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The Curse Of Good Luck: Why Most Lotto Winners Go Broke

Slot machine representing the concept that lotto winners go broke

Hey friends, it has been awhile since my last post as I have been wrapping up a home remodel project. However, that changes today as I am excited to share a guest post on why most lotto winners go broke by Adam of The Blind Luck Project. Concurrently, he is featuring a post by myself on how to stay rich if you win the lottery. But, without further ado, let’s dive in!

Lotto Winners Go Broke Table of Contents

Friends & Family
Not Having A Financial System
Risky Investments
Trying To Keep Up With The Genuinely Wealthy
Socioeconomic Factors
It’s Your Gamble


We see it everywhere: At the gas station, grocery store, and corner store where you grab morning coffee. A giant board showing today’s lotto pool you could win by just spending a few bucks to buy a chance at winning millions or even billions of dollars.  

Maybe you’ve occasionally purchased a ticket before; you know the odds are low, but it was worth it to dream about what you’d do with that sweet pot of gold should you be the lucky winner.

The things you could do are endless!

• Pay off your house
• Retire your parents
• Put your kids into a good college
• Buy some fast cars
• Maybe buy a big boat to cruise the Caribbean Islands

Money can’t solve everything, but it can undoubtedly solve money problems.

Since 77% of Americans are financially anxious, the thought of all those problems being solved overnight appeals to many. Even if you’re not worried about money, a few extra million in the bank never hurt anyone, right?!

But there is a dark side to the lotto; 70% of winners spend it all or even go bankrupt in five years! How on earth do lotto winners manage to spend more money than they’ve ever earned in their entire lives in just five years? Think of the missed opportunity to invest that money so you could ensure you never had to work again!

But, there is a relatively simple explanation as to why winners go broke. Unlike people who earned their riches, many lotto winners never developed the skills to manage basic finances, let alone a large sum of money. Throw in the added dynamics of family, friends, and charities coming out of the woodwork, and it’s a lot to handle.  

Let’s look at the pitfalls that have befallen past lotto winners so that you don’t fall into the same traps should you win the lotto, receive an inheritance, or be awarded settlement money someday.  

Friends & Family

When you win the lotto, you’re not the only one who feels like they’ve won; your friends and family will likely feel like they won, too!

Finally, they know someone rich! Someone who can wave the magic money wand and make their money problems go away!  

Of course, it’s your money, but you didn’t work for it. So why shouldn’t you share a little bit? It’ll change their life! You care about them, too, right? 

The sad fact is many family members will feel entitled to your winnings, either demanding “their cut” or resenting you for not cutting them in on some of the winnings.  

One mother went so far as to sue her son, claiming he’d taken her $51 Million winning ticket, tying up the money in limbo for an extended period while the courts resolved the matter.

Ask for money/palm extended

It’s fine to help family and friends, if you want to. But keep in mind that if someone needs more than $10K to solve “all their problems,” then the money isn’t their only problem.

After all, let’s be honest: If someone is that deep in the hole, there’s likely a behavioral reason, and they will likely be back with more money problems soon. Do yourself a favor and politely but firmly say no.  

They should be happy for you and supportive of whatever you decide to do with your money. They are likely to benefit from it indirectly (even if they don’t realize it). A friend who stops being your friend over a matter of less than $10K isn’t really your friend either. 

Not Having A Financial System

Having millions of dollars is more like running a business than balancing a checkbook. Not only do you need to keep track of where it all is, but if you buy a vacation home, boat, high-end car(s), and the like, you’ll also be taking on a lot of additional costs. Examples include insurance, operating costs, repairs, annual tax bills, utilities, staff, etc.

The more stuff you have, the more your overhead costs will be, period.

If you win a large sum, you should work with a CPA to understand your yearly expenses and from where the money will come. It also would be best if you had a good cash flow projection to ensure you live a sustainable lifestyle.  

Here is an excellent example of a man named David who won $37 million, which is enough money never to work again and live in style. He promptly blew it all on cars, a two-hundred-plus sword collection, a private jet, and more. He then bought two businesses he didn’t know how to run, got heavily into drugs, and finally passed away penniless and alone.

Without a financial system in place to handle such a large influx of money, it’s no surprise it finds ways to disappear.


We’ve all heard the stories: Someone wins a bunch of money, gives it to an “advisor” for safekeeping, or a “business manager” to handle the day-to-day bills. Then they turn around, and the person disappears with all the money.  

We might say that would never happen to us, but it’s not always easy to spot scammers.

Scam alert

Sure, sometimes someone out of nowhere offers to sell you snake oil. However, other times it’s a “reputable” Powerball lawyer, like Jay Kurland, with a specialized practice and nationally recognized track record of helping lotto winners’ who cheats you and others out of $100 million. 

You really can’t be too careful! 

Side Note: When researching this article, I noticed the second suggested search term from Google was “Lotto winners who are still rich,” implying that many people are looking for an easy mark.  

Risky Investments

Don’t try to be the next billionaire! You are different from them; they have skills and experience that you don’t have. Instead of trying to become the wealthiest person in the world, take a step back and recognize you’re now better off than the top 0.1% of people and enjoy the good life.

Far too many lotto winners try to start or buy an enterprise they have no business running or get involved with some fun but risky startups. If you weren’t a business owner or VC investor before winning the lotto, I promise you the fact that just because your bank account now has a few extra zeros does not mean you magically have the skills to manage these investments.

Running a business is hard, and many go bankrupt for a reason! You’ve already got it made, so don’t mess it up.

detailed article on the lottery effect and business success found that around 80% of businesses fail, 18% get by, and approximately 2% truly generate wealth. Are you willing to risk your lucky millions on a 2% chance of getting richer? It seems a little silly to me, too.  

Trying To Keep Up With The Genuinely Wealthy

Wealthy individuals

Now that you’re rich, you might feel like you don’t fit in with your old friend group. Maybe you want to join the local country club and meet more people like you. There are a couple of things to keep in mind here:

You won a lump sum. These people have cash flow. 

They likely didn’t get rich on one deal or a lucky break. Instead, they have a business or system that continues to throw them money (like generational wealth). If they overspend a bit here or there, the money just gets replaced over time in the same way they became wealthy in the first place. 

On the other hand, you are very unlikely to win the lotto twice. And even if you are lucky enough to win twice, you can still go broke! 

“Evelyn Marie Adams, who won $5.4 million when she won the New Jersey lottery twice in 1985 and 1986 admitted to being broke in an interview with The New York Post in 2012. Adams reportedly gambled excessively and lost the majority of her money in Atlantic City.” 

Hannah Genig, Yahoo Finance

Socioeconomic Factors

The sad fact is many people who play the lotto every week (or whenever they get a paycheck) are in the bottom fifth of society. These individuals are often lower-income minorities who are older, who may be frustrated with their finances, depressed, and don’t feel like they have many good options. Other heavy lotto players are gambling addicts and people with other mental health issues.  

Elderly gentleman

These individuals represent a disproportionally large percentage of lotto players and a significant percentage of the winners. Due to their addictions, lack of financial education, or experience with large sums of money, they are set up to fail before they even win. (Who Plays The Lotto)

It doesn’t matter how much money you give a gambling addict. They will eventually lose it all.  

There have been some calls to abandon the lotto because of this phenomenon. Many people feel the lottery may be a regressive tax that punishes the poorer parts of society. However, with many States making billions in revenue off of lotto ticket sales, it’s a significant budget line item, and few States are likely to do away with it soon.   

It’s Your Gamble

Hopefully, this has been an informative overview of the common pitfalls lottery winners face and why a third of them file for bankruptcy. While winning the lottery sounds glamorous, most recipients will lose it all within five years.

If you win the lotto or come into a large sum of money, check out Mile High Finance Guy’s suggestions on what to do next! With a few simple steps and a thoughtful plan, you can be one of the few who win big and don’t go broke in five years or less.

This post is the seventh in my ongoing guest post series. I hope you enjoyed it, and if you have interest in writing a guest post, please reach out to me on Twitter. I love featuring the viewpoints of others, and I will look forward to hearing from you soon!

Adam the Sasquatch photo

Author bio: Today’s guest post was by Adam, the Friendly Sasquatch. He runs, where all things Financial Independence & Retiring Early (FI/RE) are discussed, plus how to make your own luck!

Mile High Finance Guy

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2 thoughts on “The Curse Of Good Luck: Why Most Lotto Winners Go Broke”

  1. This was a fun article to write. It’s a good reminder that no matter how good your luck is you still have to do your part to make the most of opportunities that come your way. Something else I thought of after writing this is the role of mental health of individuals who suddenly come into large sums of money. Survivors guilt is often talked about where people feel guilty that they won when so many of their peers are still in need, leading to the urge to do something to resolve the inner conflict. often times these actions are not in the best interest of the winner long term.

    Thanks for Hosting!

    1. Adam,

      It was intriguing to read why lottery winners tend to go broke, and thanks for sharing these insights!

      That is a good point regarding mental health and survivor’s guilt. I wonder if studies exist on this, as it makes perfect sense that you would have a plethora of emotions, including guilt.

      Thanks again for writing this post!
      Olaf, the Mile High Finance Guy

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