Lotto’s big winners: Does a multimillion-dollar prize really make you happy?

ANALYSIS: Someone could win big in the March 18 Lotto draw to raise money for cyclone relief.

Last time Lotto held a disaster relief draw, someone won $10 million, with the draw raising around $3m for Kaikōura earthquake relief.

But while money raised will have a positive effect on cyclone-devastated areas, can we be sure the same thing can be said of the effect on the winner of pocketing such a large prize?

The Lottery Commission does not research whether winning has long-term positive or negative effects on winners, but there are calls for it to start a long-term study to find out what winning really means for people.

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Andree Froude from the Problem Gambling Foundation said the potential for harm after a big win was not the kind of problem the foundation spent much time thinking about.

“I think it would be very good to know. It would be very useful information. It’s life-changing for people, obviously.”

It might be especially important to research outcomes for winners of different ages in order to work out whether the commission needed to do more to support groups of people who might struggle to cope with sudden, massive wealth.

“I think that people of different ages and stages of life would be affected differently,” Froude said.

Care of younger winners is something the commission has been thinking about.

“One of the things we are looking at is whether we customise the process for people at different life stages; whether at 20 you need quite different life support than if you win Lotto at 65,” said commission spokesperson Lucy Fullarton.

“They need to make sure they still have purpose in their lives, who could we refer them to? What support would they need?”

Currently, everyone tended to be treated the same in terms of advice and help, said Fullerton.

When people win big, they are offered support and advice, including making sure they speak to a private banker at their bank, and consider getting a financial adviser to help them manage their wealth.

They also get Lotto’s Winners’ Book, which gives them a run-down on things they need to think about, including advice on who to tell about their win.

Overseas, more extensive support is sometimes offered to big lottery winners.

One example is in France, where people who win big are invited to join small groups of other winners to share advice, and support each other.

“The problem in New Zealand, is it’s smaller, and everyone knows everyone, or their cousin, so we need to be more careful, but it’s definitely something we are considering as we look at how we evolve the experience,” Fullarton said.

There are some anecdotal statistics in the Winners’ Book, including that just 8% “told everyone”.

But in terms of outcomes, what Lotto has is anecdote, not fact, despite the commission handing out jackpots since 1987.

Fullerton said winners were contacted after six and 12 months to check whether they needed anything.

“Anecdotally, the vast majority of them do have pretty steady outcomes. Using their winnings to help family and friends, paying off the mortgage, is really common,” she said.

Many take trips overseas to places they have longed to visit.

But Kiwis were a culturally conservative bunch when it comes to money, she said, and most continued to work.

The Lotto Winners’ Book says 85% of big winners keep working in the same job as before their win, but that is not based on long-term data gathering.

“We don’t hear of many people changing their lifestyle in any significant fashion, but that’s not to say it doesn’t happen,” Fullarton said.

Research overseas might provide hints as to the actual outcomes that might be expected for big winners in Aotearoa.

Sweden does keep in contact with its lottery winners, while maintaining their privacy, enabling long-term research to be carried out.

A 2020 paper on more than 3000 winners of larger prizes of US$100,000 or more found large-prize winners experienced “sustained increases in overall life satisfaction that persist for over a decade and show no evidence of dissipating over time”.

The winners had bought their golden tickets between five and 22 years before the research was carried out.

But while people who won big generally had more satisfying lives, they were not meaningfully happier on a day-to-day basis, and winning big did not result in better mental health.

The effect of winning big on day-to-day happiness, and mental health, were “not statistically distinguishable from zero”, the authors of the study concluded.

Not all research overseas paints a glowing picture of winning big.

One 2011 US study claimed people who won lotteries – both large and small prizes – were more likely to go bankrupt in the following five years than the average American.

Fullerton thinks US is so culturally different from New Zealand, and the jackpots there so massive, that comparison has to be approached warily.

Last year, one California lottery player won just over US$2 billion.

There can also be massive social pressure on US winners as in the US, a lot of lotteries’ terms and conditions require people to go public, Fullarton said.

The Lottery Commission would never make that a requirement of play, she said.

In New Zealand, Fullarton said the jackpot tended to be struck around 12 to 15 times a year.

That meant the sums people received were life-changing, but manageable, and the record $42m October 2021 Lotto win remained unusual.

“They are the kinds of amounts people can process,” Fullerton said.

Little is also known about the impact the children and grandchildren of big lottery winners in New Zealand.

One US study on a long-running state lottery found the wealth effect lasted for several generations, but finally disappeared.

If the commission does begin research, it will be some years before strong conclusions could be drawn on whether the Kiwi winning experience is different to the Swedish one.

“It would take five to 10 years to get any meaningful data, but we would like to get something in place,” Fullarton said.