Arkansas Scholarship Lottery (ASL) knows everyone dislikes paying taxes, especially when they win a lottery prize. In April, ASL launched a Taxes Paid family comprised four scratch-off tickets that solves that issue for top-prize winners.
When a player wins the top prize on any of the four “Taxes Paid” tickets, he will be paid the entire amount. The lottery is actually increasing the amount of the prize and then paying the taxes so the winner collects the entire prize amount printed on the ticket. Normally the lottery deducts 24% for federal taxes and 7% for state taxes before awarding the winning check.
“We’ve had earlier versions of a Taxes Paid ticket over the past decade that had some varied levels of success, and we’ve found that support for such a family seemed positive and worth pursuing,” said ASL Executive Director Bishop Woosley.
Two price points were researched with players. “We focus tested the $5 ticket ($100,000 Taxes Paid) and the $10 ticket ($200,000 Taxes Paid) ahead of time—both in an effort to gauge the popularity of the ticket and potentially as a family of tickets, and also to find the way to best communicate the concept to players when/if we released the games,” said Woosley.
Paying the taxes does “inflate” the prize payout as ASL has to incorporate the cost of paying the taxes. “We have a set payout range that we try and stick to for each particular price point, and these tickets are definitely on the higher end of that range, but not high enough to set them apart in that regard,” said Woosley. “Since the taxes are paid only on the top prizes, it does not stretch the payout egregiously.”
ASL didn’t intentionally chose to launch the family after April 15 (Tax Day). “We wanted to introduce a new, attractive family of tickets in May, the Taxes Paid family was the best idea we had, and if it just happened to hit the month after Tax Day, well, that was really just a happy coincidence,” said Woosley.
The names of the four tickets are: $5,000 Taxes Paid ($1) ; $20,000 Taxes Paid ($2); $100,000 Taxes Paid ($5); and, $200,000 Taxes Paid ($10).
The Taxes Paid theme for scratcher is popular with multiple U.S. lotteries. “I know that we are certainly not the first lottery to have done a Taxes Paid ticket, and we ourselves have done four of them (one $10 ticket, two $5 tickets, and a $2 ticket) outside of this family over the past decade. Other lotteries have even done a family launch of these type of tickets. Illinois last year, North and South Carolina in 2017, Missouri and Arizona in 2016,” said Woosley.