- Why are there only 2 lottery agents in the list?
- The Journey
- For the buyer to know
- Lottery winners must know
Why are there only 2 lottery agents in the list?
This is a very common question we get from American clients that want to play lottery online but afraid its illegal.
Well, in this case like many others Top 10 Best Online Lotto have you covered – you see most of the online lottery operators out there forbid American clients to use their services to buy an online lottery ticket, but only 2 of them are 100% legal to allow that.
LottoKings and Wintrillions are the only operators that based outside the US and allow American clients to take full use of their services of acquiring lottery tickets for them to any big lottery around the world.
Most of us are aware that the chances of us winning a lottery are one in a million. And yet, it does not stop us from investing in lottery tickets. Someone has to win! Why not me? The lottery system in the United States of America is among the biggest state-run lottery systems in the world. A 2017 report reported 49% of the American adults purchased lottery tickets. It has become a popular form of entertainment. Until recently, purchasing a lottery ticket online was deemed illegal and unacceptable. This changed in 2011. Keep reading to find out all about online lotteries. Before we get there, let us take a quick look at how things worked until the online purchase of lottery tickets were made possible.
New Hampshire was the first US state to sell lottery tickets in 1964. This was known as the New Hampshire lottery and the results were based on a horse race. New York quickly followed behind. In 1982, the world’s first multi-jurisdiction lotto game came into existence set up by Canada’s Inter-provincial lottery corporation and GTECH. The states began setting up lotteries one after the other, eventually leading to a large system of regulated offline and online gambling and sales of lottery tickets. There are forty-four states in the US that at present have their own state-run lotteries. Apart from this, there are also few multi-state and multi-jurisdiction lottery tickets that can be bought. Each state has its own set of rules with regard to the purchase and sales of lottery tickets. Most require the physical presence of the buyer for the ticket to be valid, this also apply to lottery ticket agents who act as custodians on behalf of their online users.
The Federal Wire Act
The Federal Wire Act was introduced in 1961 by the Congress to help states enforce strict laws on gambling and aimed to reduce gambling activities. The stated that any person engaged in betting or wagering cannot use wire transfer to buy tickets online – especially, inter-state tickets sales was punishable by fine or imprisonment.
The statue gave rise to various interpretations of what was allowed and not allowed under this act. In 2009, an amendment was introduced to the federal act that increased the use of the internet for lotteries. But the drastic change came in 2011 when a clarification from the Justice Department on the Federal Wire Act paved way for online transactions. This thirteen-page document shared with the public explained that the original intent of the Act was to ban and restrict certain types of business in the US among which were betting, wagering and gambling. But the current legal opinion states that any interstate wire communication for betting or wagering that is not connected to a sports event, such as a lottery draw, is considered to be outside the ambit of the Federal Wire Act. On this basis many of the online lottery websites chose operate.
More and more states are now transitioning to online sales of lottery tickets. This has increased the number of people investing in the lottery. Illinois, the first state to set up online sales of lottery tickets reported a sales of $425,000 in the first week.
Purchasing lottery tickets online
There are very few states that sell online tickets at the moment. Illinois, Georgia, New Hampshire, Kentucky, Virginia, Michigan, and Pennsylvania have official online state regulated websites for ticket sales. Minnesota was among the early states to set up online sales of tickets. However, the state in 2015 voted online lottery to be illegal. The states’ official lottery websites sell both single state and multi-state lottery tickets. However, this may be subject to the state laws and may change or evolve constantly. There are many lottery websites that offer interesting and cheap and/or free offers. The legitimacy of these websites is questionable. Knowing that, I try to cover and review as many of these sites in my free time – see the complete list of online lottery websites here – and eventually list theme by relevancy in a toplist. The physical absence of the buyer in online purchases makes it easier for online scammers to take advantage of naive or ignorant buyers (this is explained in detail below). It is always advisable to only purchase lottery tickets from the official state lottery website or state regulated websites.
Multi-state lotteries are governed by the Multi-State Lottery Association. This is a non-profit government-benefit association that is owned and operated by its thirty-six members. Each member provides one or more games that are administered by the multi-state association. The profits from these games are retained and used to fund projects approved by the legislature. Some of the popular games include Powerball, Lotto America, Megahits, All or nothing and Powerball Instant Millionaire. Multi-state lotteries allow states to expand their sales beyond one state. This works well for both parties – the buyer, who now has access to more options and the state that makes more revenue.
Although the direct online purchase of tickets is limited to certain states, most states also allow for online lottery subscriptions that people can sign up for via their state’s official lottery website. This essentially means that the buying of lottery tickets become mechanized and recurring. A subscription also allows the leisure of choosing numbers beforehand. The lottery ticket will be purchased automatically through the subscription and will compare the pre-selected numbers with the winning numbers. If someone wins this lottery, instructions for claiming this money will be shared. Therefore, an online subscription is a good alternative option for those who hail from states that do not allow online purchase of tickets. The negative side to this is that one cannot choose to buy selected tickets at different times online. It will depend on the subscription and is limited to the tickets that fall under the chosen subscription. It is for the buyers to decide what works best for them.
Understanding the legalities of lottery purchase
As mentioned above, there are many websites that sell lottery tickets online. But, most have turned out to be fraudulent and illegal. The few states that do allow online purchase have official websites. It is highly recommended that buyers purchase from these websites alone. Many multi-state lotteries and national lotteries (Such as Powerball) do not allow the purchase of tickets online. As of 2016, only the states of Georgia and Illinois allowed the online purchase. Even in these cases, it is required that the buyer be a resident of the state and be present physically in the state boundaries while clicking on the purchase of tickets. While there are no clearly mentioned restrictions on a person driving to a state to purchase lottery tickets, the law states that tickets bought in one state should not travel across state boundaries. Federal law also does not allow reselling of lottery tickets. With an increase in demand and increase in chaos for the purchase of lottery tickets, there are many organizations and individuals who claim to play the role of a middleman and promise to purchase tickets on the buyer’s behalf, especially for buying a ticket from another state online. This is a red flag. Most often, the self-proclaimed sales agents operate illegally and do not carry a valid license. Similarly, it is important to note that online gambling is not the same as purchasing lottery tickets. Online gambling through virtual casinos is illegal in the United States. Therefore, wagering and betting on the winning tickets is prohibited. In other instances, organizations operate as service agents who will buy a ticket online on the buyer’s behalf and hold onto to it until the winnings are announced. There is a service charge to be paid for this. The legalities around offering such a service are still in debate. Most states do not agree that retailers can act as service agents while others say that there are no laws being broken. Because this is an issue in which opinions and arguments vary from state to state, it is advisable that buyers take utmost caution while purchasing lottery tickets online.
For the buyer to know
Buyers who actively participate in lottery games come from every walk of life. Although studies have shown that the poor people on an average spend more money on lottery tickets and gambling, economic status is not a perfect determinant to categorize buyers. In fact, a study conducted showed that 53% of the survey respondents who reported to have bought a ticket in 2016, fell in the bracket of those who made above $90,000. On the other hand, studies have also shown that as a population, lower income earners spent more than twice as much as their counterparts.
State laws vary on the eligibility and prerequisites of the buyer for the lottery ticket to be considered valid. For almost all the states the buyer should be eighteen years of age and above to legally purchase a ticket. In Arizona and Iowa, the buyer must be twenty-one years of age. In few states, anyone who meets the legal age can buy a lottery ticket and gift it to a young person. In this case, if the minor wins, the winning money can be transferred to the bank account of the parent or guardian. The guardian must also be present to collect the winnings and sign on the behalf of the minor. However, this is generally advised against.
The purchase of lottery tickets for bigger games such as the Powerball and the Mega Millions is not limited to US citizens and US residents alone. A foreign national can buy tickets provided they are willing to travel to the relevant state to collect their prize money. For other games, the buyer should confirm with the state laws. Those who are not residents of the United States will have to be physically present in the country to purchase tickets. It is illegal to hire an agent on the buyer’s behalf to physically purchase the ticket for the buyer. Here as well, laws are not consistent in every state. It is suggested that the buyer consults with a lawyer about the state and country laws before investing in the lottery tickets.
Paying for lottery tickets – States encourage the buyers to buy their tickets in person, in cash. There are websites that allow for payments of tickets through cards and/or other means. But buyers must note that they are purchasing the tickets at their own risk if bought via cards or other means of payments. Purchase through credit cards is banned in most states. And if the states have not banned it, they have allowed the banks to have the right to ban the purchase of lottery tickets through credit cards. The banks make this decision based on the customer’s credibility and financial background. As of January 2018, 20 states allow the purchase of lottery tickets via credit cards. Among these states, seven of them have given the right of decision to the retailers. For example, in Connecticut, credit card purchase is not allowed. In Tennessee and South Carolina, only cash payment is accepted. In other states, the law leaves it up to the retailers.
These steps with regard to payments laws taken by the state help control addiction to gambling and/or purchase of lottery tickets. It is a way to ensure that people are not buying lottery tickets unless they have the financial capacity for the purchase. Thus controlling and prohibiting the use of credit cards especially can help compulsive gamblers and those with poor financial self-control from accumulating massive debts.
Thus, the buyers should check with their state’s official lottery website for the payment rules. And if purchasing online or even in retail stores, should avoid credit card purchases.
Lottery winners must know
Although thousands of people play the lottery games every year, we are all aware that not everyone wins the big jackpot. One of the biggest mistake that most buyers do is not consulting with a lawyer. It is important to understand all the implications and risks of investing in a lottery ticket before purchasing. This means, being aware of the processes and tax policies associated with lotteries. Read below for some of the basic yet important things that you should keep in mind as a potential lottery winner.
When the winning ticket is announced, the winner is given the option of collecting the entire money at once or collecting it as an annuity. In an annuity, the money collected will be spread out over a few years. The money collected over years may change over the years if the tax percentage changes over time. The prize money from a lottery is treated as an income and thus is taxable. A certain sum of the money will be held back as part of the federal tax by the government. The winners are legally bound to pay this tax to the IRS. Winners of the Powerball or Mega Millions jackpot (multi-state and national games) are taxed at the highest income bracket. This is for jackpot winners. For others, the tax payable is dependent on the money won and the tax laws of the state. For example, this rate is lowest for New Jersey at 3% and the highest is for New York, which is at 8.89%. The winners of smaller lotteries can collect their money by contacting the state lottery commission. Each state has its own set of rules for claiming. In certain states, small amounts can be collected at retail stores directly as cash whereas, in other states, the amount has to be transferred into a bank account.
If the winner of the lottery is a not a US citizen or a US resident, then the federal tax amount that will be held back will be 5% more. While for residents the taxable amount is usually 25% of the prize money, for foreign nationals and foreign residents it is 30%. This will also apply to immigrant lottery winners. There have been cases where illegal immigrants have won and successfully collected their prize money. But, this may expose the winner to authorities and most likely lead to deportation. Winning the prize money does not mean the individual can automatically acquire legal status. Though the winner may still be handed over the prize money. The state laws vary from case to case for situations such as these. There are recorded instances where someone who is an illegal immigrant has faced deportation while collecting the prize money. Winning the lottery money also cannot guarantee a green card for immigrants. The winner will still have to complete all the procedures required to apply for a green card including becoming a permanent resident of the country.
All of the above-discussed information pertains to cash lottery wins. What happens if the lucky person wins something in kind? There are many lotteries and raffles that offer items such as a car for the winning prize. Let us take this example and look at the options that a lottery or raffle winner can consider. The prize object (in this case, a car) is still treated as taxable income. The winner will have to pay taxes on the fair market value of the car. This can often be burdensome on the winner. Therefore, all of the possible options must be considered before deciding to keep the car. If the decision is to keep the car, then the payment can be made to the IRS as per the tax payable. A suggested option is to sell the car and use this amount to pay the tax. The difference amount can be kept as the actual winnings. But, in this scenario, if the car is sold at a prize more than the market value, then the amount payable will be calculated on the sales, thus increasing the taxes. It should also be noted that of the winning care comes with prepaid taxes offered, then the tax payable will be the market value of the car plus the tax sum received. Keeping all the above points in mind, it is generally advisable to not purchase lottery tickets where the prize is offered in kind.
Apart from all of this, the most important thing for a lottery winner to know is that every lottery ticket, big or small, has an expiration date. According to Brett Jackson a lottery expert, billions of dollars go unclaimed in lottery prizes every year. This unclaimed money either goes back into the state’s lottery pool or is turned over to the attorney general. In 2015, a total of 114 winning tickets worth around $1 million dollars went unclaimed. This seems to be because of two reasons. One is that those eyeing for a big prize money do not check if they have won the secondary prize or any of the other smaller prizes once the winner is announced. The other reason is that people are not aware that there is a time limit within which tickets can be redeemed. This period is longer for the jackpot winners and shorter for others. This deadline is set by the state law. The set time limit can range from 90 days to 365 days. For few tickets, the deadline is one year from the date the ticket was drawn and for others, it may be from the date the winning ticket was announced. This should also be checked. As soon as the ticket is bought, the buyer should check the lottery ticket. Most tickets have the expiration dates printed on the back. If there is no printed date, this information can be found on the state’s official lottery website. The tickets also cannot be redeemed if they are lost. It is important to only keep the ticket safe but to redeem it on time.
Thus, it is not enough to purchase a ticket a wait it out till you are announced a winner. A lottery jackpot winner must know the legal and tax policies of the state and make relevant decisions after consulting with an attorney.
Being an anonymous lottery winner
During a record-breaking Powerball jackpot of 2016, opinion polls asked the public what they would do if they won the jackpot money. The most common response was “I would keep it a secret”.
As opposed to the opinion polls, while collecting the money, most lotteries require that the jackpot winner collects the money publically as per the state laws where the ticket was purchased. In few of the lottery games, it is required that the basic information such as name, city and the prize money for all the winners is announced, not just for the jackpot winners. This is because the lotteries want to be as transparent as possible to the public. It also adds value to the lotteries if they show that anyone irrespective of their background, economic status, gender, educational qualification or social status can win lotteries and even jackpots worth millions of dollars. This generates more interest from the people and increases their trust to invest in lotteries. Sharing the names of winners allows people to believe that anyone can win the lottery. The stories of people from the farthest corner of life winning the jackpot increases the demand and sales of the lottery tickets each year. Very few lotteries allow big ticket winners to claim the money anonymously. Some of the states that allow winners to remain anonymous are Kansan, Maryland, Ohio, North Dakota, South Carolina and Delaware (this list if from 2016 and states may have been added or removed from this list.) This complete list and details can be found on the each state’s official lottery website. The buyer can also contact the state’s lottery commission for this information.
Because there is a certain level of risk attached with the world knowing that the winner has a lot of money in possession, winners often feel very strongly about remaining anonymous in order to protect themselves and their families from any potential danger or financial scams. So, although most states require that details of the winner be shared, there are strategies that allow the money to be claimed anonymously. In July 2016, the winner of the big lottery was able to claim the prize anonymously by doing in the name of a trust. This was facilitated by a law firm. Thus, one of the best ways to claim prize money while protecting the winner’s identity is through a legal entity. This legal entity can help receive the money on the winner’s behalf. The winner can also consult a lawyer and create a legal entity for this purpose. This way, as per state laws the details of the winner, that is the legal entity, is still announced to the public while the identity and details of the winning person remain hidden from the public
The two cases above reflect that being anonymous is a choice made by the winner. In the first story, Wancyk did not want to remain anonymous because she believed that her identity will be revealed anyway and the quicker things got over with, the better. But like the second story, if a winner feels strongly about remaining anonymous, it is possible to devise strategies to achieve this.
Tips and things to remember
Whether you are a buyer waiting for the ticket numbers to be called or you are a winner getting ready to go claim the prize, there are
- Scams are aplenty. Ensure to purchase from authorized retailers or a top tier and well named lottery agent website. Consider making a decision by consulting the state’s official lottery website. If you have won, immediately consult a lawyer.
- Do not purchase a ticket without making sure you are eligible to buy, to claim and ensure that you meet all legal requirements. This can be found on the website or at the state lottery commission.
- As soon as the ticket is bought, sign it and keep it with you at all times. If the ticket is lost and someone else gets their hands on it, they will be able to claim the prize.
- Do not purchase lottery tickets via credit cards.
- Each state may have a different process for claiming. Contact the state lottery commission for procedure and processes.
- Decide beforehand if you want the payment to be in lump sum or over a few years. Make a plan accordingly.
- Present the winning ticket at an authorized lottery payment location only. A smaller amount may be paid directly in cash. For larger sums, the prize money will be transferred to the bank account within 5 business days.
- Tickets can be claimed anonymously. There are examples of how different winners chose to stay anonymous. These stories can be found above. Consult with your lawyer for more details on how this can be done.
- Keep in mind, the lottery prize money is a taxable income. Report it in your taxes and pay the required tax amount.
- Most of important of all, remember to check personal finances, plan this strategically and do not to get swept up in the hype of it all.