Judge to toss out lottery suit, concerns remain

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Sacramento Bee

A Sacramento judge this week is preparing to throw out a lawsuit alleging the state Lottery engaged in what amounted to deceptive advertising, but beneath the surface, questions about the fairness of the lottery’s Scratcher games linger.

The problem, as the lawsuit alleged and the Lottery Commission admits, is that Scratcher game tickets were sold after all the top prizes were gone.

Over the 15-year history of the game, the lottery took in $892,000 from 11 games where tickets were sold after all the top prizes were awarded.

While lottery officials say they have implemented a number of reforms after first learning of the problems in April 2001, they acknowledge they didn’t foresee what happened.

“Barrels of Bucks,” for example, was one of the games in which tickets were sold after the top prizes were awarded. The game, introduced in August 1997, carried a top prize of $5,000. The last of the nine $5,000 awards was claimed Nov. 18, 1999, but the commission continued to sell tickets until Aug. 1, 2000, collecting another $16,000.

At the time, those managing the games did not consider the number of top prizes available when deciding when to stop a game.

Given the way games are printed, officials said they doubted that all the top price tickets would be sold before they stopped the game.

“We should have been monitoring it,” said Jim Hasegawa, the lottery’s director of marketing.

In a lawsuit filed in October 2000, Amy Stanley, a San Francisco teacher, accused the state of selling her and thousands of Californians instant win Scratcher tickets with no chance of winning the big prize.

Stanley’s lawsuit said that she and others would not have played the games if they knew the games’ selling point – the top prize – had been won and claimed.

“If the poster says, ‘Win a Harley Davidson’ and all the Harley Davidsons have been won, your chance of winning a Harley Davidson is zero,” said Tracey Buck-Walsh, one of three lawyers representing Stanley.

In a tentative ruling expected to become final later this week, Superior Court Judge Ronald Robie said the law compelling the lottery to adhere to fair business rules common in the public sector allowed some discretion. He didn’t comment on the lottery’s practices or whether it improperly advertised its games.

But critics say the gaffes erode the reputation of the lottery.

“The integrity of the entire lottery process has been called into question,” said Harvey Rosenfield of the Foundation for Taxpayer and Consumer Rights. “The public would be shocked to learn they may have bought a lottery ticket in a game they have already lost.”

Scratcher tickets are printed and distributed in bundles of tickets, with each bundle including an equal number of each prize level winners. So while it is unlikely that the first ticket sold from the last bundle printed and distributed would be the winning ticket, it is possible.

And because there is only one top prize in each bundle and each is distributed as needed, critics of the process argue that there is a chance throughout the course of the game that a top prize has been won and a new bundle of tickets is not yet in stores.

In a theoretical sense, the odds of winning the big prize is the same from the first ticket to the last ticket, said Allan Fenech, associate professor of statistics at the University of California, Davis.

If the same Scratcher game were played, but all the tickets were bought at the same time and all of the scratching took place at the same time, few would have a problem with the game, Fenech said. The “psychological” problem arises when winners emerge before the last ticket is sold, he said.

The lottery now says it is monitoring the number of top prizes available on a daily basis. Once they see that only one or two top prizes remain available, they say they begin the four-week process for ending the game.

Consumer Watchdog
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