California lottery player claims $247 million prize

Beth Torres

Just $6 million shy of half a BILLION dollars!

That was the jackpot from the Mega Millions drawing of October 15, 2022. After rolling over 21 times, it had grown to an astounding $494 million.

This time, there were two winning tickets sold. One was sold in another state. The other winner was sold right here in California. But who was the lucky California winner?

We got our answer: A “faithful CA lottery player,” Edward Lojewski, has claimed his portion of the October jackpot. His reward for being a faithful lottery player will be $247 million. He could almost say “I won a quarter of a billion dollars!”

I doubt if this matters to Mr. Lojewski, however. After all, the published prize amount is somewhat of an attention-getting fiction. More on this shortly.

Who sold the lucky ticket? 

Mr. Lojewski purchased the winning Mega Millions ticket at a California 7-Eleven convenience store. The store location is shown below.

According to the California Lottery press release, the store that sold the winning ticket will get a $1 million bonus just for selling it. Whether this results in a big raise for the employees of that store or a contribution to the 7-Eleven corporation is not clear, but it is a nice “share the wealth” gesture.

Anything with this many zeroes is terrific! But how much is it, really?

The October 14, 2022, Mega Millions drawing won by Mr. Lojewski started out at $494 million. Since another fortunate player in Florida also had all six winning numbers, each winner’s prize will be approximately $247 million.

The default payment method for the California Lottery’s Powerball, Mega Millions, and Super Lotto jackpots is 30 annual payments. Winners of these prizes have the option of receiving a “lump sum” payout instead. 

According to the California Lottery’s Winner’s Handbook,

“If you choose the cash option, the amount you receive will be less than the announced jackpot. That’s because the announced jackpot total is the amount that would be earned if the Lottery invests the cash option amount over 30 years.”

The actual “lump sum” payment will be determined by the California Lottery when this option is chosen by a prize winner. Estimates from various online calculators generally use 60% - 62% as a rule of thumb. In this case, 60% of the $247 million would result in approximately $148 million before taxes.

Lottery winnings are subject to federal taxes

California Lottery prizes have no California state or local tax obligation, but federal taxes do apply. Federal withholding tax of 24 percent is automatically deducted from lottery payouts. 

According to Forbes, however, the maximum federal tax on lottery winnings is 37%. Applied to the estimated “lump sum” payout of $148 million, this would leave about $93 million for Mr. Lojewski. Since Florida has no individual state income tax, his counterpart in Florida who shared the jackpot would likely receive a similar amount.

Disclaimer: These are anecdotal estimates and not intended as financial or tax advice. Consult a licensed professional for information about your situation.

These are just very rough estimates. It does seem likely, however, that both Mr. Lojewski and his equally fortunate counterpart in Florida will receive prizes of at least $90 million or more, should they choose the “lump sum” option for their lottery winnings. Their individual tax situations can have a significant impact on their final prize amounts as well.

The fellow in this video goes into some investing possibilities, as well as a couple stories about lottery winners who didn’t handle their lottery winnings very well. Note that he says that winnings are subject to California as well as federal taxes. The California Franchise Tax Board, however, says otherwise:

“We do not tax California Lottery or Mega millions.”

Just for fun: Would you take the lump sum or the annual payments?

The lump sum, one-time cash payment is the choice of most winners of large lottery jackpots. Agreeing to annual payments for the next 30 years, even if the ultimate total is substantially greater than the immediate payment, brings up many uncertainties. Life expectancy, inflation, and faith in government promises are all factors for many people. 

In some cases, there can be tax advantages for the annual payments, also known as a “lottery annuity.” (This is not financial advice. Check with a tax professional if this becomes an issue for you.) Annual lottery payments can be passed on to heirs like any other assets. The “payment plan” might also be a good choice for those who might spend it all or give most of it away.

Do you know which payment option — the one-time “lump sum” or the “payment plan,” 30 annual payments — you would choose? Let me know in the comments if you have any thoughts on this.

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I enjoy writing about lottery winners, housing lotteries, guaranteed income programs, and other topics that can affect our financial lives. Follow me if you would like to see more content like this. Thanks for reading, and if you like and share my content, thank you for that as well!

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