Did you know that Americans spend more than $44 billion per year playing lotteries? That figure represents an increase of 6.6% over the previous year. In fact, between 1998 and 2003, U.S. lottery sales increased steadily. What is the most common way to win the lottery? Almost half of all Americans have played the lottery at one time. But what about people who aren’t lucky enough to win the jackpot? What do you need to know about lottery winnings and taxes?
A look at the sales numbers for the lottery industry in the United States shows that the U.S. Lottery generated $2.723 billion in sales during the first half of the fiscal year. That’s up 2% from the same period last year, and the Lottery has generated an estimated profit of $531.7 million. That’s up from $509.5 million at the same point last fiscal year. But is there still room for growth?
Several studies show that lottery sales are higher in zip codes that are primarily African-American or Latino than in those that are predominantly white. In fact, lottery sales are nearly three times as high in the minority population as in the majority, according to the study. However, there are also some interesting differences between lottery sales in these different demographics. For example, the average household income of lottery ticket buyers is nearly equal to the average household income of Americans.
Despite the fact that unclaimed lottery prizes are sometimes worth millions of dollars, some are still unknown. In the UK, a recent record-breaking prize of PS125.1 million and R2.2 billion went unclaimed. The same happened in Ireland, where an unclaimed EUR3.4 million prize was sold at a truck stop in Coolock. Several years after the prize went unclaimed, the prize money was distributed to charitable organizations. Unfortunately, the UK lottery is not the only country with large amounts of unclaimed lottery prizes.
Taxes on winnings
Although a lottery win is a life-changing event, it also comes with the risk of tax liabilities. Not figuring out your tax liability can put you on the fast track to financial instability. Before spending your winnings, calculate your tax bill, earmark it, and plan how to handle the cash. In order to avoid paying excessive taxes on lottery winnings, you should first consult a tax professional. An experienced financial planner can help you determine which route to take, and will explain to you what you can do to minimize your tax liability.
Marketing to poor people
Marketers should realize that poor people are among the most loyal customers when it comes to lottery games. Research shows that the poorest third of Americans purchase over half of all lottery tickets. State governments are recognizing this fact and are aggressively advertising in poor neighborhoods to boost lottery sales. For these people, lottery tickets are more than just harmless entertainment; they also represent an investment. Marketing lottery games to poor people may seem like an oxymoron, but it is possible to make this strategy work.