A major component of playing the Mega Millions, Powerball, or another multi-state lottery is anxiously awaiting the lucky number drawings to see if you’re a big winner. In fact, many would argue that this is the only component that actually matters.
Even then, the jackpot can go unclaimed — even if there is a winning ticket out there somewhere. So what exactly happens if that’s the case? And what do states do with the money?
How Long Do You Have to Claim a Lottery Ticket?
Since each state has its own jurisdiction surrounding when a winner must claim a winning ticket, there is no clear-cut answer here.
You’d need to look at your own individual state’s rules. But as a general rule of thumb, a winning ticket typically expires 90 days to one year after the winning drawing date.
But if you just won a mega millions jackpot, or if you’re holding the winning Powerball ticket in your hand, we’d like to think that you’re going to be cashing that in much sooner than either of those dates.
How Do You Claim a Winning Ticket?
To claim your winning jackpot or any prize over $5,000 on a scratch ticket or numbers game, you’ll need to mail your ticket to your state’s lottery offices or go to the lottery office in person. If you’re one of the jackpot winners, it’s a much better idea to take your ticket in person. Be sure to sign your winning ticket so no one else can redeem it.
You’ll then need to file a claim form to decide how you want to receive your payments. You can either get your payments via a single lump sum all at once or via annual annuity payments. Each option has pros and cons, but both are subject to around 24% tax withholding from the state.
You can generally expect to receive your lotto prize money within six to eight weeks. Some states allow you to direct deposit funds into your bank account, but others will mail you a check that you can then cash.
Where Do Unclaimed Winnings Go?
While it’s even rarer than the actual odds of winning the lottery, a winning ticket may go unclaimed. The largest unclaimed prize was a 2011 Mega Millions winner in Georgia who would have won $77 million if they had claimed their ticket within the allotted time.
So where did all of that money go? If a lottery prize goes unclaimed, each participating state will get the money back that they contributed. States can use this money for different purposes, but it almost always goes back into the lottery fund to help monetize future jackpots and lotteries.
Note that unclaimed winnings are different from there just being no winner at all. An unclaimed winning means that a lottery retailer distributed a winning ticket, but the ticket holder never actually claimed their prize. If no winning ticket was ever sold, the jackpot just increases for the next drawing based on how much money was spent by players in the participating state.
How Do We Know a Winning Ticket Was Issued?
Every time a lottery retailer gives out a ticket, the set of numbers issued is kept in a secure computer database run by the Multi-State Lottery Association. These are the people responsible for the Powerball and Mega Millions.
When the drawings occur each week, the numbers drawn are matched with every ticket in the system. Since you don’t need to give any personal information to get a lotto ticket, no one will know who actually won the ticket until you claim it. But even then, if your state allows anonymity, we may never know who won the giant jackpot.
What Happens If the Winning Ticket Is Lost?
Mega Millions and Powerball are not responsible for lost or stolen tickets. So if you are holding a winning ticket in your hand, be sure to guard it with your life. Also, sign the back of your ticket — if someone else finds an unsigned ticket, they can collect the prize instead.
While you cannot submit a copy of the original ticket to claim your prize, it is still a good idea to copy your ticket so you can send those to your lawyers and attorneys. Additionally, be sure you don’t post a picture of your winning ticket on social media, as this can potentially put your safety at risk.
What Do States Do With Lottery Money?
Every state lottery has the choice to do whatever they want with the money they make from their games. But more often than not, states will use these funds to improve public education, homelessness, infrastructure, and gambling addiction support centers.
Additionally, a large chunk of the prize pool is used to pay for retailer commissions off of winning tickets, vendor fees, and state beneficiaries.
So even if you don’t win big, you can still find some solace in knowing that your lottery money is always going to the greater good of the state in which you play. Of course, it’s a nice bonus if you hit the jackpot.
What Should You Do If You Win the Lottery?
If you defy the odds and win the jackpot, let us be the first to say congratulations! This is an extremely exciting opportunity that can exceedingly change your life. But there are a few housekeeping activities you need to do before you get your hands on that cash.
First, don’t start telling everyone you know right away – craft out a plan for how you’ll let your family and friends know. It’s a harsh reality, but money changes people. If your friends know that you now have so much money on you, they might start to treat you differently.
Next, make copies of the ticket that you’ll be able to send to your lawyers and accountants. Then, sign the back of your winning ticket so no one else can redeem it on your behalf.
You also want to be prepared for media buzz. With the exceptions of South Carolina, Delaware, Texas, and Maryland, every state requires you to put your name in the public record if you win the lottery. That means reporters will be at your door to get you to speak about your win. This is when it’s important to have an attorney to guide you through this process seamlessly.
If you win the jackpot, we highly recommend taking your ticket in person to a lottery office in your state. This is the safest way to file your claim form to receive your funds.
This is when you’ll choose between lump sum payments or annuity payments. With a lump sum, you’ll receive the entirety of your prize (minus taxes) in one fell swoop. While this guarantees you’ll have access to all of your winnings, it does open up the risk that you’ll be irresponsible with your money and spend it too quickly.
With annuity payments, you’ll receive 30 graduated payments annually rather than all at once. This allows you to better plan your money and invest accordingly, but it’s also possible that you might die before you see the entirety of your sum. We recommend hiring a financial advisor to help you make this decision.
In Conclusion
If you win the lottery, the first thing you’ll want to do is get your money as fast as possible. But believe it or not, there are times when lottery winnings go unclaimed. In most cases, you have between 90 days and a year to cash in your ticket, depending on the state you live in.
However, the unclaimed prize money is returned to the participating states if a prize is not claimed within that window. They can then use these monies to fund infrastructure or other beneficiaries – though most states just add it to the lottery funds.
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