Lotto's mandatory contributions

The PCSO is mandated by virtue of a special law to contribute funds for the following government entities: the Philippine Sports Commission, the Commission on Higher Education, the Comprehensive and Integrated Shelter and Urban Development Financing Program, the Philippine Centennial Commission, the National Commission on Indigenous People, the Overseas Workers Welfare Administration, the Department of Foreign Affairs and the Quirino Memorial Medical Center.

The PCSO allocates to local government units a five percent (5%) share from the total sales of on-line lottery (lotto) outlets operating within their jurisdictions, including a documentary stamp tax from the said donation.

• RA#6847 – Six (6) Sweepstakes Draws as contribution to the Philippine Sports Commission Program
• RA#7722 – 1% of lotto gross sales to the Commission on Higher Education
• RA#7660 – Documentary Stamp Tax – 10% of the gross sales
• RA#7835 – 10% of Charity Fund to the Comprehensive and Integrated Shelter and Urban Development Financing Program (National Shelter Program)
• RA#8042 – Sec.20 and 77 of the Omnibus Rules provides for the appropriation of Php10 million for the Shared Government Information System on Migration (SGISM) under the Department of Foreign Affairs
• RA#8042 – Article IX Section 37 known as the Migrant Workers Act of 1995 – Php 150 million shall be funded from the proceeds of lotto draws taken from the Charity Fund for the Congressional Migrant Workers Scholarship Fund
• RA#8175 – 10% of net income for the Crop Insurance Program
• RA#8313 – Php100 million from lotto agents for the upgrading of the Quirino Memorial Medial Center
• RA#8371 – Php 50 million contribution to the National Commission on Indegenous Peoples for the Ancestral Domain Find
• RA#8492 – Php 250 million from the annual net earnings from lotto for the Museum Endowment Fund
• RA#9165 – 10% share on forfeited rpizes as special account in the general fund of Dangerous Drugs Board
• E.O.#201 – Php 1 billion Standby Fund for the financial requirement for Severe Acute Respiratory Syndrome (SARS) awareness and health promotion campaign
• E.O.#218 – Php 1 billion Standy Fund for the operations and programs of the Philippine Drug Enforcement Agency
• E.O.#280 – Php 250 million standy Fund for the financial requirements of the Avian Influenza or Bird Flu Viruses
• E.O.#357 – 5% Lotto share of local government units from the Charity Fund

P741M lotto winner is from luzon...

Through its Twitter account, GMANews confirms 1 winner of the P741,176,323.20 Jackpot for the November 29, 2010 draw of the Philippine Grand Lotto 6/55 which has the winning number combination, 11-16-42-47-31-37. The information is said to come from the Philippine Charity Sweepstakes Office (PCSO).

Here is what the Twitter status message says:

"PCSO confirms one winner of P741.2M peso Grand Lotto 6/55 Jackpot."

And perhaps it will be a security nightmare for this winner, if ever. In 2005, news broke out on the  alleged kidnapping of a 30-year-old lotto winner by nine neighbors who volunteered to escort him in claiming the P39.5-million jackpot prize. Investigation  showed that Erwin Namia, of Norzagaray, Bulacan, was reportedly abducted along with his wife, Virgie and their two sons on September 29 after getting half of the P79.2 million jackpot at the Philippine Charity Sweepstakes Office in Quezon City.

Side effects for these instant millionaires are not farfetched. Those of a poor socioeconomic background may not have proper money management skills. In addition, there are security and safety risks associated with publicly announcing the lottery winners such as holding family members for ransom.

For a lot of people, winning the lottery is the ultimate dream. But for many lottery winners, the reality is more like a nightmare. People who are not used to having money are fragile and vulnerable, and there are plenty of people out there who are willing to prey on that vulnerability -- even friends and family (.http://articles.moneycentral.msn.com/SavingandDebt/SaveMoney/8lotteryWinnersWhoLostTheirMillions.aspx)

The purchase of lottery tickets is, from the perspective of classical economics, irrational. However, in addition to the chance of winning, the ticket may enable some purchasers to experience a thrill and to indulge in a fantasy of becoming wealthy. If the entertainment value (or other non-monetary value) obtained by playing is high enough for a given individual, then the purchase of a lottery ticket could represent a gain in overall utility. In such a case, the monetary loss could be outweighed by the non-monetary gain, thus making the purchase a rational decision for that individual.

Lotteries are sometimes described as a regressive tax, albeit a voluntary one, since those most likely to buy tickets, and to spend a larger proportion of their money on them, are typically less affluent people. The astronomically high odds against winning the larger prizes have also led to the epithets of a "tax on stupidity" and a "math tax"