In early May of 2012, I jotted down a set of ideas for the next code to write. I had decided that it would either be a web app (UnCommonWeb based) or a mobile app. With the mobile apps, android let you get an app running on a device for free, but iOS seemed far more monetizable. While I was toying with ideas that only a geek could love, Erin had a clever idea; an app to estimate the ‘cash in hand’ if you win the lottery.
The huge lottery jackpot values advertised are cooked in an interesting way. Estimates are made of ticket sales and some ‘magic math’ is done on that number to come up with an investment value. The advertised jackpot is the sum of the payouts if the original lump were invested and a fixed amount cashed out monthly over the term listed in the small print, something like 30 years.
That $100,000,000 jackpot on the billboard is NOT the winning amount! It’s an approximation of the value of the actual value if invested into a fund and tapped as an income value. If you wanted to cash out in one lump some and manage your own investments, the amount is significantly less.
Once you decide to take the cash out value, there are additional taxes that further reduce the take-home value. We focused on the US, looking at the Mega-Millions and Powerball lotteries in particular. The tax turned out to be chock full of special cases. There’s a federal hit right off the top. Some states don’t tax lottery winnings, others do. Some cities apply their own taxes. If you happen to win the lottery and live in Yonkers, there are 4 different taxes applied! If you buy the ticket in a state you’re not a resident of, the tax situation is further complicated.
So in late April of 2012, we set to work. We reverse engineered the ‘magic scalars’ and built the tax tables. We wrote a library in C to estimate the actual cash payout based on jackpot, location, residency, etc. We wrapped it in a simple iOS frontend and submitted it to the app store in late June. After about a week and a half, it quickly went from ‘waiting for review’ to ‘in review’ and ‘approved’. Success!