D.C. Mun. Regs. tit. 30, r. 30-942
Grand Prize Payments are made as a cash lump sum payment on a pari-mutuel basis.
A Grand Prize Winner shall receive a "Withholding Taxes Paid Prize."
"Withholding Taxes Paid Prizes" is a prize where the Lottery pays the prize winner a net prize amount, that consists of the Lottery reducing the "gross prize value" by the required federal and jurisdictional withholding taxes (if any), and withholding and depositing on behalf of the prize winner the required federal and jurisdictional withholding taxes (if any) on the "gross prize value" and the Lottery pays the prizewinner the residual amount (subject to any setoff requirements). Grand Prize winners will receive a Withholding Taxes Paid prize determined after deducting all applicable withholding taxes regardless of the "Advertised Grand Prize Amount", and which may be higher or lower than the "Advertised Grand Prize amount. Federal and jurisdictional withholding tax rates are subject to change and will be determined at the time the prize is awarded.
The "Withholding Taxes Paid" prize amount reported to the federal and jurisdictional revenue authorities by the Lottery as subject to income taxation shall reflect the amount paid to the prize winner and also the amount remitted as withholding taxes to the federal and jurisdictional authorities (if any) on behalf of the prize winner. The Lottery and MUSL Product Group are not responsible for additional income or other taxes applicable in excess of the amount withheld and remitted by the Lottery that may be due when the prizewinner files all tax returns for the year the prize is claimed; Prizewinners should verify personal tax liability with a financial adviser.
For example, if a single Grand Prize winner wins the "Advertised Grand Prize" of $2,000,000.00 that has a gross prize value of $3,050,000.00, and the federal withholding tax rate is 25% and the jurisdictional withholding tax rate is 6%, the Lottery will withhold and remit $762,500.00 in federal tax withholding, $183,000.00 in jurisdictional tax withholding and pay the prize winner $2,104,500.00 in a single cash prize payment (subject to any setoff requirements); at the end of the tax year the Lottery will communicate to the prizewinner a W-2G Form showing prize won of $3,050,000.00.
Grand Prize winners will receive a "Withholding Taxes Paid Prize" determined after deducting all applicable withholding taxes regardless of the "Advertised Grand Prize Amount", and which may be higher or lower than the "Advertised Grand Prize amount."
Advertised Grand Prize Amount shall be the minimum cash amount that would be paid as a "Withholding Taxes Paid" prize to the Grand Prizewinner(s), on a pari-mutuel basis, after calculating the potential federal and jurisdictional withholding taxes, if any, to the Gross Grand Prize Amount. Minimum guaranteed prizes or increases may be waived if the alternate funding mechanism set out in § 941.5.
Entitlement to the Hot Lotto® Grand Prize, or a per winner portion thereof, shall occur upon the:
A payment election made after entitlement to the prize occurs is final and cannot be revoked, withdrawn, or changed.
The Executive Director may adopt procedures, requirements, and documentation to complete a Hot Lotto® Grand Prize payment election. The Executive Director's acceptance of an election is conditional upon his or her determination that the election request is valid.
If the documentation required by the Executive Director to complete a prize election is to be completed and signed in the name of a legal entity, the entity must designate in writing one (1) duly authorized natural person to execute the documentation.
If a Hot Lotto® Grand Prize claimant is unable to complete the documentation required by the Executive Director for a prize payment election due to a legal, physical, or other disability, a duly authorized representative, guardian, conservator, custodian, or other fiduciary may complete and execute all required documentation on the claimant's behalf.
If a natural person completing the documentation required by the Executive Director to complete prize election is the personal representative of the estate of a deceased winner, or the authorized representative of a legal person or other entity entitled to claim the prize, he or she shall submit his or her letter of administration, trust, other authorizing documents, or their legal equivalent, showing an appointment from the court having jurisdiction over the estate, or other evidence of legally binding authorization.
A person who executes documentation required by the Executive Director to complete a prize election shall be considered to have represented that the information contained therein is accurate and complete. Any person who willfully submits false or fraudulent documentation may be prosecuted for the offense of making a false statement in accordance with D.C. Official Code § 22-2405 (2001 ed.).
All provisions of this title relating to the election of a Hot Lotto® Grand Prize payment shall be interpreted in a manner that is consistent with the purposes, requirements, and restrictions of 26 U.S.C. § 451.
If the Hot Lotto® Grand Prize is not won in a drawing, the prize money allocated for the Hot Lotto® Grand Prize shall roll over.
Prior to a drawing the Product Group shall determine and publicly announce the "Advertised Grand Prize" amount for that drawing. The Gross Grand Prize Value amount, that is used to determine the Advertised Grand Prize amount, shall be a guaranteed amount, and the Product Group may offer guaranteed minimum Gross Grand Prize Value amounts or minimum increases in the Gross Grand Prize Value amount between drawings or make other changes in the allocation of prize money where the Product Group finds that it would be in the best interest of the game. Guaranteed Gross Grand Prize Value amounts shall be funded as determined by the Product Group.
Grand Prizewinner shares shall be determined as follows: if there are multiple Grand Prize winners during a single drawing, then a winner's share of the Grand Prize shall be determined by dividing the Gross Grand Prize Value by the number of winners.
A share of the Hot Lotto® Grand Prize may be rounded to facilitate the purchase of an appropriate funding mechanism. Funds remaining after the prize has been rounded down on a Hot Lotto® Grand Prize win, ("breakage"), shall be added to the first cash payment to the winner or winners. Prizes which, under this chapter, may become single-payment, pari-mutuel prizes, may be rounded down so that prizes can be paid in multiples of whole dollars. Breakage resulting from rounding these prizes shall be carried forward to the prize pool for the next draw.
D.C. Mun. Regs. tit. 30, r. 30-942