How Do Casinos Pay Out Large Sums Of Money?
Most casinos give you two options for collecting your casino winnings. Lump sum means you'll take all of the payment at once. Most casinos offer about 50 to 60 percent of your winnings in a lump sum arrangement. Taxes are taken out of that lump sum.
If you opt for annuity payments, you get the winnings sent in payments over a period of years. Taxes are also taken out of annuity payments. You pay taxes each time you receive a payment.
Casino rules change from one business to the next, but you'll usually get 90 days to consult with a finance expert and decide the preferable option. Some casinos will only allow lump sum payments. This can depend on the amount you've won. Before you play, look at the casino game or casino rules and see if it says. If it doesn't ask someone for assistance.
Pros Annuity vs. Lump Sum Casino Winnings
There are pros and cons to either arrangement. Start with the pros to lump sum payments. You have all the money in hand soon after winning the money. If the casino goes bankrupt, it doesn't matter. You already have the money. If something happens to you, your heirs collect that cash as part of your estate.
With annuity payments, you collect a portion of your winnings spread out over time. This can keep you from overspending and ending up broke, which is a common occurrence with casino and lottery winners. You also only pay taxes on the amount of winnings you receive each year. If the casino goes bankrupt while collecting annuity payments, you may have to take a lump sum payment on any money that's still due. It all comes down to the annuity contract terms.
In Nevada, laws require payments of at least $10,000 per year when the prize is $100,000 to $199,999. For prizes of $200,000 or more, the casino must pay you 1/20th of the prize each year. If you've won less than $100,000, you must collect the winnings as a lump-sum payment.
Cons of Annuity vs. Lump Sum Casino Winnings
There are cons, too. Winners who take lump-sum payments get only about half of the money they've won. You also may need to pay additional taxes on that money when you file your yearly taxes. In addition to federal taxes, you may need to pay city/town and state taxes. You also pay taxes on any interest earned on the money you invest.
You should see what happens to the annuity payments if you die before the final payment is made. A lawyer may need to help you set up a will that guarantees your remaining winnings go to the person you choose.
Just remember that for smaller prizes, you will likely get a lump-sum payment. For big prizes, you may have a choice. Online casinos usually limit the amount you can withdraw each week, so be sure to read those restrictions before you withdraw your winnings from an online casino.