50 years ago, winning the “Gordo” prize in the Christmas Lottery meant becoming a millionaire overnight. One could immediately go from a humble life to a privileged life. It gave you to buy up to 12 apartments and 22 cars. Today it is barely enough to buy a home in many cities in Spain such as Barcelona and Madrid. This year, in particular, with a different taxation and soaring inflation, the award will remain in a shadow of what it once was.
The “Gordo” this year will stay at 328,000 euros per tenth after paying 72,000 euros to the Treasury. Next we explain what the public coffers of each prize take and how the taxes on the Lottery and those “dreams” of Christmas have evolved.
How much remains Treasury? First of all, it must be mentioned that the Christmas Lottery prizes, like the rest of the prizes awarded by State Lotteries and Gambling, are not subject to taxes if they are equal to or less than €40,000. since January 2020. In other words, only prizes greater than this amount (such as the ‘Gordo’) are taxed to the Treasury, where 20% is paid in taxes, withholding that is applied directly at the time of payment.
In this way, if you win the “Gordo” prize of €400,000 and you have a tenth, the first €40,000 would not be taxed, but of the remaining €360,000 the Treasury would keep 20% (€72,000), so that in the end you would charge €328,000. For the second prize, which is €125,000, you would pay €85,000 after the exemption, so the Treasury keeps €17,000 and the winner €108,000. And for the third prize (€50,000) you would have to pay €2,000 and you would keep €48,000.
Compared to other years. In the past, winning one of the first prizes in the Christmas Lottery meant much more than getting by for a low-income family, although now it has almost become a miracle to get rid of some debts and finish paying off mortgages. In 1950, when a house cost between 140,000 and 550,000 pesetas and a SEAT 600 around 45,000, earning the three million pesetas from the 1957 “Gordo” was enough to buy 10 apartments (for 255,000 pesetas) and 10 cars, according to calculations by this RTVE article.
For many, winning the Lottery meant becoming a rentier. Those 3 million pesetas converted to today’s euros would be equivalent to 900,000 euros, according to the INE income update calculator to November 2022. And in 1967 the prize was more enormous. That year the “Gordo” was 7.5 million pesetas then, which would be like winning 1.2 million euros now. It gave you 12 floors and up to 22 cars.
What happens now? Over time, the Christmas Lottery prizes have stopped spreading so much. In 2011, it was enough to buy two apartments and three medium-priced cars. But with the CPI and the tax increase, it is nowhere near the dream it once was. Now you could buy seven cars for 22,000 euros and only a house of one hundred square meters.
How much do the Spanish spend in tenths? In order to have a complete image of what the lottery really yields to the citizens, it would be necessary to know what they spend each year in tenths of the Christmas Lottery each year. That figure is 69.36 euros, slightly less than the 66.6 euros of 2021, according to data from the State State Lottery and Betting Society (SELAE). The decrease suggests the current economic situation and the inflation that households are facing.
And how much will the Treasury collect? Here is the million dollar question, worth the redundancy. The Treasury technicians (Gestha) calculate that the public Treasury will enter 163.8 million in taxes, 7.28 million euros more than last year, having issued eight more series. Therefore, the number of prizes increases by 1,224,320, up to 27,547,200 prizes, and the amount thus rises to 2,520 million. A good ‘bonus’, without a doubt, for the coffers of the State.
Image: GTRES (Alvaro Barrientos)