How does the lottery work?

The lottery is a state run game that revolves around the idea of a person purchasing a cheap lottery ticket at a local convenience store, and guessing a set of numbers. Then a few days later, after all of the money collected from the tickets is thrown into a big pot, the numbers are drawn on television. Sometimes these numbers range from 1-50, sometimes more and sometimes less. After the numbers are drawn, the lucky person who happens to have the matching numbers will win the jackpot. When a lucky winner is announced, the will be granted the money, but then taxes will take a remarkable chunk out of your winnings. The winner will be given a choice as to how he/she will take the winnings: take it in one lump sum, or take in through yearly installments. Either way, you will be taxed a lot on your winnings. Winners usually only really take home a little more than half of the money they initially won. So if you happen to win a $500 million jackpot, expect to take home roughly $275 million, instead. When the lottery doesn't have a winner, then the money in that jackpot is kept for the next lottery. That is often why the jackpot gets so high, because it is made up of past lottery pots that weren't won by anybody. The lottery in turn is a form of legal gambling issued by the state, and another way in which a state can get a big boost to tax revenue, as big lottery winnings means a big tax collection.

Related Tax Questions