This often quoted line is a complete media distortion of what really happens. It is wrong. I highly recommend being skeptical of the misinformation spread by news and looking into the primary sources yourself.
Here’s the Florida study that this line is referring to:
https://eml.berkeley.edu/~cle/laborlunch/hoekstra.pdf
Here’s the actual results of the study:
Results show that although recipients of $50,000 to $150,000 are 50 percent less likely to file for bankruptcy in the two years after winning relative to small winners, they are equally more likely to file three to five years afterward.
First, this study wasn’t people winning millions and blowing it, it’s people winning modest amounts under 200K. Second, they’re not going bankrupt at higher rates than other people, they’re filing less often in the short term, and at the same rates in the long term. In other words, the lottery winnings of $10K - $200K didn’t help their longer term life prospects.
Is that some sort of surprise? Anyone would spend $200K in 5 years.
The winnings did not create higher rates of bankruptcy, and I don’t know right now where the 70% number came from. The number of people who filed for bankruptcy was 5.5%.
