The recently formed Consumer Protection Bureau (CFBP) has regulations concerning disclosures on bank teller machines, Loan Originator Compensation Requirements, and credit card fees, among many others. Isn't it about time that those purchasing lottery tickets had the same protections?! By God!
I recently filed the following complaint with CFPB here (its the only complaint category that seems to apply) on behalf of those who buy Powerball lottery tickets.
I became interested in the recent "$590,500,000.00" Powerball lottery and found out I had be subjected to unfair and deceptive practices. Why don't we have laws to stop state lotteries from exploiting citizens who don't understand math and statistics and freely buy lottery tickets without understanding what they are signing up for? Given CFPB's earnest efforts to protect the innocent in consumer finance I am counting on CFPB to hold state lotteries accountable for their unfair, deceptive, and abusive practices as is your mission.
Lottery jackpots are deceptively advertised, unfair, and abusive.
Advertisements and public relations efforts broadly disseminated information that the Powerball jackpot for May 19, 2013 was $590,500,000.00. Wow!
- Actually, that number represents the amount a sole winner of the Powerball jackpot would receive as an annuity in equal installments over 30 years ($19,683,333,22 per year before taxes).
- The actual cash available from lottery ticket customers for the May 19, 2013 Powerball drawing after fees and the take from ticket distributors and the state was $370,896,780.54, the amount a single winner can take as a lump sum payment in lieu of the annuity. This is after paying an unknown amount to those selling the tickets (e.g., 7-elevens), $85,000 to the store that sold the winning ticket, and some amount that went to the state of Florida.
- The Florida state lottery web site says, "This series of POWERBALL jackpot rollovers generated more than $40 million for the Educational Enhancement Trust Fund." That $40 million is over a series of six "rollovers" and the statement does not clarify how much went to education as a result of the "$590,500,000.00" Powerball event being reported. (And all you Floridians, keep in mind that lottery money going to "education" since inception of the state lottery has simply been a replacement of other funding sources, not additional funding for education.)
- When buying a ticket there is also no disclosure that you have to pay income taxes on the winnings. If a sole winner took the lump sum payment the net payment after Federal income taxes at 39.5 percent would be about $224,392,255.22. If a sole winner is a taxable resident of Manhattan, New York they would net about $200,000,000.00 after an additional 12.618 percent in taxes.
- The chances of winning are certainly material in making a decision to buy a lottery ticket but the odds of winning are not disclosed when purchasing lottery tickets. I had to poke around the Internet to locate the actual odds of the Powerball jackpot prize which are 1 in 175,223,510.
Certainly, enticing people to buy lottery tickets by overstating the value of the winnings, not disclosing the after tax value of the winnings, and failing to disclose the odds at the point of purchase must be regulated if the same types of abuse are regulated in consumer finance! By God!
Regards, Pete Weldon