Investors Haul In Nearly Half the Tobacco Settlement Cash

An updated tally by ProPublica shows that tobacco bondholders are due $2.6 billion of the $6 billion in this year’s payouts to state and local governments from Big Tobacco.

by Cezary Podkul and Claire Kelloway
ProPublica, Sep. 11, 2014, 8 a.m.

Each April, cigarette manufacturers pay states billions of dollars to reimburse them for the health-care costs of smoking. About $100 billion has been paid so far, all under a landmark 1998 legal settlement with Big Tobacco. The payments are to go on forever as long as people smoke.

Much of the money, however, doesn't go to government coffers anymore. As ProPublica reported last month, a large chunk now flows to investors – the result of deals that politicians and Wall Street bankers arranged to get cash up-front by trading away the tobacco income decades into the future.