Reduce Your Tax Bills by Playing the Lottery


Drawing lots to determine ownership and rights dates back to ancient times. It was widespread in the late fifteenth and sixteenth centuries. In 1612, King James I of England created a lottery to fund his new colony of Jamestown, Virginia. Since that time, the lottery has been used to raise money for many purposes, including wars, colleges, public-works projects, and towns. In the United States, the lottery is tied to the history of American politics and society.


Although many states have banned lotteries, others allow them in limited cases. Those in Hawaii and Utah are prohibited from gambling, and Alaska’s politicians have shown little interest in lottery expansion. In Mississippi and Alabama, a number of state lottery bills have been introduced, including one that would allow Powerball tickets to be sold. This bill was defeated in the House of Representatives in February 2007.

A number of critics believe that lotteries encourage illegal gambling and contribute to the rise of unhealthy, addictive gambling behaviors. Others contend that lotteries promote gambling addiction, represent a regressive tax on lower income groups, and lead to other abuses. Still others believe that lotteries are incompatible with state-level public welfare goals, because they impoverish millions and enrich a few. It is important to consider the arguments of those opposed to lotteries before making a decision.

Location of lotteries in the United States

State lotteries in the United States are huge, almost doubling in size in the past two decades. These state-run games fuel multibillion-dollar wealth transfers from low-income communities to multinational corporations. According to a recent study by the Howard Center for Investigative Journalism, lottery retailers are disproportionately located in communities with low education levels, high poverty rates, and large Black and Hispanic populations.

The government has a major role in the operation of state lotteries, as many of these governments rely on the revenue they generate. A study of the Oregon lottery found that every financial crisis in the state led to new gambling legalization, with the state now having more forms of legalized gaming than any other state. Ultimately, political officials must balance these competing goals. To do so, they must decide which forms of gambling are more important than others.

Variable-wager lottery (VLT) games

The game of chance can be played with multiple wagers and a variable jackpot. The play indication means of a lottery game are various symbols and numbers, as well as a ticket bearing the variable game indicia. Players can purchase a ticket or receive a play indication by SMS communication, internet, or any suitable means. The player may pay the ticket vendor after selecting a winning number or he may provide payment information to the lottery retailer.

The most popular lottery games also feature a drawing in the evening or midday. While this is beneficial, the novelty of these games has worn off. The jackpots of such games are usually small and do not encourage new players. The popularity of these games also waned, primarily due to the novelty of scratch off tickets. But that novelty is about to change. In the near future, the possibility of winning a large jackpot will increase.

Taxes on winnings

Fortunately, not all countries tax lottery winnings. Canada, for example, does not tax lottery winners at all. While the simple answer is that winnings are “income,” others point out that withholdings by the government equal nearly 50% of the total amount of sales. Thus, taxing lottery winnings is an act of greed or double-dipping. There are ways to reduce your tax bill, however. Let’s explore a few options.

First, you must know when to file your lottery tax return. In most cases, your winnings will be taxed in the year you collect them, but if you win a prize that’s a tangible object, you’ll have to pay taxes on its fair market value. You can spread out the tax bill by filing an annuity. In some states, there is no income tax, so you won’t owe it in that year.