Lottery winner gets $10 million prize money — but his one decision saw him lose out $3 mn instantly

When it comes to big lottery prizes, most winners want to get their hands on most of their winnings at once. In doing so they make a big mistake, which costs them almost half of what they have won in some cases. This is what happened to the lucky "$10,000,000 Bonanza"  player from Massachusetts who lost $3 million despite hitting the mega jackpot.

According to the lottery authorities, the $10 million was won in the “$10,000,000 Bonanza,” a $20 scratch ticket game launched in August 2024. The winner bought the scratch ticket from a sandwich shop, Coletti’s Market in Raynham, which also received a $50,000 bonus for selling the winning ticket.

The winner chose to collect the prize anonymously for which they set up a trust called the WSB Family Trust of Wellesley, represented by trustee James Goodhue, as per Mass Live. According to The US Sun, lottery winners in Massachusetts cannot claim prizes anonymously. However, to circumvent the law, winners can create a trust to claim their prize without releasing their names to the public.

This is what the $10 million Bonanza winner did to allow the trustee representative to turn in the winning ticket, and receive the check. “Prizes can be claimed by a trust or other legal entities that fulfill the definition of a legal person,” Executive Director of the Massachusetts State Lottery, Mark William Bracken told Mass Live.

Bracken added that this tactic has been increasingly used in the last several years, by winners of large prizes. In this case, too, only the identity of the trustee was made public. While the strategic move paid off, another decision of the winner cost them millions of dollars. 

When Goodhue collected the prize, the trustee had to turn in over $3 million in taxes as the winner chose the option to get the lump sum prize. The other choice of receiving the amount in annuity payments would have saved the winner from any taxes. 

"Around "90% of all lottery winners take the lump sum distribution," Lottery lawyer Andrew Stoltmann previously told The U.S. Sun. The expert called it a "big mistake" as it costs winners millions in taxes.

According to Smart Asset, before collecting any winnings, the winner has to fork out over 25% of the prize upfront to the IRS. Furthermore, depending on the location, state and local taxes can reduce the amount by an additional 13%. In the end, the winner may still owe more when it's time to file their taxes. Thus, in the end, the trustee collected only $6.5 million from the lottery, which would have been further subjected to state and federal taxes as well. 

As a result, just $6.5 million out of $10 million was given to the Massachusetts winner before tax. Goodhue was in charge of depositing the check into the bank account connected to the trust set up by the winner. Despite the immediate loss, the trustee shared that the winner had already made plans to build a new house and invest the rest of the money.