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Pick
4 or Mega Millions
Lottery
Games in Virginia
When
a Chesapeake,
Va., woman won $400,000 in the Virginia
Lottery’s Weekly Grand Game recently, she probably
didn’t realize she was continuing an Old Dominion
tradition. Lotteries have a long, if not always
distinguished, history in the U.S. Like many other
firsts in the nation, the earliest lottery was held
to benefit Virginia.
When
the Virginia Company ran into financial trouble
supporting the Jamestown settlement, the king
authorized the company to conduct a lottery for one
year. The Virginia Company’s first lottery was
held in London on July 20, 1612 (“Adoption of
State Lotteries in the United States With a Closer
Look at Illinois,” Independent Review, Winter
2006). Three other lotteries were held in the 1620s
when the Virginia Company still failed to meet its
financial goals, but eventually the House of Commons
rescinded the company’s right to conduct
lotteries. In doing so, it cited mismanagement and
complaints that the lottery diverted money from
legitimate businesses.
Still,
lotteries, both private and public, thrived in
colonial America. Thomas Jefferson, at the age of
83, attempted to give away land through a lottery to
pay off $80,000 in debts. However, he failed to sell
enough tickets to remove the debt before he died in
1826.
Over
a 70-year period beginning in 1790, colleges such as
Harvard, Dartmouth, Yale and others benefited from
lotteries. In the early 1800s, lotteries were so
popular that eight states raised $66.4 million in
just one year – 1832. That sum was four times the
expenditure of the federal government that year
(“The Social and Economic Impact of State
Lotteries,” Annals of the American Academy of
Political and Social Science, July 1984).
However,
by the mid- to late-19th century, as corruption
seeped into more and more government-run lotteries,
with illegal schemes ranging from selling fake
tickets to fixing the winners, the institution was
abandoned. Louisiana’s state lottery, considered
one of the most corrupt, was the last to be shut
down in 1895. It would be 70 years before states
would again experiment with lotteries to improve
their bottom line.
New
Hampshire led the lottery renaissance in 1964. As
with many states at the time, NH relied heavily on
property taxes and excise taxes on liquor and
cigarettes for revenue. Lotteries, state officials
hoped, would help keep taxes lower, though some
critics argued that a lottery was a regressive tax
on the less wealthy, not a voluntary tax on “those
who choose to pay,” as Jefferson believed.
The
Virginia Lottery grew out of this resurgence,
although it wasn’t until 1987 that voters approved
a state-wide lottery. The first Virginia Lottery,
held in 1989, sold $409.1 million in tickets and
gave out $205.9 million in prizes. It also raised
$140.5 million for capital construction projects.
From 1990–98, proceeds from the lottery were
transferred to the state’s general fund. From 1999
on, they have been earmarked solely for educational
purposes.
In
2006, the Virginia lottery sold more than $1.3
billion in tickets, gave out $773.5 million in
prizes and raised $454 million for K-12 education
– 10 percent of the state funding. Over the years,
there have been some unusual lottery winners.
In
1992, an Australian group, led by professional
lottery whiz Stefan Mandel, bought 5.5 million of
the possible 7 million ticket combinations possible
and won the $27 million jackpot. In the three days
before the drawing, 20 representatives of the Lotto
Fund of Melbourne, Australia crisscrossed the state
snatching up as many of the tickets as possible. The
2,524 investors won $400 a year per each $3,000 unit
bought. Needless to say, Virginia tightened the
rules on block ticket purchases after that win
(“Jackpot! Australian Group Wins Virginia
Lottery,” People Weekly, April 6, 1992).
In
2004, a Virginia Beach woman, who had anonymously
donated a kidney to a man she didn’t know, won
half a million dollars. She was a cashier in the
gift shop on the Chesapeake Bay Bridge-Tunnel, and
she planned to use her windfall – $355,000 after
taxes – to buy her first home, plus a truck for
her husband, a car for herself, and help her
daughter return to college as well as fix the car of
the man who received kidney (“Kidney Donor Wins
$500,000 Lottery Prize: Virginia Woman Plans to Help
Kin, Organ Recipient,” Houston Chronicle, June 16,
2004).
Many
big money winners have to make tough decisions on
whether to take a lump sum payment or spread
payments over time. In 2000, the CEO of the Henrico
County Federal Credit Union won the $10.7 million
grand prize in the multi-state Lotto game. She
quickly discovered that her winnings would shrink to
$3.7 million if she took the lump sum. Twenty-eight
percent was held back for federal taxes and four
percent went to the state, but another $3.5 million
represented the interest that would have accrued if
the amount had been in U.S. Treasury bonds and paid
out over 26 years – the alternative to the
lump-sum disbursement. Still, many winners choose
the lump sum, believing they can make higher yield
investments, or perhaps they don’t want to bet on
their life span. (“Where Did All the Money Go?”
Credit Union Journal, November 2000).
Finally,
there are the cautionary tales. When a 24-year-old
won $4.3 million in the Virginia Lottery in 1992, he
already had a wild reputation. The money, which he
chose to take in 20 yearly payments of $220,000,
didn’t seem to change his ways. While he
generously donated to the local volunteer fire
department and rescue squad, and helped friends dig
out swimming pools and driveways, by 2003 he was in
jail, charged with attempting to kill a police
officer. Police had dragged him naked from his
pickup truck. “This man would have been better off
without the money, frankly,” said the Henry County
sheriff at the time. “It certainly didn’t help
him, I can tell you that.” (“Be Careful What You
Wish For; Lottery Win Exacerbated Va. Man’s
Troubles, Friends and Family Say,” The
Washington Post, June 26, 2003).
Still,
those scratch cards are tempting, aren’t they?
NEXT:
A Day’s Journey to the Courthouse: Virginia’s
Counties
--
May 28, 2007
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