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Yes, you read that title right. These tough economic times have affected almost every industry and sector so far, and the lottery has not proven to be immune. A lot of changes have been happening to the lotteries in the United States – to the one in New York, in particular – and you might see those changes affecting you very soon. A Little Bit of Hope With everyone losing jobs and declaring bankruptcy left and right, many people need some hope to hold on to. This kind of public sentiment has been fueling a spike in lottery betting that’s been observed these past few months. The New York Lottery alone posted an increase of over 3% - that’s over $170 million – in sales in the latter half of 2008. New York’s local lottery agency also saw a 4% increase in sales of their scratch-off tickets. That’s on top of the 5% increase in sales of Mega Millions, one of the most popular lotto games in New York. But all might not be well in Lotto Land. Something Awful This Way Comes Many winners of the New York Lottery tend to take the lump sum option, choosing a smaller total amount received immediately over a larger amount that’ll take almost three decades to get. Given the current financial situation, however, the lump sum might be an even better option than ever now that the economy is floundering. A recent Mega Millions draw with a prize advertised at $73 million would’ve paid out 65% or about $47 million as a lump sum payment. Although that’s more than a percent down from the figures in January 2009, lotto insiders say that one-time payments used to be just about half of the advertised prize amount. What gives? How the Lotto Makes Money It’s generally assumed that the lottery makes money simply from the wagers that people place and overall ticket sales. While a bulk of the money does come from there, the New York Lottery administration also invests some of its prize funds, and then using returns on those investments to pay off people’s prizes. That’s the case with annuity payments, which are coupled with investments in the form of long-term Treasury bonds. But the recent recession has warped the conditions for every kind of investment across the safety spectrum. Nowadays, Treasury bonds perform at just a fraction of how they used to a couple of years ago. Consequently, it’s become more difficult to sustain annuity payments, leading to a decline in the total value of annuities. If you ever find yourself with a New York lotto-winning ticket, you know which option to choose. The disparity might not look so big on paper, but they can get pretty considerable once you’re considering real money. And because this trend is expected to continue, you may soon see this become a real concern for lotto players everywhere. The local government of New York is looking at new investments to use for expanding its lottery funds. While that plan hasn’t taken off yet, lump sum seems to sound like the more profitable choice.
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The New York Lottery In The Recession
