A lottery is a popular form of gambling in which numbers are drawn in anticipation of winning a monetary prize. As some governments forbid it, others had endorsed it to the extent that a national lottery was formulated. It was expected, however, that the governments were authorized to regulate the lottery to some degree.
Lotteries were organized to be effective in many formats. The prize was distributed as fixed cash or goods. This format ensured that there was a risk to the organizer if insufficient tickets were sold. Meaning, the reward was a fixed percentage of the receipts. On the other hand, if each ticket that was sold had a unique number, then perhaps the prize would demonstrate guaranteed uniqueness. Furthermore, many recent lotteries allow purchasers to select the numbers on the international lottery tickets resulting in the possibility of multiple winners.
In some countries, deciding on a payment option is not a challenging task due to the fact that lottery winnings are not subject to personal income tax. Therefore, no tax consequences will be administered. Specifically Canada, Australia and the United Kingdom distribute all prizes immediately after winners are declared. The monetary prize is paid out as a lump sum, tax free to the winner.
Contrarily, some countries such as the United States, require taxes to be withheld from the lump sum prize. Although, the winner has the opportunity to choose between annuity payment and a one time payment, the one time payment is much smaller. Most often, the winner is presented with only half of the advertised jackpot; this is the amount that is offered even before the tax is withheld. The annuity option provides regular payments to be dispersed over time subsequently extending from ten to forty years.
Coincidentally, with various online lotteries, the annual payments may be as minute as $25,000 over forty years to include a balloon payment on the final year. Government-backed securities often implemented the investment of these type instalment payments. The insurance back-up of online lotteries was responsible for paying the winners. However, many winners opted to take the lump-sum payment as they conceived that they were able to obtain a better rate of return on the investment elsewhere.
To date, lottery is played in almost every country all over the world. The prize money distributed to the lucky winners may vary from a few hundred or up to hundreds of thousands and even billions. Researches have reported that three lotteries from the United States alone; New York State, Massachusetts and Texas lotteries are included in the ten largest lotteries in the world. However, documentation proves that the largest lotteries are located in Spain, Japan, France, Italy and the United Kingdom.