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Texas(TX) Lotto Prize Analysis for Wed Jan 13, 2021

As legally required by the state of Texas, taxes are withheld on lottery winnings of $600.00 or more. For prizes over $5,000.00, US citizens and resident aliens with a social security number are subject to a 25% deduction to their prizes, which represents federal taxes. Luckily, lottery prizes are exempt from Texas state and local personal income taxes. For more information on taxes for lottery winnings in the state of Texas, click here.

  • Choose Payment Option: The Texas Lotto players have to choose either “Cash Value Option” or 25 annual payments while purchasing the Lotto Texas ticket. If no payment options selected, the purchase will be rejected.
  • For the Cash Option in the amount of $4,000,000, the federal tax that must be withheld is $1,000,000. There is no state tax for lottery prizes in the state of Texas. After all the taxes are paid, the winner gets a net lump-sum payment of $3,000,000.
  • Annuity: If the winner chooses annuity in the amount of $5,000,000, the winner gets paid in 25 annual installments amounting to $200,000.00 yearly. The federal tax amounts to $50,000.00 yearly. The winner will receive, after paying all the taxes, $150,000.00 yearly.

The Texas(TX) Lotto prize analysis tells you how much you would get after state, local and federal tax withholdings.

The Luck of the Texan: An Empirical Analysis of Texas Lottery Games

Journal of Gambling Business and Economics, Forthcoming

24 Pages Posted: 20 Jun 2007 Last revised: 3 Aug 2009

Craig A. Depken

University of North Carolina at Charlotte – The Belk College of Business Administration – Department of Economics

Paul R. Dorasil

University of Florida

Abstract

This paper provides an empirical analysis of the relationships between three popular lottery games in the state of Texas: Lotto Texas, Texas Two Step, and the multi-state Mega Millions game. The analysis suggests complementarity between the Lotto Texas and Mega Millions; habitual players tend to play relatively safer games; the 2006 Lotto Texas rule change decreased revenue substantially; and that only at low effective ticket prices do players prefer high stakes/low odds games. We simulate the effective prices at which consumers prefer one game over another and find that Mega Millions and Lotto Texas are strictly preferred over Texas Two Step, and that Lotto Texas is preferred to Mega Millions at all feasible price levels. Only at unfeasibly low effective ticket prices would Mega Millions be preferred to Lotto Texas.

Keywords: games of chance, preference, gambling

JEL Classification: D12, L83

Craig A. Depken (Contact Author)

University of North Carolina at Charlotte – The Belk College of Business Administration – Department of Economics ( email )

Charlotte, NC 28223
United States

This paper provides an empirical analysis of the relationships between three popular lottery games in the state of Texas: Lotto Texas, Texas Two Step, and the m