What happens when a state can't pay their lottery winners?

There’s a common theme which runs through some of the old time gangster movies I used to watch and it has to do with the numbers racket. It was basically the same as the lottery today, only done on paper and run by mobsters. People would frequently ask why poor, destitute people would risk the little money they had taking a chance on such an endeavor, having long odds and forcing you to deal with criminals.

The answer was fairly simple. Because if you do manage to win the mob always pays.

And it was true. They couldn’t afford to not pay because nobody would play any more. With that in mind, I wonder if Illinois will be running into a similar phenomenon in the near future? If they don’t get their state budget squared away in the next couple of weeks they will either be cancelling all lottery ticket sales or be unable to pay the big winners. (CNN)

Illinois lottery officials are warning that if the state legislature doesn’t pass a budget before June 28, they will halt Powerball and Mega Millions ticket sales in the state.

Without a budget, there’s no money earmarked to pay lottery winners.

Illinois is years into a fiscal crunch, and this isn’t the first time budget gridlock has thrown a wrench into its lottery.

In 2015, the state government had to issue IOUs to players who landed large cash prizes because lawmakers couldn’t agree on a budget.

The cause of the problems facing Illinois right now isn’t the lottery. That’s just collateral damage. What they’re dealing with is a nearly $120B public pension fund crisis. That’s how far in the hole the pension plans are and it adds up to right around $10,000 of debt for every man, woman and child in the state. They worked out the same fat deals for government employees that so many other states did over the years having no idea how they were going to pay for all those goodies when the bills came due.

Now it’s happened. And if the dominoes start falling in Illinois their future looks bleak indeed. The lottery may only be one side effect, but it could be a telling one. Much like the old mobster movies I referenced above, nobody is going to be buying tickets if the state isn’t paying the winners. And that means that another revenue stream dries up just when they need every dime they can lay their hands on.

Of course, if things get too bad, Illinois could just try offering the big prize winners a steak dinner instead of the cash. It seems to have worked for one casino.

Ed Morrissey Jan 28, 2022 8:31 AM ET