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Friday, February 7, 1997

Lotto offering 'lump sum' prizes next week

By MICHAEL HOLMES Associated Press

AUSTIN - Lotto Texas winners get a new option for getting paid next week - a lump sum instead of annual installments.

Texas Lottery officials said Thursday the new "cash value option" - a single payment equal to about half of the estimated lotto jackpot - takes effect Monday.

"Players have been asking the lottery for the choice to claim their jackpots immediately, in one lump sum, since Lotto Texas began four years ago. We're ready to give them that choice,' " said Karen Porter, lottery marketing director.

The first drawing in which winners can choose the new payment scheme will be Wednesday.

Leticia Vasquez, lottery spokeswoman, said the option will be available only for lotto drawings, the twice-weekly six-number drawings with jackpots usually starting at $4 million.

Under the new system, when players purchase lotto tickets, they also will make a choice for prize payment: lump sum or 25 annual payments.

Players who choose to claim their winnings in a lump sum will receive the single payment for about half the estimated jackpot. That's because about 50 percent of the each jackpot total comes from interest earned on annuities the lottery purchases for winners.

"Many people will wonder what happened to the 'other half,' " Porter said. "The 'other half' is the interest the players would have received if the lottery had invested that net present value and paid out the prize over 25 years."

A winner choosing annual installments gets that earned interest, which over time raises the total payout to the amount listed as the estimated jackpot.

Winners who don't indicate a preference at the time of purchase automatically would get annual payments, Vasquez said.

Since its start in 1992, the lottery has paid lotto winners in 20 annual installments.

Lottery officials said at least eight other states have a cash value option, including New York and Colorado. In those states, up to 50 percent of the winners choose the option.Send a Letter to the Editor about This Story | Start or Join A Discussion about This Story
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