Lottery payouts

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Lottery payouts are the way lottery winnings are distributed. Typically, lotteries pay out around 50–70% of stakes (turnover) back to players. The remainder is then kept for administration costs and charitable donations or tax revenues. In gambling terminology lottery payouts are the equivalent of RTP or returns to players. The lottery operator's gross margin is the opposite of RTP.

Actual payouts after a draw will vary to what payouts are advertised before a draw, depending on whether the jackpot is hit or not. Typically jackpot amounts that are not hit or paid out are then rolled over to the next draw. In this sense, typical RTP or returns to player percentages will vary with the size of the jackpot. It can happen that after several rollovers, a jackpot becomes that large that there is real 'positive RTP; with a lottery ticket, i.e. if you were to buy every single ticket you would make a profit after your ticket costs. This will of course also depend on your chances of sharing or not sharing the jackpot with another player, any taxes payable plus whether you are taking the cash or annuity option or not (as available).

In the US, large lottery winnings generally are advertised as an annuity amount, paid in 20 or more installments; in most cases, a cash option is available. The cash option in the US can be 40–60% of the advertised annuity amount.

Legislation varies by US jurisdiction; many statutes specify a minimum payout percentage. To make lotteries competitive, some jurisdictions increase payout percentages versus those of a neighboring lottery. The percentage changes are likely due to competition from illegal numbers on daily numbers games.[1]

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  1. ^ Clotfelter, Charles (1991). Selling hope: state lotteries in America. Harvard University Press.