IN these times of gloom and doom, millions of desperate souls around the world will certainly be wishing they could be as lucky as Neal Wanless, the struggling American rancher who recently won more than US$230mil in a Lotto draw.
Mathematicians have calculated that Lotto punters have a better chance of being struck by a meteorite hurtling through space than winning the jackpot but, against all the odds, some people from around the world have walked away with some of the biggest cash prizes in lottery draws.
As you read this, someone in New Zealand – perhaps a person who was teetering at the edge of the financial precipice – may already have won the country’s biggest Big Wednesday Lotto Powerball jackpot of $30mil plus $1.7mil in other prizes including a luxury car, a boat, a holiday bungalow and travel benefits.
Under New Zealand lottery rules, $30mil is the Powerball jackpot limit in Lotto.
So, if there was no single Powerball winner in the First Division, the money and the cash value of the other prizes will be shared by Powerball winners in the Second or Third Divisions. The lure of a $30-plus million jackpot had generated a frenzy of excitement among people but, curiously, it has also drawn criticism from some quarters.
The Problem Gambling Foundation says the $30 million Jackpot limit is too big and it fears it will encourage vulnerable families to divert money into tickets instead of basic needs like food.
Last year, New Zealand gamblers lost $2.03bil to lotteries with Lotto accounting for $346mil.
The image of children and elderly people remaining cold and hungry in the winter as a result of families pouring money on Lotto instead of satisfying basic needs is disturbing, if true. Retailers have reported that such Lotto spending has affected sales.
The Foundation would prefer the ceiling on the Jackpot be capped at $12.5 million, at which point punters would already be salivating with excitement.
The proposal has, however, not been well-received by the majority of people who do not participate in mundane draws but wouldn’t mind dropping $20 for a shot at the big prize.
There is very little likelihood of people betting hundreds of dollars on Lotto tickets, unlike gamblers sitting before the Blackjack dealer or a slot machine.
Limiting the jackpot would only encourage punters to go online for overseas lottery draws which offer even bigger jackpots without having to surrender part of their windfall to the NZ tax collector.
Such an outflow of gambling money is not good for NZ as at least 20 cents of every dollar spent on a Lotto ticket is channelled to funding for activities like sports, cultural activities and other community projects.
Some big winners might also use their windfalls to start economic activities resulting in new jobs.
There has been much speculation on how the lives of big lottery winners would change for better or worse.
According to financial adviser Jeff Mathews of Spicers Wealth Management, instant and vast wealth could “literally blow a person’s mind.”
He tells the story of a couple who nearly blew their $2mil Lotto win because the husband went on a spending binge, buying flash cars which devalued quickly and were eventually worth a fraction of what he paid. He also had a go at property development but failed.
The marriage came under strain as his wife had more conservative spending habits and, within a few years, the couple was both back at work but were saved from complete disaster by two mortgage-free properties.
“People need to build a satisfactory support mechanism, perhaps a trusted adviser, a good accountant or lawyer or someone you can rely on, without it you are fair game,” Matthews said.
Another financial adviser, Roger Sutherland of Grant Thornton Wealth Management advises winners to keep their emotions in check and stay quiet.
He remembers a couple who made the mistake of “telling the whole world” about their Lotto win.
“Soon friends and family and even total strangers were asking for handouts.”
After three years of profligate spending, the couple was back to exactly the same assets and lifestyle they had before winning.
The sensible thing for winners to do would be to bank the money for at least six months while trying to work out what is really important to them.
At five per cent interest, this week’s $30mil winner would clear $1.5mil before tax of $570,000 for a total of $930,000 a year. That’s about $77,500 a month or $17,885 a week.
That’s a lot of serious change to enable one to lead a meaningful life.