A LOTTERY player defied bumper odds to win a $1 million jackpot but saw almost two-thirds wiped before receiving it.
Frank Phillips’ struck gold after buying the ticket at a casino in Ohio.
He, like many other lottery players, faced the decision of claiming his prize as a lump sum or as an annuity.
Phillips chose to receive his prize as a lump sum and his prize was halved to $500,000 before federal and state lotto taxes saw even more deductions.
He took home around $360,000, rather than pocketing $50,000 a year over 20 years.
Phillips beat the odds of one in 235,636 to scoop the bumper prize.
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Scratch-off ticket holders and Mega Millions and Powerball jackpot winners face the conundrum of how to receive their prize.
Both the lump sum and the annuity options have their pros and cons but there has been a debate over which choice is better.
Renowned attorney Andrew Stoltmann is among the legal experts who have recommended lottery winners should choose the annuity option.
He told The U.S. Sun that taking the lump sum is among the first mistakes that jackpot winners make.
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Stoltmann claimed winners don’t have the infrastructure to deal with their success.
He said: “They tend to be from lower socioeconomic backgrounds.
“So they then take this massive sum of money and they just don't really know what to do with that. It’s a pretty big mistake.”
He alluded to a potential drawback of the annuity option, which is that the terms surrounding the payments cannot be changed and are inflexible.
Nicholas Bunlo, a certified financial planner, has also warned of the risks surrounding the lump-sum prize.
He told CNBC: “If having a lot of money was to guarantee to run out of money, why do millionaire athletes go bankrupt?”
Consumer expert Jeff Rose, who is behind the blog GoodFinancialcents.com, revealed that the annuity can produce a steady income and reduce the risk of potential errors.
Jared James, the mastermind behind the lottery algorithm Lotto Edge, told The U.S. Sun that jackpot winners who choose the annuity can plan how they use their winnings.
He said: “It’s easier to deploy that and plan your steps ahead than it is to get an amount dumped on you at one time.”
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In 2016, the businessman and investor Mark Cuban warned that jackpot winners shouldn’t take the lump sum, per The Dallas Morning News.
He said the jackpot winner shouldn’t want to blow the prize at once, recommending they hire a tax attorney.
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