Is the State of Illinois running out of money, or are lottery payments caught up in legislative red tape? Either way, winners of over $25,000 have to take an IOU. The Illinois Lottery does not have the money to pay winners, at least not for now.

State public relations gave the following excuse:

“All winners will be paid in full as soon as the Lottery and the Illinois Comptroller have the legislative authority to do so,” Lottery spokesman Steve Rossi said in a written statement.

But what if the legislature never agrees to a budget that allows for these payments?

The lottery “gives back” money to several state programs. The list is wide, and poorly defined:

The Illinois Lottery strives to enrich the communities we serve and improve the lives of those who live and work in them. Thus, as part of our mission, we are committed to leaving a positive “footprint” throughout Illinois by responsibly delivering growth, and providing resources to support the Common School Fund and Capital Improvements throughout the state. In addition, the Illinois Lottery is committed to providing funding for the needs of Illinois Veterans, and raising awareness about life changing illnesses such as Breast Cancer, HIV/AIDS and Multiple Sclerosis through our specialty tickets.

While the money goes to good causes, the decisions about how the yield from lottery profits is used is ill-defined.

The Illinois Lottery gives players a number of options to play, even though it may not be able to pay winners. These range from daily games to instant games and Jackpot games. The Jackpot games begin with a prize pool value of $40 million. Presumably the players of these games can win tens of millions of dollars — and not get paid.

There is at least one important lesson from the Illinois Lottery debacle. States that cannot run their financial operations, or cannot fund them, can treat people as they like. On the other hand, try to skip paying the State of Illinois income taxes.

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