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Thursday, May 5, 2016

Ross Rambles: Misinformation from a trusted source

Tuesday, July 18, 2006

A headline in a recent Associated Press article reads, "Auto parts workers split $9 million jackpot."

Before I had read any further than the headline, I assumed that the headline was misleading, as announcements from state lotteries (in this case the Indiana Lottery) tend to be. I also suspected that the editor or other employee at the Associated Press responsible for relaying this press release was too lazy or ignorant to correct the misleading headline suggested in the lottery's self-serving press release.

I acknowledge that because of our limited staff here, we sometimes do not research or edit press release information to the degree we should and some self-serving press releases get into the paper with little or no modification.

However, the article I am referring to was released nationally from the one major wire service in the country and it involves a type of misinformation that has been passed along to readers for decades.

Some may disagree, but I regard inflated lottery claims as more than a semantics dispute. Such claims are fraudulent and only tolerated because those making the claims are government entities.

When a jackpot of $9 million is announced, the prize is not actually $9 million. It is an annuity that will pay off a total of $9 million over a period of years.

I don't know the number of years the Indiana Lottery annuity has. The multi-state Powerball, which includes Iowa, now uses a 29-year annuity.

The Powerball offers an immediate payout of about half the amount of the stated jackpot, but the percentage of payout doesn't stay consistent every week. The recent Indiana Lottery payout was $3.7 million, 41 percent of the $9 million prize amount reported.

I can imagine how a merchant would react if I ordered a product sold at $100, then gave the merchant $50 and said, "Put this in the bank and leave it for 29 years and you'll have your $100."

I became even more annoyed at the AP article when I read that the workers chose the $3.7 million instant payout rather than the $9 million long-term payout, which makes the $9 million figure mentioned not just misleading but downright false. How is $3.7 million a $9 million jackpot?

I find the negligence of the AP more disturbing than the misleading hype of lottery officials. News associations are supposed to act as gatekeepers of information, weeding out false or misleading claims.

The story of the Indiana win has some general interest justifying its national distribution. A group of coworkers at a plant destined for closing had been pooling money for 16 years and finally hit the jackpot on their last week of play.

The headline could have avoided any reference to a specific dollar amount. There could have been a reference to the $3.7 million actual payout early in the article and the less relevant $9 million potential long-term payout could have been explained later in the article or simply not mentioned at all.

I personally don't play the lottery unless I hear that the jackpot is over $100 million. Of course, that means that the prize is actually about $50 million with $17 million or more in taxes taken out immediately, reducing the payout to maybe $33 million. Then there's the investment of at least $1 for the ticket, further reducing the actual profit.

That would leave a nice sum in prize money but it wouldn't be $100 million.