Lottery winner scoops $1 million prize with ‘Jaws’ ticket – but her choice means she only takes home two thirds of cash

TWO one-million dollar prizes remain after a woman won the jackpot on a scratch-off ticket, but she only walked away with half her award.

The mother got the golden ticket when she bought a Jaws scratch-off from a Stop & Shop in Pembroke, Massachusetts.

“This is life-changing,” lottery winner Erin Cobb told Mass Live.

“We will make the most of it, and will have some fun,” she said, adding that she wants to use part of her winnings to go on a family vacation.

Cobb won $1 million on a Jaws scratch ticket. Shortly after discovering her win, she faced the crossroads every lottery winner faces: she could choose to receive half the winnings in a one-time lump sum or receive the total $1 million over several installments.

She chose the former, receiving a one-time payment of $650,000 before taxes.

Cobb isn’t the only lottery winner to opt to lose half her winnings, in fact, it’s quite common.

In June, an Ohio woman $15 million off of a $50 scratch-off she bought at her local gas station.

“I scratched it off and none of the numbers matched because I don’t scratch all the numbers,” the lottery winner who goes by Jeanne said.

“I scratched like maybe 10 or 12 and I usually know if it’s a winner or not. So, nothing matched, and I scanned it and it said, ‘Winner, see clerk.’”

When Jeanne went to the clerk, the employee couldn’t believe their eyes.

Jeanne had won $600,000 a year for 25 years.

“I was speechless,” Jeanne said.

“What I kept thinking is I’m just going to wake up. It’s not real.”

Rather than choosing to receive the $600,000 over the course of 25 years, the shocked woman decided to receive a lump sum payment of $7.5 million.

After state taxes, she took home $5.4 million.

Taking home the lump-sum payment may seem tempting, but lawyers and financial advisors argue that lottery winners should think twice before grabbing the money.

“Virtually everybody who wins the lottery picks the lump sum distribution,” said Andrew Stoltmann, a Chicago-based lawyer who has represented several lottery winners, told CNBC.

“And I think that’s a mistake.”

Stoltmann said that “the typical lottery winner doesn’t have the infrastructure in place to manage such a large sum so quickly.”

The lack of planning in place for receiving such a large sum of money at once can lead to reckless spending and other mishaps.

Those hoping to win the lottery still have a chance with the Jaws scratch-off ticket.

Two other million-dollar tickets are still out there, along with two tickets whose winners will get a paid trip to Martha’s Vineyard.

Lottery winnings: lump sum or annuity?

Players who win big on lottery tickets typically have a choice to make: lump sum or annuity?

The two payout methods can impact how much money you get from your prize.

Annuities pay out slowly in increments, often over 30 years.

Lump sums pay all at once but in a smaller amount, as taxes are withheld in one go. That means 24% of your prize goes to Uncle Sam right away. Many states tax winnings as well.

Annuities can provide winners time to set up the financial infrastructure required to take in a life-changing amount of money, but lump sums have the benefit of being taxed only once.

Inflation is also worth considering when making a choice, as payouts do not adjust with the value of a dollar. That means that you'll likely be getting less valuable money towards the end of an annuity.

Each state and game pays out prizes differently, so it’s best to check with your state’s lottery to confirm payment policies. A financial advisor can also help you weigh the pros and cons of each option.

Experts have varying opinions on whether to take the lump sum or take the annuity.