04 August 2023 , 11:10
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A scratch-off lottery winner has made a controversial choice by taking home less than his $5million (£4m) jackpot win.
Daniel Grijalva Esquivel, from Kansas City, won the New York scratch-off jackpot. While he won $5million, he ended up only taking home $3.2million (£2.5m) after making a choice many see as controversial.
When deciding how to claim his winnings, Mr Esquivel decided to go for a single lump sum payment. Usually, lump sum payments are smaller than the other option of annual lottery payouts.
If people choose annual payments, their payout is usually close to the advertised winnings. So, by taking his winnings in a lump sum, and not forgetting about taxes and fees, Mr Esquivel ended up with $3.2million instead of $5million.
Mr Esquivel won the New York Lottery's Cash X100 scratch-off game after buying a $20 (£16) ticket from a convenience store in Spring Valley, New York.
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Deciding whether to claim their winnings as a lump sum or an annuity is one of the first decisions a lottery winner has to make. One of the biggest selling points of annuity is the guaranteed income stream it provides for the next 30 years, and it offers peace of mind.
However, most winners choose the lump sum cash option. This is also considered income and therefore subject to Federal, State and local income taxes.
Mr Esquivel won the New York Lottery's Cash X100 scratch-off game (NY Lottery)Chicago-based lawyer Andrew Stoltman has represented several lottery winners throughout his career. He said taking the lump sum can be a "big mistake".
He explained that spreading out your payments gives you the opportunity to build an experienced team, including an accountant, financial adviser, and an attorney to protect the money and your interests.
"We lottery winners have the infrastructure in place to manage a lottery windfall," he said.
According to the New York Lottery the odds of winning the $5million stands at one in 4,498,390. However, the odds of winning your $20 back are just one in 10.
New York State claims to have the most profitable lottery in the US. In the 2021-2022 financial year, it contributed £3.6billion toward educational programmes.
This latest win comes after residents in Florida have managed to get their hands on their winnings after claiming they had been "held hostage" by local government.
A little-known law prevented lottery winners in Florida from collecting their prize money as the unemployment office, the Department of Economic Opportunity (DEO), kept winners from their money. One woman said she received a letter from the DEO saying she couldn't claim her prize as she had been overplayed in Covid unemployment benefits.
82-year-old Hilde McMillen worked at the Double Tree hotel, but during the Covid pandemic it shut its doors, leaving Ms McMillen needing to claim unemployment. After her big lottery win she was excited to get her hands on the money that could have had a huge impact on her life.
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But, she said: "They held me hostage from my own money. My $1,000 was sitting at the unemployment office and nobody did nothing."