Problems That Past Lottery Winners Have Faced

Winning the lottery is something most people only dream about, which is probably a good thing because a large, unexpected windfall can be more of a curse than a blessing. Lottery winners face a variety of personal and financial challenges that can drastically alter their lives -- and not always for the better. Some winners even end up going broke after pocketing millions of dollars in prize money.

Winning the lottery can change the nature of personal relationships. Spouses may disagree about how to spend prize money and even split up over disputes about winnings. Sudden riches also can alienate winners from friends, family members and co-workers and make them targets for people begging for cash or loans. For example, "TIME Business" reports that a Texan named Billie Bob Harrell Jr. squandered a $31 million jackpot giving handouts to friends and family and making poor financial decisions before eventually committing suicide.

Lottery winners are often lack the financial education and discipline to handle large sums of cash. Instead of getting sound advice and making wise investments, winners may go on spending sprees, buying mansions, fancy cars and making other lavish purchases. Rampant spending can whittle away even the largest lottery jackpots, leading to massive debt and bankruptcy. Some winners use their newfound wealth to fuel addictions, says "Business Insider," citing the case of Michael Carroll, an Englishman who blew more than $15 million on cocaine and prostitutes.

Coming into a large sum of cash can lead to a variety of legal problems. People who play the lottery sometimes enter into pools with friends or co-workers who intend to split winnings if anyone in the pool happens to win. Refusal to split a prize as agreed in advance could lead to a costly lawsuit. Similarly, divorces can force spouses to split up prize money.

When it comes to taxation, more money usually means more problems. Lottery winners have to fork over a share of their winnings to the Internal Revenue Service for income taxes, and things like investments and gifts also can have tax consequences. Failure to pay taxes can lead to penalties and, in some cases, jail time, as in the case of Rhoda Toth, who served two years in prison for tax evasion after wasting a $13 million jackpot.