States Want to be Mega Millions Winners, Too

Disappointed that you didn’t win the Mega Millions $640 million jackpot? So are most states. Illinois, Kansas and Maryland are expecting to rake in a pretty profit from the three residents who bought winning tickets in their states. 

Each state’s take will be different and so is the amount going to the retailer who sold the winning ticket. While lottery winnings are subject to state income tax in most states, withholding tax varies, the Tax Foundation reports in this brief. The withholding tax in Illinois and Kansas is 5 percent. Maryland has a 9.25 percent withholding rate for residents and 7.5 percent for non-residents, so an out-of-state winner who bought a ticket in those two states could face double withholding, the group explains. That is in addition to the cut that the federal government will get. Winnings in excess of $5,000 are subject to a 25 percent federal withholding tax. 

The Illinois Lottery, which became the first state last week to sell lottery games online, said it sold more than $1 million from the Internet and recorded the largest sales week in state history, with sales totaling more than $94 million. Sales peaked on Friday night from 5 p.m. to 6 p.m. when lottery officials reported tickets selling at a rate of $37,600 per minute or $2.3 million in sales for that hour. 

Retailers also were watching. The retailer in Illinois that sold the winning jackpot ticket, MotoMart in Red Bud, will receive ,000. The 7-11 retailer in Maryland will receive a $100,000 agent bonus. 

Not every state was watching the numbers hoping a resident would score a big lottery win. Seven states don’t have a lottery (Alabama, Alaska, Hawaii, Mississippi, Nevada, Utah and Wyoming) and nine don’t have income taxes (Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming) The states with lotteries reaped nearly $18 billion in revenue in 2010, according to the latest figures from the North American Association of State and Provincial Lotteries.