Lady Luck's Price Tag

One thing I always wondered was: if you win the lottery, aren’t you immediately in danger? The whole world knows you won, like, $500 million, so what’s to stop bad actors from showing up and forcibly collecting their share? Nothing, as we see below:

• A 2016 winner of $400,000 was attacked by masked intruders in his home. Failing to find enough money, the intruders shot him in front of his partner and children.
• In 2018, an Illinois State Lottery winner of $420,000 was kidnapped alongside his stepfather for ransom. They survived, but were traumatized by the violent abduction.
• In Indiana, a winner of $250,000 suffered repeated robberies due to unwanted attention. Eventually, an armed robbery crew pistol-whipped him to get needed PINs and fatally shot him.

Grim stuff. It takes the wind out of any victory lap after winning a jackpot, even one far smaller than a nine-figure payout. And if strangers don’t do you in, there are always the people you know to take up the slack:

• In 2009, a winner claimed a $30 million Powerball jackpot. Over time, his financial adviser surreptitiously took control of his assets, eventually murdering him and burying his body under a concrete slab.
• A winner of a $20 million Illinois Lottery jackpot in 1996 used his fortune to fund family businesses. In 2005, he was kidnapped and murdered by his sister-in-law and her boyfriend in an attempt to extort his remaining assets.
• A couple that won a $1.5 billion jackpot drawn in October 2018 was defrauded by a lawyer they hired. He placed their money in illicit lending operations and helped himself to $19.5 million without authorization.

There is not much one can do when friends and family turn on you, but because of the incidents above, more states allow you to collect the money anonymously. In fact, the Georgia example above persuaded the state legislature to allow for the anonymous collection of lottery winnings. The chart below shows which states permit unidentified winners:

For states that have mandatory disclosure, it may be possible to create a limited liability company that hides your name somehow, but that sounds tricky. And after reading the above, whom can you trust to set up the LLC in the first place?  

Okay, so what is the probability of tragedy if you are a winner? We just don't know. There are scary anecdotal cases, but no official tracking. Because more people are wisely using LLCs to mask their identity and more states allow anonymous winner registration, it is hard to get good statistics. And for all I know, there are lottery winners out there sipping champagne from slippers without a care in the world. Still, it is a sword of Damocles over one's head. Even if everything is done right (LLC or anonymous collection), there is the ongoing fear that some gang will crack the byzantine LLC paper trail, or someone you trust will hit you over the head with a shovel and rifle through your still-warm corpse for your safe-deposit key.  

Now, if you survive all that, more travails await. First of all, after all this effort, isn’t there a 70% chance you’ll be bankrupt in a few years? Not so fast. The NEFE states that this is mere hearsay. They believe it originated as an offhand comment in 2001 think tank by one of the attending experts. The unsubstantiated claim was repeated widely and became accepted, the Whatever Axiom in action! Although there are no global statistics for bankruptcy, it seems that winning money does not alter the way you handle money. If you are accustomed to accumulating too much debt, chances are, no matter how much you win, you’ll still lose it all.

Then there is “sudden wealth syndrome,” once again proving there is a name for everything—and an acronym too! (SWS). You should be so lucky, right? But winners of large amounts of money overestimate what they actually won since the lump sum is much less than was advertised. Couple that with low risk awareness—it’s the “house’s money”after all!—the winnings go pretty fast. And money doesn’t seem to buy happiness since lottery winners are not any happier than any one else. They even lose interest in daily activities they once enjoyed. To top it all off, just as discussed above, the fear of safety and perceived dishonest motives of others ofter drive lottery winners into isolation.

So the next time you buy a lottery ticket, think of this: maybe you have the right stuff to handle millions of dollars and the adrenaline that comes with constantly looking over your shoulder. But if your ticket loses, consider it a stroke of luck. You walk away with your familiar life, completely free of a target on your back.