Four reasons not to play the lottery, and what to do if you hit it big anyway

What would you do if you woke up with $1.4 billion after winning the sixth largest lottery game in U.S. history?

Somebody may get the chance to answer that question Thursday following Wednesday night’s Powerball drawing, which advertises online a 1-in-292.2 million chance of any one ticket striking the jackpot.

“It’s fun to say, ‘What would you do?’ ” executive director of a Tennessee-based gambling education and research center James Whelan said. “Where would you take a vacation? Would you buy a second home? Would you remove debt from everybody who you care about?”

Gambling has been a part of cultures since the beginning of the human record, Whelan said. It allows people to dream, and around 95% of people who gamble in the U.S. do so recreationally without harm.

So, why not?

The Spokesman-Review talked with Whelan and financial planner Nick Fuller with Spokane-based Quantum Financial Planning to talk you out of it.

1. Low odds of winning

“The odds of winning are so abysmal that, whether you buy one ticket or 1,000 tickets, it’s very, very rare that someone will actually win,” Whelan said. “Winning the Powerball has the same probability of being struck by lightning – twice.”

Fuller said that his mother used to joke that buying a lottery ticket would double ones chances at winning, “Which, you know, two times zero is zero.”

“It’s fun as a dreaming mechanism or as a fun thought process,” Fuller said. “But you know, I wouldn’t put it into people’s monthly budget, that’s for sure.”

Winning is only the first hurdle for some, though.

2. Bigger than life expectations

“The second thing is, believe it or not, many people who win a substantial amount of money through a lottery find that it doesn’t add value to their lives,” Whelan said. “And a portion of those people will report to you that it actually harms their life.”

Acknowledging that many people win the lottery and “it’s all good,” Whelan said that many others tell him that the money didn’t change their lives as they thought it would.

In Spokane, Fuller said that many of his clients can live “very comfortable” lives making around $200,000 per year, and others who are “perfectly content” with about $60,000 to $100,000 annually.

“I think the danger with winning the lottery is what I would call a kind of ‘lifestyle creep,’ ” Fuller said. “Because what used to be considered a comfortable life may not feel like a comfortable life when all of a sudden you have this seemingly unlimited pool of money.”

In some cases, becoming super-rich overnight can lead to people “coming out of the woodwork” and trying to take advantage of winners.

“Talk to any NBA or NFL player who is making millions of dollars a year about how many people hit them up for money,” Whelan said.

3. An irreplicable taste of fortune

Fuller said that many people who make it big in the lottery will file for bankruptcy at some point in their lives due to inexperience in managing such large sums of money.

Separate from this phenomenon though, Whelan said that in case of some people – including one of the clients at his gambling clinic – a big win can trigger a bigger gambling problem in people.

“This person won a lot of money, money that you and I might think would change our life,” he said. “But in fact, what it really started was a life of chasing getting more money, to the point that this person has indicated that they were committing while collar crimes in order to get money to gamble.”

4. A better use of funds

“My fourth one would be, just think about what else you could do with three bucks,” Whelan said. “Even if you just gave those $3 to a little kid who wanted something and make their day really happy, or buy some food for somebody who needs food.

“I mean, those $3 could really generate instant happiness.”

Further, buying up tickets isn’t a “long term wealth building strategy” in Fuller’s eyes. In fact, it would be the first area he recommends a client cut if they are strapped for cash.

Lotteries tend to act as a “regressive tax on the poor,” Fuller said, adding that the people who can afford to splurge on tickets the least are the ones who spend the most “because they’re being taxed on their hope, essentially.”

I already won the lottery. Now what?

Of course, the damage has already been done this Powerball cycle. But for the current or future big winner reading along, Fuller has some advice.

“In the context of the lottery, I would say first of all my instinct would be to slow down,” he said. “Just take a step back and, kind of, not make any rash decisions.”

As you are sitting on the couch and the numbers being read off the TV are matching your ticket, your first call should be to an attorney, Fuller said. In Washington, lottery winners are not allowed to be anonymous, and he cautions about exploitation without proper legal help. Though biased as a financial planner, he said building a professional team of trustworthy accountants and planners can help guide winners.

“Whether you like it or not, if you have an earth-shattering amount of money you’re going to have a lot of change in your life,” he said.

Next, he recommends sitting down with yourself or your inner circle and devising a personal plan for moving forward. This, he said, depends on individuals’ personal priorities.

“I had a client who I worked with that got about $3 million. They grew up kind of under the poverty line and was terrified to invest it, but ended up spending $2 million in the first year and depleted the rest in the next five years,” Fuller said. “Those are the sad stories, but on the flip side, there’s a lot of things you can do with $1.4 billion and still leave enough left over to save for the future or to set aside for your loved ones or whatever it might be.”

While he doesn’t think anybody wants to win the lottery to continue living their current lifestyle, Fuller said that even saving 98% of over a billion dollars in winnings still leaves millions for spending, “which goes a long way here in Spokane. And so I would say just act slowly in the first year.”

“There is no real successful shortcut to wealth, unfortunately,” Fuller said. “So it typically takes an eye towards the long term.”