Can I beat the lottery curse?

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Most of us dream of winning the lottery: the butler, the mansion, the private planes, the unmatched joy of finally telling your boss to shove it… But when that dream comes true, it can quickly turn into a financial nightmare. There’s a lot of talk about a lotto “curse,” but the winners aren’t victims of witches or gypsies—they’re victims of the poor financial decisions often made by newly-minted millionaires.

What causes the financial ruin of so many lucky winners? In many cases, it’s the simple but devastating specter of poor financial planning. William “Bud” Post III, a 1998 winner of $16.2 million, spent $300k in the first two weeks after his windfall—and never stopped. After purchasing a restaurant, a used-car lot along with all the cars, a plane (with no pilot’s license), and a 16-room mansion, he found himself $500k in debt within three months. British Callie Rogers, who bought herself, among other things, a brand new pair of breasts with her winnings. After finding that many of her expenditures were, um, non-refundable, she now works as a maid to support herself and her family.

While it seems that selfish spending is the culprit, it turns out that philanthropists aren’t spared, either. Billie Bob Harrell Jr. won the Texas lotto jackpot of $31 million, and quickly set out to do good. He bought homes and cars for his family members. He donated much of his fortune to the church—and a lot to the personal empty coffers of his  fellow parishioners. It turns out when you’re a millionaire, everybody needs your help. Harrell could never say no, and twenty months later, broke and stretched in every direction by family and former friends, he killed himself with a shotgun in a locked room of his brand new mansion.

Since good’s no good, you might be tempted to try bad. With the capital to indulge in your favorite vices, you’ll find yourself following in the footsteps of the less savory lottery winners before you. Michael Carroll, known as the “Lotto Lout” and, by his own styling, the stomach-turning “King of Chavs,” gambled, whored, and snorted his way through a £9.7 million jackpot—and now lives off his weekly welfare check of £42.

How to spend your winnings wisely

So how can you break the lotto “curse?” Firstly, pay attention to your taxes: not only does the government takes about 50% of your winnings right off the top, but there are the ongoing tax expenses of many of your big purchases. By spending the money on a vetted financial planner, lawyer, and accountant, you may be able to keep yourself in a mansion—and out of the poorhouse.

If you’re worried about all the hands out waiting for your hard-won cash, you might not necessarily need to go public with your winnings. While the lotto requires a face and a name to collect your winnings, in some states it may be possible to send a proxy in order to protect yourself, as may have been the case with the recent Greenwich asset managers who “won the lottery.” If the state where you win doesn’t allow you to hide your identity—or you want to rub your winnings in your grade school bully’s face—you’ll have to learn to exercise the most important word in a lottery winner’s vocabulary: No.

You could also go the sneaky route of successful lotto millionaire Joe Johnson, who turned his £10 million winnings into an even greater fortune by creating an investment portfolio that included multiple luxury properties. Afraid that he wouldn’t find real love with his vast fortune, he courted his now-wife Lisa Johnson as an average Joe, driving an old beater and always going Dutch. He only revealed his true millionaire status after their engagement. As you can imagine, she was pretty mad about his lies–but for some reason she didn’t leave him.

Another lotto success story is Brad Duke, who’s also managed to maintain—and grow—his fortune. After investing $80 million of his after-tax $85 million Powerball winnings, he paid off the mortgage of his modest home, paid his student loans, and bought a used Jetta. He still budgeted to give you away $12,000 to his family members annually—the highest gift possible without a state tax.

Even with all the evidence of the lotto curse, millions of people all over the world dream of winning the lottery every day. But while winning is all luck, keeping your money is all smarts. If you can be like Duke and combine sound financial planning, sensible expenses, and moderate philanthropy, you too might be able to beat the lotto “curse.”

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