Million-Dollar Lottery Winners Face New Financial Decisions

by Mark Friedman  on Monday, Jan. 16, 2012 12:00 am  

Lottery tickets at the Site store on the corner of Cantrell Road and Kings Row Drive in Little Rock. (Photo by Michael Pirnique)

Baldridge also said about 70 percent of the winners didn’t want the ASL to promote their winnings through press releases. They can decline to pose for pictures with the traditional oversized checks. But under the Arkansas Freedom of Information Act, the winner, the amount won and the winner’s hometown have to be made public. 

First Steps

Some lottery winners can’t get their mind around the fact that they won $1 million or more and that it’s theirs, said Steven Danish, a professor of psychology and social and behavioral health at Virginia Commonwealth University who has worked with lottery winners for 25 years.

That’s why a number of the winners quickly deplete their prizes, he said.

In addition, winners are bombarded by friends and relatives looking for handouts. Winners sometimes feel guilty about winning and want to help make other people’s dreams come true, Danish said. “And they can’t.”

Winning also can cause other unforeseen problems, he said.

“If you don’t have dreams or goals that you have planned for your life before you win, winning is just going to screw you up royally because you don’t know what to do,” Danish said.

He said that’s why people end up squandering the money on multiple cars or other items.

Economists studied Florida lottery winners and found that winning between $50,000 and $150,000 didn’t prevent people in financial trouble from filing bankruptcy; it only postponed it.

The winners who already had financial problems were more likely to file for bankruptcy three to five years after winning, according to the study, published in August in The Review of Economics & Statistics.

Economists also found that although the winners could have paid off unsecured debt or increased equity in a new or existing home, they typically did neither.

Several financial advisers told Arkansas Business that the first thing a winner should do is consult with a financial adviser, accountant and an attorney to map out a strategy.

 

 

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