I've always found it odd how the lotteries do that. Win X Dollars. You can take it now as X/2 dollars, or you can take the 'whole thing' annually for the rest of your life in small amounts... where they mean less over time due to inflation... and you have to hope that the entity paying out is still around decades later. There doesn't seem to be a way to take your winnings in a way that preserves the purchasing power of those winnings at the time they were won.
It's because the annuity's figure is the purchasing power of those winnings at that time--the value you see as a jackpot is based on an annuity over a period of years. You're buying a lottery ticket to win a $XM dollar Y year annuity, with an allowed early exit (with penalty).
Taxes. Lottery winnings may be taxed depending on state taxes. Though it is not clear if this is a lottery or gambling. Gambling winnings are not normally taxed in the US.
Not accurate. For US federal taxes, you can deduct gambling losses against gambling winnings, but not against your income.
If you earn $50,000 in income, $X in winnings, and $Y in losses, you pay taxes on $50,000 of income, plus taxes on $X-Y of winnings (if it's a positive number).
You can only deduct them from your _winnings_, not income[1]. You can't go to Vegas, blow $10,000 on a single round of blackjack and deduct that at the end of the year.
Or maybe that is irrational, and your tendency towards Loss Aversion is lying to you. After getting your first cheque for $25M, your biggest worry shouldn't be about losses due to inflation on the remainder of the $1B sitting in trust, as you did not have $25M before, and now you do.
