Illinois lottery defers paying jackpots

It's due to the ongoing fiscal crisis here in the state. Had I known this two weeks ago, I would not have purchased an online subscription. Oh there was no deferring THAT payment as they wanted the money up front. Would be just my luck after 40 years to finally win it and then have to wait.
The comptroller claims prizes (over $25,000) can't be paid to winners until a new budget is passed. One would think this would be a separate entity, that since they take in much more than they pay out, that it wouldn't be a problem. But it is.

Tim

I'm guessing this will hurt their ticket sales.

The Illinois Lottery is supposed to be a state agency. (Link)

I don't know if similar lotteries are state agencies in other states. I know if I won a huge lottery, I would now think about taking the lump sum instead of taking it out over a 20 to 30 year period. I can see in a crisis where the state will take your money and maybe not pay you for a very long time. God forbid if the same state has to declare bankruptcy.

I saw that article and was quite surprised as well. I also thought about what RM said, IL. is in pretty bad shape financially as it is.


"God forbid if the same state has to declare bankruptcy. "

That would be an interesting situation. I'm pretty sure of onne thing, if the lottery didn't pay, I doubt they'd ever sell another lottery ticket and that would be a HUGE blow to the education system( I assume that is where lottery profits go).

As of now States cannot declare bankruptcy.

" . . . the federal bankruptcy code does not allow—and has never allowed—state governments to declare bankruptcy. Since 1937, the bankruptcy code has allowed ‘municipalities’ to declare bankruptcy. The term ‘municipality’ is defined in the bankruptcy code as a ‘political subdivision or public agency or instrumentality of a state.’ This definition is broad enough to include cities, counties, townships, school districts and public improvement districts. It also includes revenue-producing bodies that provide services which are paid for by users rather than by general taxes, such as bridge authorities, highway authorities and gas authorities. But it does not include state governments.
. . . The contracts clause of the U.S. Constitution prohibits state governments from ‘impairing the obligation of contracts.’ As originally understood and enforced, this clause prohibited state legislatures from passing any laws to relieve either private debt or the state government's own debt. Beginning in 1934, however, the Supreme Court began to interpret the contracts clause more flexibly and not as an absolute bar to state debt relief laws. Even under the flexible modern approach, however, the Supreme Court in 1977 reiterated that ‘a state cannot refuse to meet its legitimate financial obligations simply because it would prefer to spend the money (on something else.)’ Thus, were Congress to amend the federal bankruptcy code to authorize states to repudiate debt, the Supreme Court would then need to decide the novel constitutional question of whether such debt repudiation would nonetheless violate the contracts clause of Article I, Section 10."
Ref: The Council of State Governments

DonDiego does not know whether the State Agency responsible for administration of the lottery can declare bankruptcy.

Nonetheless, DonDiego concurs with Roulette Man that in the event of a financial crisis The State will grab whatever funds it thinks it can get away with grabbing. This is not limited to the 50 states; there is already speculation that in the event of a financial catastrophe, f'rinstance, the Federal Government might seize funds in IRAs or designate that all such monies must be invested in Government bonds. Desperate times demand desperate solutions.

Each State designates how the lottery "profits' are to be spent.

States can spend the money however they choose. Illinois chooses to spend it on the state's Common School Fund.

"Some states (about 16) designate lottery profits for schools and education, about thirteen states distribute profit to the general fund, or a fund for economic development, such as highway construction, in support of stadium authorities. A few states designate lottery revenues to fund various general environmental activities."
Ref: encyclopedia.com

Pennsylvania designates most of the monies to be spent on helping the elderly, and a portion to be spent on fighting illegal gambling.

In reality, most of the "funds" generated by the lotteries are nothing more than another source of income for the grafting thieves who run the lotteries. Kind of reminds one of our Social Security system that our government has vandalized for years.

Interesting, I thought most went to education, thanks for posting this, learned something new today.
I found Pa.'s use of some of the money to fight illegal gambling kind of odd. Illegal gambling, Really? Sounds more a skimming deal to me.

I would sue the state. Starting at 100X what ever the winnings are.

For the big wins there are supposed to have an escrow account set aside.

Lottery sales never help any one state program like education. It's an old political trick, even if the proceeds go directly to a program the legislature simultaneously cuts the program from the general fund. It's like tipping the dealers at the Wynn, you think you're helping the dealers out but Steve Wynn compensates by paying them less than minimum wage. Then at some point he'll just grab the money outright.