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America is the only country I've ever heard of that does this, BTW.

Marketing. It allows you to advertise a prize about double of what it normally would be.

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.

> Gambling winnings are not normally taxed in the US.

Where did you hear this? They're income, and subject to the income tax.

Not only that, you can deduct gambling losses from your income, if you're unlucky.

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.

1: http://www.irs.gov/taxtopics/tc419.html

Taxed in the US but not in Canada I believe (IANAL etc)

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