Lottery withholding taxes are quite substantial, and from my understanding of the federal tax regulations, gambling winnings can be offset by gambling losses up to the amount won.
So if someone won 5 million dollars from a lottery ticket, and had a lot of it automatically withheld, that same withheld amount could be used (for fun, bankroll, consumption) by further gambling at high roller tables and slot machines and other lotteries, and losing.
This would then incur a tax deduction and if more was withheld than you won from the lottery ticket, then you would likely get it back from the government. In practice this would have to require spending the post tax cash, and getting a large refund, which is still a lot better than not having access to that portion of the original lottery proceedings at all.
Am I understanding this correctly?