States Cheat Lottery Players Out of Millions

Radley Balko | July 2, 2008

USA Today reports that many states have continued selling scratch-off jackpot tickets long after the top prizes emblazoned all over the tickets have already been awarded.  A law professor in Virginia is filing a class action suit claiming the state sold more than $20 million worth of such tickets per year for at least three years.

The states claim that the practice isn't fraudulent because smaller prizes are still available, and because lottery players can check the back of tickets (after they've already bought them) and websites for disclaimers and lists of prizes already claimed.  Despite that weak defense, several states, including Virginia, have since discontinued the practice.

Virginia, by the way, has killed two of its citizens in police actions aimed at protecting residents of the Old Dominion from losing their money while gambling privately.  Because those shady black market bookies might take your money under false pretenses.

Comments

SIV|7.3.08 @ 12:36AM|#

I noticed this back when FL introduced the lottery in the 1980s. If there is one "million dollar prize" on a scratch off and the first ticket on the roll wins they have 5 million "losing" tickets left to sell. So what, State lotteries are, by definition a "cheat". Tax on stupidity, tax on those who don't understand math. I'll stil buy a single powerball or megamillions when the jackpot goes over 100 million. Back of the envelope figuring says the lump sum is roughly half the annuity, multiply x .6 for taxes = 30 million cash to a single winner.I'm more likely to be struck by lightning while being attacked by a shark and saved by a meteor strike , but hey, somebody has got to win! I do feel dirty after plunking down my buck at the gas station or liquor store as gambling is truly a degenerate behavior.

TallDave|7.3.08 @ 12:37AM|#

shady black market bookies might take your money under false pretenses.

Isn't that the definition of a government, too?

Dave B.|7.3.08 @ 12:57AM|#

Tax on stupidity, tax on those who don't understand math.

This argument only works if you assume that the sole reason for playing the lottery is monetary. Lottery tickets are a pretty cheap thrill. Being able to enjoy it is hardly a mark of stupidity.

|7.3.08 @ 1:00AM|#

Buying into a 1 in 14 million chance is pretty close to buying into a 0 in 14 million chance. At the end of the day, you still gave your money to the state for basically no shot at winning.

Dave B.|7.3.08 @ 3:32AM|#

You don't have a chance of winning anything when you go see a movie either, but people still buy tickets. The reasons are the same for both, people enjoy the experience they derive from the purchase. Of course, there are people out there who buy scratch off tickets for the money, but even then it's not like they're losing that much.

|7.3.08 @ 7:10AM|#

I bought these couple times for the entertainment of daydreaming about what I'd do with $100million. Then I realized I didn't need to give money to the state to do that daydreaming.

And the answer is: Hookers and Blow - lots of Hookers and Blow.

|7.3.08 @ 7:44AM|#

The lottery is a game only. The problem is with those who try to treat it as an investment...Unfortunately, too many think they have a real probability of winning eventually.

I play lotto occasionally when the prize gets north of $50M but it's discretionary anyway. I can buy $5 in tickets or a cup of Starbucks. Eventually the Starbucks just makes me pee.

The states do make available the status of the winnings, they just don't advertise that the big prize is gone.

Caveat emptor.

parse|7.3.08 @ 8:06AM|#

Virginia, by the way, has killed two of its citizens in police actions aimed at protecting residents of the Old Dominion from losing their money while gambling privately. Because those shady black market bookies might take your money under false pretenses.

I never heard this particular justification used in defense of laws against gambling.

|7.3.08 @ 8:14AM|#

Definitely bogus. Unlike jackpot lotteries, where the time variable simply increases the pot, with scratch tickets, the time variable increases your odds.

FWIW...NH is among those which terminates the game when the top prize has been taken.

Guy Montag|7.3.08 @ 8:59AM|#

Gambling rules of thumb:

1. The mob pays better than any government, and they pay what they advertise.

2. Parimutual betting is your best bet, second best if the government has it's fingers all over it.

3. You frequently can get a better payoff from a horse race bet from a bookie than at the track (#2).

4. Exception to #2: Jai Alai is probably the most fixed game ever in parimutual betting.

5. Dog racing is too unpredictable to bother betting. Use the ex-wife method: bet a name you like.

J|7.3.08 @ 9:04AM|#

I also agree that they aren't a tax on stupidity (or at least not only one). Buying a $1 ticket for the anticipation and suspense of seeing if you win isn't really a bad choice (assuming you can afford $1 for a little bit of fun).

The state's advertising it that way still suck.

J|7.3.08 @ 9:04AM|#

states

|7.3.08 @ 9:11AM|#

It never occurred to me that a state would pull tickets when the top prize was won. I just always assumed there were a certain number of prize tickets, randomly scattered through the rolls they sell to vendors. Just because the big prize is gone doesn't mean you can't win the free ticket, or the $1, or the $5 . . . .

And if you can't stand the thought of spending the money after the big prize is gone, why are you buying scratch tickets?

Shirley Jackson|7.3.08 @ 9:22AM|#

Lotteries can be lots of fun, but not for the winner.

|7.3.08 @ 9:42AM|#

I find Indian casinos are a much more interesting way of blowing money. You get to see and meet so many fascinating people there.

|7.3.08 @ 10:00AM|#

I've found that blackjack gives the most entertainment value for the dollar, especially if you find a lively table.

Phil|7.3.08 @ 10:47AM|#

Um, why is that a problem? If you *don't know* if the winning ticket has been sold, your chances are the same regardless.

Suppose customers were prohibited from scratching their tickets until all the tickets were sold. In that case, if you buy your ticket late, there's a good chance the winning ticket is gone. But if it's NOT gone, the chance YOU buy it is higher. Mathematically, the two factors cancel each other out exactly, and your chance of winning is exactly the same in both cases.

So I don't see what the problem is.

Curley|7.3.08 @ 11:46AM|#

I'd play again, but there ain't no mo' prizes!

Invisible Finger|7.3.08 @ 12:10PM|#

This argument only works if you assume that the sole reason for playing the lottery is monetary. Lottery tickets are a pretty cheap thrill.

Can't be bothered to read the article, eh Dave B.?

The tickets are $20 a piece! That ain't no cheap thrill. And the drive is completely monetary.

"Here's your welfare check. Wanna buy a $50 scratch-off? You could win eleventy jillion bucks!"

D.A. Ridgely |7.3.08 @ 2:18PM|#

I only bet on professional wrestling.

|7.3.08 @ 3:44PM|#

Lottery scratch off tickets are false advertising from the get go. They come up with all sorts of fun sounding names and different games (IE Lucky 7's, Hot Peppers, Magic 8-Ball etc etc etc.) many of these now claim in their ads that you can win up to 20 times on one ticket or that there is 5 ways to win.

In the end the ticket is either a winner or it's not. There should be no game just a single scratch off that says Winner or Loser and the amount won if thats the case. But that type of game would not captivate the gambling publics urge to believe they actually can win 20 times with this one certain game they favor over the other 25 they have running simultantiously. If it was you Win or you Lose it wouldn't have the hook to get those people to play.

Now the real catch and the fraud in false advertising is that they say all these things mentioned above. Yet take any scratch off lottery ticket and look on the back and it will say something like Odds of Winning 1:4.762 or some similar ratio of odds.

So for them to say win up to 20 times on a ticket is just plain lying since only 1 in every 4.762 tickets will pay anything regardless of how many times they claim you can win. They could claim you could win 500 times on each ticket but the reality is that only 1 in every 4.762 tickets is likely to be a winner of even the lowest prize amount.

True false and misleading state sponsored gambling. Thankfully they keep me from blowing all my cash on evil internet poker now. I was only up $4000 off a $50 deposit when they made me quit playing, but alas I am saved from myself and can spend that $4000 on scratch offs that are sure to triple my money.

Invisible Finger|7.3.08 @ 4:33PM|#

only 1 in every 4.762 tickets is likely to be a winner of even the lowest prize amount.

And of course only the state would consider getting your ante back as a "win". And usually that payout on a $2 bet isn't $2, it's a "free ticket" which means you HAVE to play again and the odds are now worse because one "winner" was taken out of the pool while the number of losing tickets remains the same.

The odds of actually winning - i.e. getting back more than you bet are significantly worse than the "winning" odds printed on the back of the ticket.

If the state is going to misrepresent the facts in something as simple as the lottery, one shouldn't have to wonder if the state will misrepresent the facts on anything else.

|7.4.08 @ 8:21AM|#

Get me on the jury.

Nick|10.9.09 @ 9:41AM|#

@ SIV: I don’t think playing the lottery has to be stupid. This view leaves out the value we get from the benefit of anticipation, which can be real pleasure as well. The question is: is the value of anticipation greater than the "cost of disappointment” (from not winning) and the “value of money to play in lottery” combined?

I recently had a more detailed look at it: Are lottery players stupid?

|10.24.09 @ 1:58AM|#

I have a question. I know we hate government run business because it is socialism, and socialism because it utilizes the coercion of theft to create a monopolizing, inefficient system of which individuals are forced to assume the future risk for, and in which they are forced to pay for goods they wouldn't have chosen voluntarily. But my question is this: does this apply to state lotteries? I mean couldn't the state support it's lottery without taxation and in fact these voluntary contributions to the lottery instead be supporting the state? Endless donations by mathematically challenged people ensuring that "the house always wins" and would mean that state lotteries are really creative programs of voluntary contributions to the state instead of coercive burdens on taxpayers. Maybe state raffles could be the answer to "how could you possibly get enough donations to support a minimal, (courts of justice, common-defence) non coercive state that doesn't utilize the force of taxation?"