Hitting the jackpot in a lottery game is something that many people aspire to achieve. And while the odds of winning a lottery jackpot are tiny, there is still this shred of hope that you might be able to completely change your life by just drawing a few random numbers.
Jackpot prizes can soar so high that many people don’t know what to do with all their money. And while it might seem impossible to spend hundreds of millions of dollars — many lottery winners have found a way to break the bank despite breaking the odds.
This is often called the “lottery curse,” and it’s one of those strange phenomena that many people debate the validity of. Here’s everything you need to know about this psychological predicament and ways to prevent it from plaguing your next windfall.
What Is the Lottery Curse?
Many people might say that the lottery is cursed because your chances of winning are so slim that you’re bound to lose money almost every time. But the curse of the lottery refers to lotto winners who probably shouldn’t have gotten their hands on winning tickets in the first place.
There have been many instances in which individuals strike it rich on the Mega Millions jackpot or a Powerball ticket only to lose their money or completely upend their lives. This lottery curse is even rarer than the odds of winning the lottery, but it happens much more than you might think.
Additionally, winning the lottery causes individuals to become somewhat of a target by the media and individuals hoping to get a slice of the pie. This has led to scandal, violence, and turmoil after winning.
What Causes the Lottery Curse?
The highest Mega Millions jackpot prize ever awarded was over $1.5 billion. It’s almost impossible to put that amount of money into perspective, but let’s just say one billion equals one million. That’s a lot of money.
But oddly enough, even the largest jackpots don’t provide that much money if you’re not mindful of how you use it. And many people fail to practice financial literacy even after winning such large sums of money. Since the prize seems so large and endless, many people feel a sense of immunity that the funds will never dwindle. But this mindset is one of the reasons why jackpot winners tend to cut through their winnings quickly.
For one, tax obligations can be much more costly than you might think, especially when a lotto prize brings you into a higher tax bracket. This also makes the payout less than you might expect to begin with. That $1.5 billion prize we mentioned above only paid a little over $900 million after taxes.
Additionally, many individuals feel an obligation to give money to friends and family members. While this is a nice gesture, the money is not infinite, and getting marvelous gifts for the people in your life can add up. Not to mention, you’ll need to pay a gift tax if your gesture costs over $15,000 per recipient, which can tack on 18-22% of the cost of the gift itself.
After winning the lottery, many people treat themselves to giant mansions or expensive cars. This is the worst thing for an ill-equipped winner to do. Because not only do these come with a hefty price tag, but they also come with insanely high recurring mortgages, insurance payments, and other bills. If you ever run out of money, you might be without a house or a car.
What Are Examples of the Lottery Curse?
It’s hard to believe that lottery winners somehow lose all of their money after cashing in. However, it happens more than you might think. Here are some famous examples of the lottery curse in action.
When Jack Whittaker won the $315 million Powerball jackpot in 2002, he became an instant celebrity. After taking the lump sum of $113.4 after taxes, he immediately started flying around the country in his private jet to attend media outings.
But quickly, Whittaker fell into endless scandals and bad habits that had him running through his winnings faster than he could keep up. While at a strip club, Whittaker had over $500,000 stolen from his car parked outside. Another $200,000 got stolen later, though he recovered this money after the incident.
Though the biggest scandal happened in his own home, where his granddaughter’s boyfriend was found dead of a drug overdose, his granddaughter was also found dead for the same reason.
It wasn’t all bad news, though, because Whittaker could use some of his money to fund two churches in the years after his jackpot win. He also donated food and scholarships to local students at underprivileged schools.
The lottery isn’t just an American ordeal — it’s also a popular game overseas. And in England, Michael Carroll gained fame when he scooped up over 9.7 million pounds in a 2002 lottery game.
At 19 years old, Carroll didn’t know what to do with so much money. He didn’t even have a bank account to deposit his winnings. This made him a significant target for people hoping to get their hands on some of his winnings. One day, Carroll woke up to find his five dogs killed and blackmailers threatening his family if he did not hand over some of his winnings.
He gave a million quid each to his aunt, sister, and mother while investing nearly four million quid into a savings bond. However, he also admitted to spending over 2,000 quid a day on cocaine alone and 1,000 quid a day on prostitutes.
By 2010, he had blown through his winnings and had to reapply to his old job as a garbage collector.
Jeffrey Dampier’s story of the lottery curse made national headlines. When Dampier won the $20 million jackpot in the Illinois lottery in 1996, he shared his winnings with his family.
But when he got divorced, he split his winnings 50/50 and continued to be generous with his winnings on his new wife’s side of the family. Of course, he had an ulterior motive for doing so — he was having an affair with his wife’s sister — Victoria Jackson.
Victoria had secretly been dating another man named Nathaniel, and he knew about Dampier’s wealth. He planned to get his hands on the rest of his money with Victoria’s help. Victoria had called Dampier to her home, saying she was having car troubles, and when he arrived, Nathaniel pulled a shotgun on him and forced him into a van.
Dampier refused to give over the money, so Victoria tried to persuade him. According to sources, Nathaniel gave Victoria the shotgun and told her to shoot Dampier unless she wanted him to shoot her as well. Victoria then fired a single shot, killing Dampier instantly.
Authorities arrested both Victoria and Nathaniel the next day.
Florida man Abraham Shakespeare struck it rich when he won $31 million in the state lottery. With nearly $17 million left after taxes, he shared his generosity by buying homes for his family and helping friends get business loans to keep their companies afloat.
But Shakespeare was an uneducated man who struggled even to read and write, so he wasn’t used to having so much money at his disposal. Only $2 million of his winnings remained just two years after winning. This was when he met Dee Dee Moore, a writer who offered to write a book about his story.
She then worked as his financial advisor, telling him to isolate himself in his home to avoid throwing away pieces of his wealth. After several months of his family being unable to reach him, his family grew worried.
His family would receive a text message from Shakespeare now and then, but they found this strange, considering he couldn’t read or write. After seven months of no physical contact, his family filed him as a missing person.
An arduous investigation found that Dee Dee Moore had killed Shakespeare and tried to cover it up for months. The investigation revealed that she spent the rest of his wealth on lavish gifts.
How Can You Avoid the Lottery Curse?
It’s easy to read some of these cases and be scared to play the lottery again. However, as long as you know what to do after winning the lottery, you can avoid the fate of these “cursed” winners.
Be Careful Who You Tell
If you’ve just won a multi-million dollar jackpot, you’ll want to tell everyone you know. However, you must be careful about who you tell — even people you think you can trust.
Money changes people, and you might find yourself in precarious situations if you tell too many people about your winnings. People might come to you asking for favors or even start to threaten you for a piece of the pie.
Only tell the people closest to you. There will be plenty of time for celebrating later on, but you’ll want to keep your close-knit circle in the loop rather than the ones on your outer circle. This also means you should not post about your win on social media.
You also should request anonymity if your state allows it. While most states require your name to go into the public record if you win, you can remain anonymous in Delaware, Kansas, Maryland, North Dakota, Texas, Ohio, and South Carolina. When you come into profound amounts of money, it’s best not to be trending all over social media with your face all over ABC News and the Associated Press — keeping a low profile will keep any unwanted targets off your back.
Don’t Quit Your Day Job
When you win the lottery, you’ll probably want to call your boss and quit immediately. However, there’s no reason to burn any bridges. Think about giving them a courtesy two weeks' notice instead. You never know if you’ll need to reapply for the position in the future, and it’s best not to burn any bridges.
Hire a Financial Advisor
You might think you’ll be able to spend your winnings responsibly, but it’s much easier said than done. Hire a financial advisor and a tax advisor to ensure that you’re being guided through the hoops of financial literacy to ensure you’re being smart with your cash while still enjoying it.
While these services cost money, the amount you’ll need to pay is minuscule compared to your winnings. And they’ll be able to help you make a budget, so you don’t completely blow your lottery ticket winnings and fall victim to the curse.
Open Up a Savings Account
Savings accounts not only keep your winnings safe, but they can also ensure that your money continues to grow with interest over time. And if you want to have some fun while spending and saving, Yotta is a bank account that pays out interest in prizes of up to $10 million a week.
Get raffle tickets for every $25 you have in your account, then press your luck in traditional drawings. You could win things like cash, cars, and everything in between.
Pay Off Debt
One of the first things you should do when you strike it rich is pay off any debt that you might still have outstanding. This will save you money in the long run because you won’t need to make any interest payments later down the road.
Trust us; you’ll feel so much better when you’re debt-free if you just make this necessary commitment immediately. Plus, when you buy a new home or car, your monthly payments will put you back into debt, so you might as well wipe the slate clean and start fresh.
The lottery curse plagues some jackpot winners because many individuals are too eager to spend, and some even get targeted for their newfound wealth. While certain inevitabilities surround a lottery win, you can try to prevent the curse by being smart with your winnings and preparing ahead of time.
For more information on smart savings, come check out Yotta. Get started today to see why over 500,000 users save money the fun way.