Given that I will win this, I decided to read some small print.
I normally buy through the PlayUKInternet.com network. I understand this is run by some South African ex-pats living in London and has done very well.
However, there are a number of issues to consider:
- Is the lottery site legit and if you won would the site pay you or disappear with your winnings?
- The PlayUKInternet site has an established reputation and seems high-profile and reliable
- What premium does the site charge over the actual ticket costs?
- A Megamillions ticket costs $1 if bought at a retailer in the US.
- PlayUKInternet and other agency sites charge a premium for their services. Overseas residents cannot buy from in-country retailers, so agencies have people who stand in queues, process winnings, etc. This premium varies.
- PlayUKInternet charges £2,40 per ticket for a US Megamillions draw. They do give one voucher for every five tickets bought, effectively dropping the price to £2. That's $3,24, a premium of 224%.
- OSA charge a whopping €3,60 per ticket. That's $5,13, a premium of 413%!
- Betslips.com charge $2 per ticket, a premium of 100%
- Does the agency have any discretion over my winnings payout?
- PlayUKInternet take 10% of winnings awarded through them. TEN PERCENT!!!! They also have the discretion as to whether to take the winnings as an annuity or lump sum. This is only evident through reading the fine print in their terms and conditions
- Betslips.com takes 1% of winnings. This is also only apparent by reading their FAQ.
Clearly the fine print here is important. Imagine winning the $325 million and being forced to take the lump sum payout of $204 million. I'm not sure how the percentage paid to the agency is determined (this is not clear from their terms and conditions). I would imagine it is based on the net payout. That would be $204 million less US withholding tax of 30% equals $140 million. 10% to PlayUKInternet would then be $14 million. But if calculated on a gross basis, it could be $20 million or $32,5 million. You would have to pay local taxes - let's say 6% if you were a resident of New York - although as an overseas resident it might well be higher. That moves your take home winnings towards $100 million.
Of course $100 million is a huge amount of money, but why would you want to pay the agency anything more than their cost of administration? Why do they deserve any percentage of your winnings?
For this reason, I bought through Overseas Subscribers Agents - osalottos.com, despite their astronomical cost per ticket. That way, when I collect my winnings, I'll not be paying them any more.
Sheeesh. Read the fine print....