How Lottery Winners Spend Their Money

Dec. 12, 2012 -- Lottery winners: What separates the ones who live happily ever after from the ones who, five years later, wind up drunk, broke, in jail or hounded by the IRS?

Stephen Danish knows. In fact, the Virginia Commonwealth University professor of psychology is such an expert on the subject that the Virginia Lottery has hired him to counsel winners. Asked by ABC News how many winners he has helped, he puts the number is in the double digits.

He once told the Roanoke Times that he can tell how well (or badly) somebody will handle a lottery windfall when he hears them talk about their future: If they talk only about spending, he says, he knows they're in trouble; if, though, they talk about what they want to accomplish with the money, he knows they're going to be okay.

Winners who go on to lead successful lives, he tells ABC News, are those who had well-defined goals, plans and ambitions long before they ever bought a ticket. They view money not as a plaything to be frittered away, but as a tool with which to gain some practical end. The more specific their ambition, the better.

Jay Vargas, according to the Tampa Tribune, was just 19 when he won a Powerball jackpot of over $35 million in 2008. At first, Vargas told the paper, he partied hardy. What saved him from a life of dissipation? Ambition. He knew what he liked: hot women and professional wrestling. Eventually he found a way to invest himself and his money in these two.

He founded Wrestlicious, a Tampa TV production company whose programming features gorgeous, sweaty women in small costumes grappling with one another. It went into syndication in 2010.

Asked by a Wrestlicious interviewer on the eve of his show's debut if he felt his money had been well spent, Vargas said: "I think it has. Time will tell of course. It certainly has been an awesome learning experience. Best case, we have a huge hit. Worst case, I have a tax write-off." The show did a premiere season but has since gone into hiatus.

Likewise, William Kiefer of Katy, Texas, knew what he liked: nuns.

In 2010, Kiefer, according to the Houston Chronicle, won what was then the largest prize in Texas Lottery history—$144 million. "The greatest gift my parents gave me," he announced in a statement, "was to be raised a Christian. I plan to give 60 percent of all [my] after-tax winnings to charity."

"We are proud to count Mr. Kiefer among our players," said Lottery Executive Director Gary Grief in response. "Many winners plan to give to charity, but I don't think we've ever seen generosity quite like this."

Among the causes Kiefer has supported is the care of retired Catholic nuns. Sister Deenan Hubbard of the Sisters of Charity of the Incarnate Word, speaking to the Houston Chronicle, described Kiefer as a really good man with a big heart. Kiefer, who has refused to grant interviews to any news organizations except the Texas Catholic Herald, said the other objects of his charity would include abused children and Haitian relief.

Professor Danish notes that no matter what kind of person you are—goal-focused or a sybaritic layabout-- winning the lottery can be tough: "You're bombarded by people asking, threatening, trying to do whatever they can to get money from you. To be able to say 'no' is difficult but important, because otherwise you'll find you have no money left."

It's not bad to give it all away, he clarifies. "That's fine. But that has to be your plan. You have to know how much you have, how much you want to give away, and how much you need to keep."

The holder of the winning ticket is not the only one fate favors when someone wins the lottery: The merchant who sold the ticket also cashes in.

In 2011, a supermarket customer on Long Island won $72 million from the New York State Lottery. The winning ticket was sold him at a ShopRite owned by Mannix Family Supermarkets. Kevin Mannix, owner of the company, tells ABC News that he got $10,000 from lottery officials for having sold the winning ticket.

"Yes, I'm sitting in my office looking at an enlargement of the check right now," Mannix tells ABC. He donated part of his winnings, he says, to the Salvation Army, some to the Food Bank of New York, and some to Project Hospitality, which is providing relief for victims of Hurricane Sandy. "That was the appropriate thing to do," he says. After that, he had exactly $1 left over, which he used to play the lottery.

He didn't win.

Mannix's ShopRite has been lucky once before. Six years ago, a group of 10 bakery employees split a $19 million ticket. Nine of them, says Mannix, decided to keep working and are still on the job. None went wacky or became a drunk or wound up in jail. Some, he says, "bought their dream house." Others salted away the money, to be used later to pay for college for their grandkids. Some paid off mortgages. A few took trips. "They didn't spend foolishly," says their boss. "They're hardworking, blue collar people. It's a great story with a great ending."

There are sad stories as well. On Monday, DeeDee Moore, the Tampa woman accused of swindling and then killing lottery winner Abraham Shakespeare, was found guilty of first degree murder and other charges. Shakespeare had won $30 million in the Florida Lottery but gave it away to people who simply asked for it. His luck ran out when he met Moore.

"Abraham Shakespeare was your prey and victim. Money was the route of evil you brought to Abraham. You are sentenced to life in prison you shall not be elegible for parole," Judge Emmet Battles told Moore. You can read more about this story here.