LVA Question of the Day - 13 APR 2008

[vpFae1]

Q: Question one: Could you please settle a small wager. On any
Megabucks jackpot, I contend that the slot manufacturer is
responsible for paying when a jackpot is hit. My friend is
equally sure that it's the casinos responsibility. Who wins?
Question two: Whenever I read about Megabucks being hit, the
winner almost always opts fot the lump-sum payout. But how much
the winner receives is never revealed. Why not? And do you know
how much someone might wind up with?

Read the answer here:

http://www.lasvegasadvisor.com/qod.cfm

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http://www.lasvegasadvisor.com/qod.cfm</a>

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[Mickey]

The Megabucks number is a phony number and has always been a phony
number. If you were to get paid what the number said it was on the
spot then it wouldn't be a phony number. Buts thats not what you get
paid. It's a twenty year number. They can buy an annuity and pay you
over twenty years for about half the price. If you don't go for that
then you get the discount rate. Maybe 2/3 of the number. After taxes
you will get about a third. What a great hustle! Big number and no
one ever gets it. And I thought I was a hustler.

···

--- In vpFREE@yahoogroups.com, "vpFae" <vpFae@...> wrote:

Q: Question one: Could you please settle a small wager. On any
Megabucks jackpot, I contend that the slot manufacturer is
responsible for paying when a jackpot is hit. My friend is
equally sure that it's the casinos responsibility. Who wins?
Question two: Whenever I read about Megabucks being hit, the
winner almost always opts fot the lump-sum payout. But how much
the winner receives is never revealed. Why not? And do you know
how much someone might wind up with?

[basinrench]

#1 the manufacture,#2 interesting analogy I thought you could take

it in one big lump-sum after taxes but would 20yr's be cheaper for
the winner in total taxes payed?

>
> Q: Question one: Could you please settle a small wager. On any
> Megabucks jackpot, I contend that the slot manufacturer is
> responsible for paying when a jackpot is hit. My friend is
> equally sure that it's the casinos responsibility. Who wins?
> Question two: Whenever I read about Megabucks being hit, the
> winner almost always opts fot the lump-sum payout. But how much
> the winner receives is never revealed. Why not? And do you know
> how much someone might wind up with?
>
The Megabucks number is a phony number and has always been a phony
number. If you were to get paid what the number said it was on the
spot then it wouldn't be a phony number. Buts thats not what you

get

paid. It's a twenty year number. They can buy an annuity and pay

you

over twenty years for about half the price. If you don't go for

that

then you get the discount rate. Maybe 2/3 of the number. After

taxes

you will get about a third. What a great hustle! Big number and

no

···

--- In vpFREE@yahoogroups.com, "mickeycrimm" <mickeycrimm@...> wrote:

--- In vpFREE@yahoogroups.com, "vpFae" <vpFae@> wrote:
one ever gets it. And I thought I was a hustler.

[Robert3]

>
> Q: Question one: Could you please settle a small wager. On any
> Megabucks jackpot, I contend that the slot manufacturer is
> responsible for paying when a jackpot is hit. My friend is
> equally sure that it's the casinos responsibility. Who wins?
> Question two: Whenever I read about Megabucks being hit, the
> winner almost always opts fot the lump-sum payout. But how much
> the winner receives is never revealed. Why not? And do you know
> how much someone might wind up with?
>
The Megabucks number is a phony number and has always been a phony
number. If you were to get paid what the number said it was on the
spot then it wouldn't be a phony number. Buts thats not what you

get

paid. It's a twenty year number. They can buy an annuity and pay

you

over twenty years for about half the price. If you don't go for

that

then you get the discount rate. Maybe 2/3 of the number. After

taxes

you will get about a third. What a great hustle! Big number and

no

one ever gets it. And I thought I was a hustler.

It used to be 20 years, now it's 25. I don't know why you call it a
phony number. After 25 years you will collect exactly what they say
you will. From what I understand in the answer to this question, you
get the first payout right away, and you can then decide whether you
want the rest paid over the next 24 years, or take 60% of the prize
right away.

···

--- In vpFREE@yahoogroups.com, "mickeycrimm" <mickeycrimm@...> wrote:

--- In vpFREE@yahoogroups.com, "vpFae" <vpFae@> wrote:

[Mickey]

Mickey Crimm Wrote:

> The Megabucks number is a phony number and has always been a

phony

> number. If you were to get paid what the number said it was on

the

> spot then it wouldn't be a phony number. Buts thats not what you
get
> paid. It's a twenty year number. They can buy an annuity and

pay

you
> over twenty years for about half the price. If you don't go for
that
> then you get the discount rate. Maybe 2/3 of the number. After
taxes
> you will get about a third. What a great hustle! Big number and
no
> one ever gets it. And I thought I was a hustler.

Robert Levine wrote:

It used to be 20 years, now it's 25. I don't know why you call it a
phony number. After 25 years you will collect exactly what they

say

you will. From what I understand in the answer to this question,

you

get the first payout right away, and you can then decide whether

you

want the rest paid over the next 24 years, or take 60% of the prize
right away.

You walk into a casino and see a dollar bank of 9/6 Jacks progressive
video poker machines. The royal, which started at $4000 is right at
$8000. You sit down and play and after awhile you hit the royal.
But instead of getting $8000 on the spot the hired help tell you you
won $400 a year for twenty years

Now let's do some more math. This particular bank had a .5% royal
meter. The royal had gone up $4000 from preset. So the bank got
about $800,000 in action before the royal hit. The game holds about
3% between royals. So the casino held about $24,000.

They buy an annuity for $4800 to pay you, over 20 years, and pocket
the rest.

If you were to invest the money you won, whether it was $8000 on the
spot, or $400 per year for twenty years, in stocks, real estate, or
business, which investment do you think would have the strongest
monetary position twenty years from now.

If they can buy an annuity for %4800 to pay you over twenty years
then the true value of the royal is $4800--not $8000. And, remember,
the cost to produce a royal in this spot is about $4900.

Doesn't look like a very attractive investment, does it? If this
were the way we all got paid for hitting royals, would any of us be
playing video poker? I don't think so.

[Mickey]

>#1 the manufacture,#2 interesting analogy I thought you could

take

it in one big lump-sum after taxes but would 20yr's be cheaper for
the winner in total taxes payed?

I know gambling investments fairly well but I'm not even close to
being knowledgeable when it comes to financial investments. But, if
I were to be faced with the choice of "lump sum vs. twenty years", I
think the question would be "which way would put me in the strongest
financial position?"

Maybe 8 or ten years ago I caught a very lengthy article in the Las
Vegas Review-Journal about Megabucks. I think it has been
reconfigured since then to start at 7K and pays over 25 years. But,
I believe, back then it started at 5K and payed over 20 years.

Here is what I got out of the article:

The odds on the top line hit.......50,000,000
Game return between top line hits.........84%

The winners were payed over 20 years. IGT bought an annuity for
about 60% of the number to pay the winners. So, if someone hit for
$10,000,000, IGT would buy an annuity for $6,000,000.

If the winner chose "lump sum", they got $6,000,000, then would have
to settle with the IRS on taxes.

Some vpFree'er who knows about annuities may be able to fill us in on
whether this math adds up.

But using the above odds and game hold I can come up with some
numbers. If you were to make 2000 pulls a day on Megabucks, from
here to eternity, you would have an expectation of hitting the top
line jackpot about once every 68.5 years. And those 2000 spins would
cost you about $1000 a day.

A have a friend, Willie. He was a thirty year casino hustler--credit
hustler, couponer, gimmick games, anything to make a buck. And
Willie will tell you himself, he spent at least half those 30 years
sleeping in his car.

He showed up at Ho-Chunk Casino out of Wisconsin Dells, Wisconsin.
He was told the place was full of IGT Vision machines. "They were
right", Willie told me, "The place was full of Visions, but it was
also full of hustlers." He staked out his area on the Visions known
as "Jewel in the Crown." He built a $40,000 bankroll over the next
two years playing the Jewels.

Then they had an electronic drawing for Christmas. $1,000,000 to the
winner. Except, it wasn't really 1K. It was $50,000 a year for 20
years. Willie won the money.

Willie's "hustler does good" story reverberated though the hustler's
grapevine. I passed through Ho-Chunk in the summer of 2002 and got
to talk to Willie about it. I was very curious as to why he took
the "lump sum" and how much he got by taking it.

"I had to decide which way would put me in the strongest financial
position", Willie said. "I took the lump sum and after I payed the
taxes I got $337,000." "I surprised some folks in my little hometown
of Dodge City, Kansas, when I showed up and bought a couple of houses
and invested in antique cars."

···

--- In vpFREE@yahoogroups.com, "john" <schatsa@...> wrote:

[Harry_Porter]

john wrote:

> #2 interesting analogy I thought you could take it in one big
> lump-sum after taxes but would 20yr's be cheaper for the winner
> in total taxes payed?

mickeycrimm wrote:

I know gambling investments fairly well but I'm not even close to
being knowledgeable when it comes to financial investments. But, if
I were to be faced with the choice of "lump sum vs. twenty years", I
think the question would be "which way would put me in the strongest
financial position?"

The most significant issue with the annuity payout of jackpots such as
MegaBucks and lottery wins is that the issuer of the prize purchases
an annuity that has a strong guarantee of payout. This means that the
market securities used to underlie the annuity are typical high-grade
corporate bonds, which offer a relatively low rate of return.

However, if the funds used to purchase that annuity are instead
distributed as a lump-sum payment, the winner can alternatively choose
to invest some or all of the funds into higher yielding equity funds
or into individual corporate stocks.

However, there's a second issue with jackpot payouts. If paid in an
annuity, taxes on the gross winnings are deferred until paid out. If
received lump sum, taxes are due immediately, leaving a smaller
balance to be invested. That means less investment income generated
than from the annuity, assuming an investment in comparable securities.

Thus, if someone's principal interest is a strongly reliable annual
stream of future cash (meaning they would be likely to invest highly
in bonds) an annuity payout can be very attractive.

On the other hand, if the individual is willing to assume greater risk
for a greater expected long-term proceeds from the winnings, then a
lump-sum payout is desirable -- taking such measures to tax-shelter
the winnings as is possible, and definitely taking steps to
tax-shelter future investment income (much more feasible) until the
cash is needed.

- Harry

[Dennis_Soucy]

There are some proprietary slots at LV Hilton that have recently had limits put on the progressives. There was never a limit on these machines before.
Are there any Gaming regulations concerning this?
Anybody have any info about proprietary progressive slots?

···

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[Bob_Dancer]

Mickey Crimm Wrote:

> The Megabucks number is a phony number and has always been a phony

number.

Just be glad it isn't the "Polish lottery" reputed to have been invented
by Bob Stupak, a colorful hustler who use to own Vegas
World/Stratosphere. In this lottery, the million dollar first prize is
paid off $1 a year for a million years!

Bob Dancer

For a 3-day free trial of Video Poker for Winners, the best video poker
computer trainer ever invented, go to //www.videopokerforwinners.com

[Bob_Dancer]

Harry wrote: Thus, if someone's principal interest is a strongly
reliable annual
stream of future cash (meaning they would be likely to invest highly
in bonds) an annuity payout can be very attractive.

A major consideration should be your gambling horizon. Most Wide Area
Progressive winners are slot players --- i.e. big losers. If you take
the money as an annuity, you can write off each years losses against the
LARGE payment from the WAP.

If you're an advantage player (unlikely --- why were you playing a WAP
in the first place? Free pulls from the Palms, perhaps?) this feature
has much less appeal.

Bob Dancer

For a 3-day free trial of Video Poker for Winners, the best video poker
computer trainer ever invented, go to //www.videopokerforwinners.com

[Mickey]

Mickey Crimm Wrote:
> > The Megabucks number is a phony number and has always been a

phony

number.

Just be glad it isn't the "Polish lottery" reputed to have been

invented

by Bob Stupak, a colorful hustler who use to own Vegas
World/Stratosphere. In this lottery, the million dollar first prize

is

paid off $1 a year for a million years!

Bob Dancer

For a 3-day free trial of Video Poker for Winners, the best video

poker

computer trainer ever invented, go to //www.videopokerforwinners.com

The owner of the hotel I used in Billings, Montana is an old
Newspaper guy (publisher, editor). When he found out I was from
Nevada he told me some very colorful stories about Bob Stupak.

Someone came to him one day and said a man in Nevada was looking for
someone to run a newspaper. They flew him to Las Vegas. It was Bob
Stupak. Except, Stupak didn't have a newpaper, he wanted one. So
Stupak shelled out the money for the equipment and the building.

I believe he told me it was called "The Bullet." And the only thing
Stupak was interested in publishing was dirt on his political
enemies. Except, the newspaperman was given explicit instructions
not to print anything on the Horseshoe.

Eventually, the newspaperman was advised by the Sheriff that he
should leave Las Vegas. He took the Sheriff's advice and returned to
Billings.

···

--- In vpFREE@yahoogroups.com, "Bob Dancer" <bdancer@...> wrote:

[Peter]

In choosing to take the "annuity" route, as opposed to the "lump sum" route, one should
also take into consideration the tax consequences on heirs, should the recipient die before
receiving all of the annuity payments.

The tax consequences on the heirs can sometimes be devastating.

..... bl

···

--- In vpFREE@yahoogroups.com, "Harry Porter" <harry.porter@...> wrote:

john wrote:
> > #2 interesting analogy I thought you could take it in one big
> > lump-sum after taxes but would 20yr's be cheaper for the winner
> > in total taxes payed?

mickeycrimm wrote:
> I know gambling investments fairly well but I'm not even close to
> being knowledgeable when it comes to financial investments. But, if
> I were to be faced with the choice of "lump sum vs. twenty years", I
> think the question would be "which way would put me in the strongest
> financial position?"

The most significant issue with the annuity payout of jackpots such as
MegaBucks and lottery wins is that the issuer of the prize purchases
an annuity that has a strong guarantee of payout. This means that the
market securities used to underlie the annuity are typical high-grade
corporate bonds, which offer a relatively low rate of return.

However, if the funds used to purchase that annuity are instead
distributed as a lump-sum payment, the winner can alternatively choose
to invest some or all of the funds into higher yielding equity funds
or into individual corporate stocks.

However, there's a second issue with jackpot payouts. If paid in an
annuity, taxes on the gross winnings are deferred until paid out. If
received lump sum, taxes are due immediately, leaving a smaller
balance to be invested. That means less investment income generated
than from the annuity, assuming an investment in comparable securities.

Thus, if someone's principal interest is a strongly reliable annual
stream of future cash (meaning they would be likely to invest highly
in bonds) an annuity payout can be very attractive.

On the other hand, if the individual is willing to assume greater risk
for a greater expected long-term proceeds from the winnings, then a
lump-sum payout is desirable -- taking such measures to tax-shelter
the winnings as is possible, and definitely taking steps to
tax-shelter future investment income (much more feasible) until the
cash is needed.

- Harry

[dipy9112]

Mickey Crimm Wrote:
You walk into a casino and see a dollar bank of 9/6 Jacks progressive
video poker machines. The royal, which started at $4000 is right at
$8000. You sit down and play and after awhile you hit the royal.
But instead of getting $8000 on the spot the hired help tell you you
won $400 a year for twenty years

Does this hypothetical machine have writing in small print stating
this anywhere on the machine? If so, before you play the machine read
it! This jackpot number is no different than any of the multi-state
lotteries that are out there. The great unwashed are used to
multi-million dollar jackpot being paid this way. Video poker
jackpots, on the other hand, have never been paid this way.

dipy911

[worldbefree22001]

You're right, I asked around and everyone at
the Vegas Club seemed to know this.

···

--- In vpFREE@yahoogroups.com, "dipy911" <dwoods49090@...> wrote:

The great unwashed are used to multi-million
dollar jackpots being paid this way.

[dipy9112]

--- In vpFREE@yahoogroups.com, "worldbefree22001" <krajewski.sa@...>
wrote:

>
> The great unwashed are used to multi-million
> dollar jackpots being paid this way.
>

You're right, I asked around and everyone at
the Vegas Club seemed to know this.

I would have said El Cortez or Slots of Fun. Nothing wrong with
playing a little double deuces at the Vegas Club, even if they did
kill my bankroll last year.

I also only play Powerball Lottery when it is over $200 Million, and
then I only play $5 at a time. If everyone knows the rules, it CAN'T
be unfair, even if it is a made-up number. Boo-Hoo, I only got $80
million after taxes.

dipy911

···

--- In vpFREE@yahoogroups.com, "dipy911" <dwoods49090@> wrote:

[Mickey]

> Mickey Crimm Wrote:
> You walk into a casino and see a dollar bank of 9/6 Jacks

progressive

> video poker machines. The royal, which started at $4000 is right

at

> $8000. You sit down and play and after awhile you hit the

royal.

> But instead of getting $8000 on the spot the hired help tell you

you

> won $400 a year for twenty years

Does this hypothetical machine have writing in small print stating
this anywhere on the machine? If so, before you play the machine

read

it! This jackpot number is no different than any of the multi-state
lotteries that are out there. The great unwashed are used to
multi-million dollar jackpot being paid this way. Video poker
jackpots, on the other hand, have never been paid this way.

dipy911

You missed the point of the post.

···

--- In vpFREE@yahoogroups.com, "dipy911" <dwoods49090@...> wrote: