Lottery Winners Share Lessons, Risks of a Giant Powerball Prize

By ALAN SCHER ZAGIER

COLUMBIA, Mo. -- So you just won the $500 million Powerball jackpot, the second highest in lottery history. Now what?

Perhaps it's time for a tropical vacation or a new car. There are bills to pay, loans to settle, debts to square.

Past winners of mega-lottery drawings and financial planners have some more sound advice: Stick to a budget, invest wisely, learn to say no and be prepared to lose friends while riding an emotional roller-coaster of joy, anxiety, guilt and distrust.

"I had to adapt to this new life, "said Sandra Hayes, 52, a former child services social worker who split a $224 million Powerball jackpot with a dozen co-workers in 2006, collecting a lump sum she said was in excess of $6 million after taxes. "I had to endure the greed and the need that people have, trying to get you to release your money to them. That caused a lot of emotional pain. These are people who you've loved deep down, and they're turning into vampires trying to suck the life out of me."

The single mother kept her job with the state of Missouri for another month and immediately used her winnings to pay off an estimated $100,000 in student loans and a $70,000 mortgage. She spent a week in Hawaii and bought a new Lexus, but six years later still shops at discount stores and lives on a fixed income -- albeit, at a higher monthly allowance than when she brought home paychecks of less than $500 a week.

"I know a lot of people who won the lottery and are broke today," she said. "If you're not disciplined, you will go broke. I don't care how much money you have."

• <p> Business news website <a href="http://247wallst.com/" target="_blank">24/7 Wall St.</a> has compiled a list of the 10 states that pay out the most in lottery winnings.&nbsp; The figures used are based on the most recently available full set of data, which is from 2010, but it turns out that the best states in which to buy a ticket don't change much from year to year. So which state holds the crown? Read on to find out.</p> <p> </p> <p> <span><span>Photo: </span></span>The spectators gather in front of ABC studio at Times Square to watch the draw for MEGA Millions jackpot winning numbers of an estimated $370 million in New York,&nbsp; Tuesday, Mar. 6, 2007.&nbsp; The company officials have claimed the prize is the largest in the game's history, In a studio in frigid Times Square, lottery officials announced the winning numbers: 42-39-29-22-16; Mega Ball number 20. It wasn't immediately known how many tickets were sold nationwide or who, if anyone, held the winning ticket.</p>
• <p> <strong>Largest Jackpot:</strong> $363 Million, (two-state lottery win shared with Illinois, 2000)<br /> <strong>Prizes Paid:</strong> $1.41 billion<br /> <strong>Ticket Sales: </strong>$2.35 billion<br /> <strong>State Profit from Sales:</strong> $704 million<br /> <strong>Government Use: </strong>K-12 education</p> <p> The Michigan Lottery has been operating since 1972. In that time, it has generated more than $16 billion in revenue for the state's education fund. In 2006, Michigan joined five other states to found a multistate lottery called The Big Game, which would eventually become Mega Millions. Along with Powerball, it produces the largest jackpots in the country. In May 2000, when it was still called The Big Game, one Michigan resident won half of a $363 million jackpot, the third-largest combined jackpot ever won in a lottery in the U.S. The largest single-ticket prize in the state went to a couple in Port Huron, who won $208 Million before taxes.</p> <p> <strong>Photo:</strong> In this photo provided by the Michigan Lottery, Fred Topous, Michigan Mega Millions jackpot winner, displays his lucky ticket on June 17, 2008 in Lansing. Topous, who&nbsp; vowed to continue to play the lottery, elected to take a lump sum payment of $33,989,267.</p>
• <p> <b>Largest Jackpot:</b> $390 Million (two-state lottery win shared with Georgia, 2007)<br /> <b> Prizes Paid: </b>$1.47 billion<br /> <b> Ticket Sales: </b>$2.61 billion<br /> <b> State Profit From Sales:</b> $924 million<br /> <b> Government Use: </b>K-12 education</p> <div> <br /> In 1969, voters from the Garden State approved a lottery system, and by 1971, the first drawing had been held. Though 2010, the lottery&nbsp; generated roughly $18 billion&nbsp; for the state's education budget. In 2005, Harold and Helen Lerner won a $258 million Mega Millions drawing. In 2007, the biggest jackpot in Mega Millions history at the time was shared by ticket holders in New Jersey and Georgia.</div> <div> </div> <div> In January 2010, New Jersey began participating in the Powerball. Three months later, Sandra McNeil of Morristown was the single-ticket winner of a $211.7 million Powerball ticket.</div> <div> </div> <div> <strong>Photo:</strong> Powerball winners Celeste and Joseph Tamburello display a ceremonial check for $70 million from the New Jersey Lottery on March 26 in Lawrenceville. They will get a $41.5 million lump sum payout for the cash value ticket, which they bought at the Little Silver Family Pharmacy in Little Silver, N.J. At right is Foster Krupa, the New Jersey Lottery's marketing manager.</div>
• <p> <b>Largest Single Jackpot:</b> $267 million (2006)<br /> <b> Prizes Paid:</b> $1.51 billion<br /> <b> Ticket Sales:</b> $2.49 billion<br /> <b> State Profit From Sales:</b> $729 million<br /> <b> Government Use:</b> Education</p> <div> The Ohio Lotto's motto is &quot;Take a chance on education. Odds are, you'll have fun!&quot; Since it began in 1974, more than $17 billion in lottery profits have gone to a state education fund. Since 1989, the state lottery association has hosted a game show called <em>Cash Explosion Double Play</em> on Ohio TV. The largest jackpot in the state's history went to an individual in the town of Lyons for $267 million.</div> <div> </div> <div> <strong>Photo:</strong> Jeffrey Erb, general manager of Main Stop, and Linda Freeworth, manager of Lyons Main Stop Citgo, receive a check from the Ohio Lottery's Marie Kilbane, right, in the store in Lyons, Ohio. on March 1, 2006. They were given $100,000 for selling the winning ticket for the $267 million Mega Millions drawing.</div>
• <p> <b>Largest Single Jackpot:</b> $333 million (two-state lottery win shared with New York, 2009)<br /> <b> Prizes Paid:</b> $1.61 billion<br /> <b> Ticket Sales:</b> $3.09 billion<br /> <b> State Profit From Sales:</b> $1.06 billion<br /> <b> Government Use:</b> Education</p> <div> California instituted its lottery in 1984, when it was looking a method for increasing spending on education without raising taxes. The largest jackpot which included a California resident was a $336 million prize shared with a ticket holder in New York in May 2000. The largest single-ticket win for a California resident was a $315 million Mega Millions jackpot awarded in November 2005. That remains the third-largest single-ticket prize in history: An Oregon resident won $340 million in 2005 and a Nebraska resident won $365 million in 2006. In 2010, as one of his last acts in office, then-Gov. Arnold Schwarzenegger proposed a bill which would increase the efficiency of the California Lottery while increasing the percentage of ticket sales that go to state profits. Payout for ticket holders remained at 50%.</div> <div> </div> <div> </div> <div> <strong>Photo:</strong> On June 22, 2005, after California joined the Mega Millions club, patrons lined up to purchase the newly available lottery tickets for the first time -- as well as Super Lottos, scratchers and other California Lottery games.</div>
• <p> <b>Largest Single Jackpot:</b> $115.5 million (1989)<br /> <b> Prizes Paid:</b> $1.87 billion<br /> <b> Ticket Sales:</b> $3.07 billion<br /> <b> State Profit From Sales:</b> $916 million<br /> <b> Government Use:</b> Services for the elderly</p> <div> Since the Pennsylvania State Lottery began, it has steered $20.6 billion to a variety of causes, but its profits have primarily been funneled into an elderly benefits fund. This fund includes subsidies for transportation, tax rebates and Medicare. Currently, about 61% of the roughly $3 billion in annual ticket sales goes to prizes, while 30% goes to the state, and the rest covers expenses. That's a higher percentage of prize return than most other states.</div> <div> </div> <p> <strong>Photo:</strong> Kristine (center left) and Steven White (center right) of Skillman, N.J., the holders of the single winning Powerball ticket for the May 8, 2004 drawing, receive their ceremonial check from the Secretary of Revenue Gregory Fajt, (left) and Executive Director of the Pennsylvania Lottery Edward Mahlman in Harrisburg, Pa. The Whites won the largest prize in the Pennsylvania lottery's history, with an annuity value of $213.2 million.</p>
• <p> <b>Largest Single Jackpot:</b> $390 million (two-state lottery win shared with New Jersey, 2007)<br /> <b> Prizes Paid: </b>$2.13 billion<br /> <b> Ticket Sales:</b> $3.65 billion<br /> <b> State Profit From Sales:</b> $884 million<br /> <b> Government Use:</b> Education</p> <div> One Georgia resident was part of the largest jackpot in the history of the American lottery, winning half of $390 million on February 18, 2006. The other half went to a ticket holder in New Jersey. The state has one of the least efficient lottery systems in the country, with 17% of sales going to pay for the cost of operations. The Georgia lottery also only returns a third of total sales to the public fund, where the money goes to support education. The state didn't begin selling lottery tickets until 1993, making it one of the newest systems in the country. In its first year in operation, the Georgia lottery system sold roughly $1.1 billion in tickets, the most successful entry year on record. Georgia joined the Multi-State Lottery Association (MUSL) in 2010.</div> <p> <strong>Photo:</strong> Mega Millions winners Margaret, left, and James Jones, right, embrace as they hold an oversize replica of their $77,744,832. check during a news conference at the Georgia Lottery Corporation headquarters in Atlanta on Jan. 21, 2005. When the Washington, Ga., couple claimed their prize, worth an annuitized $130 million, they became the second-largest winners in Georgia Lottery history. They selected the cash option.&nbsp;</p>
• <p> <b>Largest Single Jackpot:</b> $330 Million, (four-state shared lottery win, 2007)<br /> <b> Prizes Paid:</b> $2.30 billion<br /> <b> Ticket Sales:</b> $3.75 billion<br /> <b> State Profit From Sales:</b> $1.10 billion<br /> <b> Government Use:</b> Education, state general fundThe Texas Lottery began operating in 1992, just a year before Georgia. Since then, the program has raised $17 billion for the state, with $5.1 billion of that going to the state's general fund, $180 million going to health care programs, and the lion's share -- $11.6 billion -- going to education. In its relatively short history in the MUSL, Texas hasn't had an truly big winners. In August 2007, one resident won part of a $330 million jackpot, but the winnings were split between holders in three other states.</p> <p> <strong>Photo: </strong>Lottery posters are displayed at the Times Market in Bishop, Texas. Bishop native Joan Ginther, who now lives in Las Vegas, won $10 million in June 2010 on a $50 scratch-off ticket. Overall, she has won four Texas Lottery jackpots for a combined $21 million, and the last two winning tickets were purchased at the Times Market.</p>
• <p> <b>Largest Single Jackpot:</b> $189 million (2011)<br /> <b> Prizes Paid:</b> $2.35 billion<br /> <b> Ticket Sales:</b> $3.90 billion<br /> <b> State Profit From Sales:</b> $1.25 billion<br /> <b> Government Use:</b> Education trust fund</p> <div> </div> <div> Florida's lottery benefits the state education trust fund, to which $20 billion has gone since system began operating in 1987. At the moment, lottery income represents about 5% of the state education budget. Florida joined the Multi-State Lottery Association in 2009. Because of its late entry into the MUSL, Florida hasn't had a winner whose jackpot was on the scale of some of the others. However, in October, just nine months after joining MUSL, a Florida resident hit the Powerball jackpot and won $189 million. The MUSL now has 33 members (including Washington, D.C., and the Virgin Islands).</div> <div> </div> <p> <strong>Photo:</strong> Scott Adams, one of the three Powerball hosts, announces winning numbers. The drawings are broadcast nationally from a studio in Universal Orlando Resort.</p>
• <p> <b>Largest Single Jackpot:</b> $294 million (2004)<br /> <b> Prizes Paid: </b>$3.17 billion<br /> <b> Ticket Sales:</b> $4.42 billion<br /> <b> State Profit From Sales:</b> $903 million<br /> <b> Government Use:</b> City and town funds, compulsive gambling, the arts</p> <div> In 2009, the Massachusetts lottery paid out roughly $3.2 billion in prizes to lottery winners, making it the second highest paying state in the country. The extent to which the state profits, however, is low compared to other states. In 2009, the state beneficiaries, which include city and town governments, a state arts fund, and a compulsive gambling support group, received only $859 million. Florida's respective payouts were less, $2.4 billion, but the state still earned $1.28 billion.</div> <p> <strong>Photo: </strong>Judith Zahn of Hatfield, receives a giant check from Massachusetts State Treasurer Tim Cahill at the Massachusetts Lottery Commission Headquarters on July 5, 2007, in Braintree, Mass. Pictured at left is Steve Zahn, Judith's husband, and second from right is Judith's daughter, Hannah. Judith Zahn, a nurse at the VA Medical Center in Northampton, Mass., won a $20 million lottery jackpot. She'll receive a lump after-tax sum of $14 million.</p>
• <p> <b>Largest Single Jackpot:</b> $333 million (two-state lottery win shared with California, 2009)<br /> <b> Prizes Paid:</b> $3.95 billion<br /> <b> Ticket Sales:</b> $7.82 billion<br /> <b> State Profit From Sales: </b>$2.67 billion<br /> <b> Government Use:</b> EducationBesides having the largest lottery system in dollar terms in the country, New York has one of the richest histories of government-run gambling. Since the late 1880's, lotteries and raffles have been used to raise funds for regional public works projects. New York was one of the first states to begin a state-wide system as well, voting in the program in 1966. Since the lottery began in official capacity the following year, more than $36 billion has been raised to fund education. This sum accounts for approximately 13% of all the money that has been raised in the history of U.S. state-run gaming.</p> <p> <strong>Photo: </strong>Mega Millions Winners Richard and Mary Morrison of Miller Place, N.Y. were elated after being presented with their ceremonial check for $165 million by New York Lottery jackpot announcer Ralph Buckley and the Lottery's Yoland Vega at the New York Lottery Customer Service Center on Thursday, Jan. 7, 2010, in Garden City, N.Y.&nbsp;</p>
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Easy Come, Easy Go

Lottery agencies are keen to show off beaming prize-winners hugging oversize checks at celebratory news conferences, but the tales of big lottery winners who wind up in financial ruin, despair or both are increasingly common.

There's the two-time New Jersey lottery winner who squandered her $5.4 million fortune. A West Virginia man who won $315 million a decade ago on Christmas later said the windfall was to blame for his granddaughter's fatal drug overdose, his divorce, hundreds of lawsuits and an absence of true friends.

The National Endowment for Financial Education cautions those who receive a financial windfall -- whether from lottery winnings, divorce settlements, cashed-out stock options or family inheritances -- to plan for their psychological needs as well as their financial strategies. The Denver-based nonprofit estimates that as many as 70 percent of people who land sudden windfalls lose that money within several years.

"Being able to manage your emotions before you do anything sudden is one of the biggest things," said endowment spokesman Paul Golden. "If you've never had the comfort of financial security before, if you were really eking out a living from paycheck to paycheck, if you've never managed money before, it can be really confusing. There's this false belief that no matter what you do, you're never going to worry about money again."

"At Times I'd Wake Up and This Would All Seem Like a Dream"

David Gehle, who spent 20 years at a Nebraska meatpacking plant before he and seven ConAgra Foods co-workers won a $365 million Powerball jackpot in 2006, used some of his winnings to visit Australia, New Guinea and Vietnam. He left ConAgra three weeks after he won, and now spends his time woodworking and playing racquetball, tennis and golf.

But most of his winnings are invested, and the 59-year-old still lives in his native Lincoln. He waited for several years before buying a $450,000 home in a tidy neighborhood on the southern edge of town.

"My roots are in Nebraska, and I'm not all that much different now than I was before," Gehle said. "I'm pretty normal. I never was the kind of guy who went for big, expensive cars or anything like that. I just want something that runs."

In the first year after he won, Michael Terpstra would awaken many nights in a panic. Had he slept in? Was he late to work the night shift?

"At times I'd wake up and this would all seem like a dream," the 54-year-old said. "I'd have to walk around the house and tell myself, I did win. I'm not working anymore, and I do live here. I didn't get drunk, break into someone's house and go to sleep. This is where I'm supposed to be."

His new home is a roomy, two-story house in south Lincoln with a big-screen television and paintings of Jesus on the walls. He no longer uses alarm clocks and spends his days taking his 92-pound black lab, Rocco, on walks.

He was terrified when he first won, convinced that he would lose all of the money and have to return to work. So he lives carefully off the interest from conservative investments, with help from accountants and lawyers. He bought the new house and a truck, but struggles to name any extravagant purchases.

"I can't buy a super yacht. I can't buy a Gulfstream," he said. "Then again, I don't think I'd use either one, so why would I buy one?"

That said, some mega-winners still can't resist the lure of big jackpots, at least not the two-buck chances. On Tuesday, former ConAgra worker Dung Tran, a Vietnamese immigrant, walked into the same Lincoln U-Stop where he purchased the winning ticket six years ago and bought 22 more from the very employee who sold him the first prize-winner, said cashier Janice Mitzner.

"We joked about it," she said. "I told him, 'Wouldn't it be something if you won again?'"

Hayes is also hoping to strike rich again -- she bought 10 tickets at a Dirt Cheap liquor store on her way home Tuesday while speaking with an Associated Press reporter. Unlike many big winners, she has kept a visible public profile instead of going underground, appearing on a 2007 reality TV show ("Million Dollar Christmas"), writing an online Life After the Lottery blog and self-publishing a short book, "How Winning the Lottery Changed My Life."

"We have this drawing tomorrow, and if somebody wins, God bless them," she said. "They're going to need those blessings."

___


Associated Press writers Grant Schulte in Lincoln, Neb., and Josh Funk in Omaha contributed to this report.