Lottery winnings are payments - usually annual - paid by state lottery commissions to lottery winners.

Large lottery winnings are usually not paid out in one lump sum, but in annual installments over 10 to 26 years.  Even though the dollar amount awarded in a lottery may be high, when winnings are rationed out over time, the installment payments may be relatively small.  For example, a $1 million lottery payment prize paid out over 26 years works out to only $38,461 per year - before taxes.

Selling future lottery payments for cash benefits winners who want to or need an immediate lump-sum payment rather than a series of small payments over time.