Re: How to win the lottery

From: Michael S. Lorrey (
Date: Tue May 09 2000 - 18:55:35 MDT

James Wetterau wrote:
> The really big thing was that the winnings were untaxed in any way.
> Apparently gambling winnings in the U.S. by a foreigner do not (or at
> the time did not) subject you to U.S. taxes, and Australia (like many
> former British Commonwealth countries) has no tax on gambling. So the
> consortium would just pocket the profits. After they walked away with
> many millions from (I think) Tennessee there were rumors that either
> the U.S. or Tennessee might start imposing a special tax on winnings
> for people who cover more than some large fraction of the lottery
> numbers.

There is always a tax. Capital gains taxes are assessed on businesses,
and income taxes on individuals. The operatives the company was sending
around to buy tickets had to either be residents or have green cards, in
which case if a ticket they bought won, they'd have to pay 39% income
tax to the government, then the company that paid them could collect any
winnings after that, and they'd have to pay a 28% corporate income tax
at least to get any money out of the country.

The only time I ever heard of someone really getting away with not
paying 'his fair share' was a case where a guy bought a ticket and won a
$990,000.00 jackpot. On monday morning he had already gotten some sort
of limited partnership business organized or something, such that his
annualized payments of $49,500.00 from the state were just under the
legal limit of $50,000.00 to have to pay taxes using that business
model, so I think he got away with paying no taxes.

Even with these numbers though, it might be a decent deal, however,
buying every possible number combination ranges from 7 million up to 70
million dollars in ticket buys. The state typically keeps half to two
thirds of the total amount even before the jackpot is made, and then you
also have subsidiary prizes.

Many lotteries though seem to have about 1/4 to 1/3 of the numbers that
are far more frequent than the other numbers (more than you'd see from a
statistical average) so you can improve your odds by focusing on these
numbers. Additionally, a 1 in 70 million odds lotery typically doesn't
have more than 5-15 million tickets sold in each lottery period. Any
prize money in excess is rollover from the previous period. The key is
to use the number frequency data and only buy tickets in lotteries that
have a lot of rollover, especially if the rollover is in excess of the
odds of winning. As the present Big Game jackpot is, at something like
$235 million on 1:70 million odds, the one time payment is $120 million.
Thus if you bought 70 million dollars in tickets, the prize would be
$305 million due to unexpected sales (yours), so even if three other
people also won the same number, you'd still make money on the deal.

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