Why Mark Cuban tells lottery winners to skip the cash option and take the annuity instead

With the Powerball jackpot reaching $1 billion this month and an Illinois player winning $1.04 billion, the fantasy math starts up again: the house, the cars, the family bailed out, the bills gone forever. Billionaire Mark Cuban has a blunter piece of advice for whoever is holding that ticket. Slow down.

Cuban knows how it feels to be flushed with a windfall of sudden money. He sold Broadcast.com to Yahoo for $5.7 billion in stock back in 1999 and spent years as an investor on ABC's Shark Tank, so when he laid out a lottery playbook for The Dallas Morning News as a 2016 jackpot neared $1.6 billion, it's worth bringing it up again. Most of it cuts against what people expect a billionaire to say.

His first instruction was not about spending at all. Hire a tax attorney, before the financial guru, the personal shopper or the friend who suddenly has a great investment idea. Also why you should take the annuity: "Don't take the lump sum. You don't want to blow it all in one spot," Cuban said. He favored the annuity, which pays the prize out over roughly 30 years.

The case against the cash

This is where Cuban parts ways with what most winners actually do. Nearly everyone takes the cash, and on paper that can be the smarter call: the lump sum, invested that receives a decent return, tends to beat the annuity's total over 30 years, which is the case we lay out in lump sum vs. annuity article.

Cuban's point is that the paper math assumes having discipline that most people do not have. A single account with hundreds of millions in it can drain shockingly fast once every relative, adviser, and old acquaintance comes knocking. The annuity's real feature is protection from yourself, not return: you cannot lose it all as if you spend all the money in a year, another big payday is coming the next year, and the year after. He extends the same logic to investing: "You don't become a smart investor when you win the lottery. Don't make investments." Winning a jackpot does not turn anyone into Warren Buffett, and a winner can simply bank the money, live well, and, as Cuban put it, "sleep a lot better knowing you won't lose money."

Then the phone starts ringing

The hardest adjustment, Cuban warned, is not the money but the calls. Friends and relatives will ask, and his rule was to say no, even when it is uncomfortable. That does not mean never helping anyone, but he drew a hard line: nobody needs $1 million or even $100,000 just because they asked, and a long-lost cousin with a business idea is not a financial emergency. It is the same instinct behind keeping the win quiet in the first place, which is the single best thing a new winner can do.

He was clear-eyed about what the money can and cannot buy. "If you weren't happy yesterday, you won't be happy tomorrow. It's money. It's not happiness," he said, before adding the other half: "If you were happy yesterday, you are going to be a lot happier tomorrow. Life gets easier when you don't have to worry about the bills." And when Business Insider asked if he had one last tip, he kept it short: "Be nice. No one likes a mean billionaire."

Whether the annuity is right for you comes down to your own discipline more than any formula, and our lottery tax calculator will show what each option pays after tax. But Cuban's larger playbook is hard to argue with. Get real advice first, set boundaries early, and figure out how not to lose the money before you spend a dollar of it. The full first-week checklist is here.

Sources

Barchart: Mark Cuban says if you win the lottery, don't take the lump sum

Business Insider: Mark Cuban's advice for lottery winners