Do Lottery Winners Go Broke?

Winning the lottery may seem like a dream. You would never need to work again or worry about money, and you could buy anything you wanted without so much as breaking a sweat. But many winners, in fact, handle money poorly and ignore financial advice.

Many lottery winners do go broke. Due to irresponsible spending or bad financial habits or family and friends asking for money, winners can lose money fast. However, this doesn’t apply to every winner, and some have done really well with the money they earned.

Read on to learn more about why winners go broke, what they buy, if the amount they win matters, and smart financial decisions to make if you ever get lucky. Also included is a list of people who did go broke, as well as a couple of people who didn’t.

Why Lottery Winners Often Go Broke


Lottery winners who run out of money typically do so in three to five years after they win- though it depends on the sum they receive. There’s a variety of reasons, though the outcome is usually pretty similar: nothing left or needing to declare bankruptcy. This isn’t just a one-off, either. Here’s a list of 20 winners who “lost every penny.”

While there is a rumor that about 70% of people who won later run out of money, a report on the matter declared this fact unreliable. However, it can be seen that plenty of people do fulfill this prophecy.

Winners might spend it all on luxury cars, houses, and vacations, before realizing that their seemingly endless supply of money is finite after all. Or, convinced of their innate good luck, they might gamble it away in casinos or more lottery tickets. They might invest it all in one place, and watch it drain away as a company or corporation fails.

What Winners Buy First


According to this article in Business Insider, winners can choose to buy all sorts of random things, including a water park, a wrestling show, or even donate to a political party. Winning the lottery means you can indulge in your fantasies, no matter the cost.

However, the most common purchases are what you might expect. The Guardian, which collected data from UK winners of the National Lottery, found that property was the most common, followed by insurance and gifts to family and friends.

Family and Friends


Winners also face a difficult dilemma after collecting their money. Do they say “no” to their loved ones asking for a handout, or do they oblige, and give in to the torrent of acquaintances who come running to them after the news breaks?

It’s difficult to turn away from pleas from loved ones, and many winners do, in fact, share their earnings. However, this means that money will quickly slip away, further causing financial strain down the road. Older winners often put away investments or funds for kids, meaning that while they end up losing money, it can still stay in the family.

In a couple of scenarios, a winner promises to split any earnings with friends and gets sued if they don’t. For example, this happened to Americo Lopes, who was reported to have won $38.5 million from the lottery. He and five other friends, who all worked in construction, pooled their money regularly to play the lottery. Lopes bought the tickets.

However, when he won, he didn’t tell anyone, just quit his job, and told his friends it was because he needed surgery. When his friends found out, they took him to court and were able to get promised shares of the money, despite largely circumstantial evidence.

Plenty of winners get sued since splitting up money between ex-spouses or children can get tricky. Between court fines and settling payments, the cash can disappear quickly.

What About Smaller Lotteries?


A study investigated people who have won smaller lump sums in lotteries, from about $50,000 to $150,000. The results concluded that the sum of money, which would be a fantastic asset to most working Americans, only postponed bankruptcy rather than avoiding it altogether.

Additionally, since the money may seem like a huge sum at the moment, it can lead to a higher rate of spending, just as seen in larger lottery winners. However, in truth, a couple hundred thousand will only last a few years even with normal spending, provided no other income is flowing in.

Winners Who Went Broke


Unfortunately, there are many tales of lottery winners who spent too much too fast and ruined their lives by going broke. Here are a few of the most tragic stories.

  1. William Post: After winning $16.2 million in his home state of Pennsylvania, Post lost all his money a year after, even dipping into debt. He was sued by an ex-girlfriend for a third of his money and even survived an attempted murder by his brother, who was hoping to claim the rest of it. Post lived paycheck to paycheck before winning, and after all was said and done, lived on food stamps until his eventual, early death.
  2. Sharon Tirabassi: A single mother living in Canada, Tirabassi won about $10 million (in Canadian dollars) from the Ontario lottery. However, after a decade of lavish spending on cars, expensive vacations, and houses, she was back to her original state of living without any luxury. Tirabassi did put away some of the money for her children and doesn’t have many regrets about using the money for personal enjoyment.
  3. Jack Whittaker: Once a well-off, corporate man, Whittaker spiraled downhill once he won a $314 million jackpot off a Quick Pick ticket. After donating some of his money to Christian charities, Whittaker began frequenting casinos and gambling (and losing) huge sums of money. His house, which was uninsured, caught on fire, just as a woman began a lawsuit against him. Additionally, Whittaker had to fend off thieves that broke into his cars to search for money.
  4. Michael Carroll: A young kid from the UK, Carroll came into a few billion pounds by winning a lottery jackpot. With a tumultuous childhood, Carroll didn’t have much financial skill and ended up blowing his fortune on lavish parties, paying off blackmailers, and giving to his friends and family. Like Tirabassi, however, he didn’t voice any regrets about how he spent his money.

How to Avoid Going Broke


The issue of lottery winners going broke isn’t that there are no guidelines to follow about finances - there’s plenty of financial experts that are willing to share their tips and tricks. The issue is that many winners throw caution to the wind and ignore any practical advice from knowledgeable people.

Here’s some advice from a few experts on what to do if you win the lottery. Listen up!

  1. Don’t take the lump sum. While opinions on this may differ, Shark Tank judge Mark Cuban advises taking the annuity payments (more on this later), which doles out money over the years. This way, you avoid blowing all your winnings at once, and can better avoid cash-hungry relatives.

  2. If the sum is big, avoid investments. If you’re not a smart and avid investor before the lottery, you won’t be after. If the sum is big enough to live off, you don’t need to take the risk of investing it, unless you’re really sure of what you’re doing. However, if you win a couple hundred thousand, and are confident in your abilities, go ahead and put it in a mutual fund.

  3. Take a breath. Farnoosh Torabi, host of the podcast “So Money,” implores people not to spend right away. Figure out what you really want to do with your money, and take the time to budget it out. The most successful winners carefully thought through and planned out what they were going to do with their money.

    Since most lotteries allow you to wait up to a year before claiming the prize, you might want to assemble financial planners, create a new bank account, or write out exactly when and where you want to spend your money before you even claim your prize. This way, it’s easier to avoid poor choices or impulse buys.

  4. Don’t tell everyone. While it may be tempting to broadcast the good news to all your friends and family, this can be a direct cause of the same people showing up at your door, or making you a target for theft. In this same vein, avoid talking to the press until after the cash is safely in your bank account. If you do talk to the media, be wary of giving out personal details.

  5. Prepare yourself emotionally. While this step is less straightforward, it’s important to remember that winning can create as many problems as solutions in your life. Most people report not much change in their happiness levels, and the stress of media or pressure from outside to share the wealth may take its toll on you. Make sure to prioritize your mental well-being.

Annuity vs. Lump Sum: Which Is Better for Saving?

Annuity vs Lump Sum

Winners do get to choose how they receive the money- either as a lump sum or in annual payments, called “annuity.” What’s the difference? And is one a better financial choice?

Lump Sum

Lump Sum

Lump sums are pretty much self-explanatory. Winners get their money all at once, after a huge tax cut from the state. The tax cut is sometimes up to 30% or 40% of the winnings, meaning that the advertised amount of money in the jackpot isn’t the amount that you’ll receive.

Since most winners choose the whole lot at once, the state makes more at once than they would if everyone chose smaller annual payments. Luckily for them, many lottery winners find the lump sum option appealing.

However, with lump sums, it’s much easier to spend all the cash at once, and then you have none left. Winners have to rely on their own self-regulation (or lack thereof) to avoid losing all their money within a few months or years.

Sometimes, as an article in The Balance explains, financial managers will push for people to take the lump sum, and pay for it to be invested. While this can be smart, it still requires a good amount of self-discipline and a willingness to pay someone to manage your investment.



This option involves smaller payouts, usually yearly. While it means that tax rates can fluctuate, it also helps to keep winners in a steady stream of cash flow. Since annuity agreements are inflexible and binding, there’s no way to blow all the money at once. Additionally, it’s contractual, meaning that you are promised to get your yearly payments no matter what.

For example, Powerball offers twenty-nine annuity payments for over thirty years. Similarly, Mega Millions offers either annuity over 29 years, with one large initial payment at the time of the win. Some annuity agreements increase the amount you’re paid over time by a few percent, meaning you slowly get more at once. Additionally, some lotteries allow you to keep more of the jackpot, while you only get a piece of it with a lump sum.

Lastly, since winners have to fend off cash-hungry relatives, an annuity can also be a good deterrent, since you literally don’t have enough to pay everyone all at once. This may be another step towards cash security since many lottery winners are sucked dry by family and friends. If you only receive a couple hundred thousand a year, you cannot hand out millions at a time to your loved ones. While this may seem greedy, it will most likely help you in the long run.

Lottery Winners That Didn’t Go Broke

Thumbs up

Just because headlines pick the lottery winners that hit rock bottom doesn’t mean that all of them run out of cash. There are plenty of winners who were smart with their money or put their winnings towards a good cause.

  1. Brad Duke: A cycling enthusiast from Star, Idaho, won $22 million from Powerball in 2005. In an interview with NPR News in 2016, he explained that he actually let his money sit for a couple of years before buying anything.

    At that time, he realized he didn’t really want to go on a spending spree, and would rather save his money. Though he did cave to buying a few high-caliber mountain bikes, Duke never bought enough luxury items that depleted his money, and he kept his head on his shoulders.

  2. Jim and Carolyn McCullar: In 2011, this elderly couple won $380 million in the Mega Millions lottery. Though Jim jokingly handed the check directly to his wife, the money-handler in the family, the couple later decided to make a plan to support their kids and 23 grandkids, so everyone could have a share and live relatively comfortably.

Good Causes


While lottery earnings may not have lasted these winners for a lifetime, they did put their money towards helping other people in productive ways.

  1. Letting kids be kids. Les Robins, who won a staggering $111 million in 1993, founded Camp Winnegator, for kids who had little access to the outdoors to enjoy camping, swimming, and horseback riding- all activities that he loved in his childhood. The camp only lasted for a couple of decades but left memories to last a lifetime in the minds of many young children.
  2. The Legacy of Angels. Paul and Sue Rosenau won $181.2 million on a Powerball ticket in 2008. They used the money to start a charity to support research for a little-known disease that killed their granddaughter, called Krabbe disease. They named the foundation “The Legacy of Angels.” The charity also specializes in cystic fibrosis, another disease that drastically shortens the lifespan of affected kids.
  3. Fighting cancer: When Jim Crist won $40 million in a Canadian lottery, he immediately turned around and donated the entire lump sum. Since he and his kids were comfortable financially, Crist wanted to help in the fight against cancer, as cancer was what took his wife, Jan’s life. Since the Canadian lottery rules don’t include a tax, Crist was able to give all the money directly to a good cause.


It’s true that there are plenty of cautionary tales of lottery winners going broke. From parties to personal tragedy, to lawsuits, many winners find themselves strapped for cash just years after coming into their windfall.

Financial experts say to avoid impulse buys, not to advertise your win, and to take annuity payments over a few years if you’re not comfortable with investing or dealing with large sums of cash.

The people that were patient and planned out ways to deal with their money did much better than those who ignored this advice. Additionally, a couple of kind-hearted winners set up foundations or charities to help their communities or the public.

If you win the lottery, be careful and contact a financial advisor before acting on your impulses. We have a full guide for lottery winners, make sure to check that out, it can help you avoid financial disaster.

Now, all you have to do is buy the winning ticket!