically inhale your tuna+cheese, barely savouring the flavour. You reach for your second sandwich but when you unwrap it you discover it's not the same as the one you ordered; it's bread with a thin smear of butter, technically it is a sandwich but it's definitely not what you wanted or expected when you ordered.

Did you get scammed? Are you okay with that since you still got one sandwich even though you chose that vendor because they advertised three?

It really shouldn't be a controversial statement to say that lying to people to get their money is wrong. If it really makes no difference as you're suggesting why can't they just advertise the real value instead?

[–] Stern 5 points 5 days ago (1 children)

Not gonna read that incredibly tortured analogy. I hope you took it out back and shot it after you did those awful longwinded things to it though.

They do note the lump non-annuity value. The numbers I pulled were off the powerball website and were right next to each other. Different states (and even municipalities possibly.) tax differently (not at all in some cases), so its not as if they can give a solid number there.

[–] [email protected] -1 points 5 days ago* (last edited 5 days ago)

Okay, I'll simplify. Store advertises three sandwich. You buy three sandwich. You get one sandwich. Store says fees+taxes ate other sandwiches. You say it's fine, you got sandwich. I say it's not, store lied.

They absolutely can give a solid number even when a lottery runs in areas with different taxes, they simply choose not to because they make more money that way and for some reason you lack regulation there. See for instance here where the prize money may be partially subjected to income tax, meaning tax varies wildly depending on the winner's other income:

£10,000 every month for 30 years. [..] However, based on tax rules and rates at the date of these Procedures, the monthly payments will not be less than £10,000 after tax.

So there's three obvious choices: mislead customers, calculate the correct prize after relevant taxes and advertise that, or give a fixed value and eat the cost of any taxes themselves. They chose the first one.

[–] Trae 1 points 5 days ago

I think everyone agrees with you that at face value it's bullshit. What the commenter above was also saying is that in your scenario, you end up with slightly less food then you expected which has happened to all of us.

In the lotto scenario, you end up with multi-generational wealth that means your great great grand children would never have to work if the money is managed appropriately.

The state lotto systems should absolutely be taxed up front though. That way whoever wins gets the full advertised value of the jackpot.