The rich get richer, and the poor get poorer, or so they say. Not always true, depending on the circumstances, but a recent headline about some lottery winners certainly underscores that first part.
On November 2, three money managers from Greenwich, Connecticut—one of the richest cities in America, largely because it is a haven for money management firms—won a $242 million Powerball lottery, off of a single $1 ticket. The winners—Greg Skidmore, Brandon Lacoff and Tim Davidson—all worked for the wealth management firm Belpointe. Their winnings are the largest in Connecticut lottery history, and the 12th largest in Powerball history.
That's saying something, considering how extremely big Powerball jackpots get from time to time. It seems every so often, one hits critical mass and suddenly the land is gripped with a kind of lottery mania. I just don't understand it myself, but plenty do, given the size of the state lottery system, which basically accounts as a kind of secondary tax structure (this is a real knee-slapper when you consider that a great deal of whatever you win off of these jackpots gets taxed anyway). The Belpointe Three's take-home after taxes is about $100 million, or less than half their original winnings.)
When you look at how much revenue state lotteries bring in, you can see why the states themselves love them so much. Critics deride these things as a regressive tax upon the poor, since most who play them, especially scratch-off lotteries, are in the bottom socioeconomic brackets. But as the Belpointe Three have shown, clearly the appeal of instant millions applies to the wealthy and struggling alike. They never have to me, perhaps because my view on gambling of any kind, including mere lotteries, was informed by my grandfather, who grew up in the Depression. He referred to any gambling as "sucker tax," and he took an especially dim view of state lotteries, with their insidious way of nickel and diming folks on an unrealistic dream of instant fortune. That so many of our nation's poor who play lotteries view it as a form of Hail Mary financial planning only underscores the point.
On that note, however, the reason why this story made news right before this issue went to press is because the winners kept their cool and formed a trust for the money and had everything sorted out by their legal help before going public with it. They are wealth managers, after all, so you'd hope they would handle even something extraordinary with a sense of responsibility, and they did. They will be giving a portion of their winnings to charity, which also is to be lauded. But for me, anyway, that's where my adoration for this thing comes to an end.
The fellows who played this lottery didn't need the cash, really. I do not begrudge them for their newfound wealth, but I do pity anyone who can makes the kind of living that a Greenwich wealth manager makes and yet can't find that satisfying. They clearly don't have what mutual fund legend John C. Bogle would have considered "enough," and that's sad. Sadder still that three financial planners have basically led by example in telling the world that responsibly preparing for the future is great, but it doesn't hold a candle to chucking money at a laughably remote chance of striking it rich instantly.
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