Lottery is a term used to describe an arrangement in which prizes are allocated by chance. Examples of this include a lottery where a prize is given away to the winner(s) of a game that relies on chance and the distribution of land or property based on random selection. Often, lottery prizes are cash or annuities, which provide payments over time instead of a lump sum.
When someone wins the lottery, they may want to assemble a financial team consisting of a CPA, a financial advisor and a lawyer to assist with structuring the best strategies for claiming their prize and handling their newfound wealth. They may also want to consider whether to invest their prize or sell it for a lump-sum payout and how that will affect taxes.
It’s easy to see why some people would choose to gamble on the lottery, but that doesn’t mean that it’s right. In fact, there’s a lot of bad behavior behind the lottery and it’s not just that some people are irrational gamblers. It’s that the lottery is an increasingly regressive activity that dangles the promise of instant riches to a demographic that doesn’t have many other opportunities for upward mobility.
For example, the top-quintile of income earners spends about 2 percent of their income on lottery tickets. Meanwhile, the bottom quintile of income earners spends about 7 percent of their income on food and housing, leaving them with very little disposable income to play the lottery. This creates a huge imbalance, and the resulting lottery jackpots have been growing at an alarming rate.