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* Tribune…
State lawmakers from both political parties are calling for an investigation of how the Illinois Lottery managed scratch-off games in response to a Tribune report showing the lottery didn’t award many of the biggest prizes in the biggest games.
“I just don’t think we should promise people things we don’t deliver,” said state Rep. Lou Lang, D-Skokie. “And if we say we have a game that’s going to pay X and it doesn’t pay X, then we’ve lied to the people who bought the tickets.” […]
Illinois handed over management of its lottery in mid-2011 to a private firm, Northstar Lottery Group, and the Tribune studied the 17 biggest-prize instant games that were begun and ended in the five years since.
Reporters found most of those games did not award all of their grand prizes and some did not award any. In all, those games awarded less than 60 percent of their grand prizes — a rate lower than other states studied by the Tribune, and lower than when Illinois managed its own lottery. The Tribune also found that, because of how the games ended, the lottery often paid a lower percentage of revenue than the games were designed to pay.
One $30-a-ticket game, for example, pitched the biggest instant grand prize in Illinois history: $46 million in periodic payments. But it was pulled from store shelves before it awarded either of its two grand prizes. Its designed payout rate — nearly 78 percent of sales — ended at 61 percent of sales. Had it paid out at its designed rate, players would have won an additional $10 million, the Tribune found.
The original story is here. I didn’t post it on Friday because I wasn’t quite clear on what the alleged scam was all about. You have to kinda read between the lines. For instance…
Take the game The Good Life: $30,000 A Week For 30 Years.
Based on internal design documents kept by the lottery, the game was designed to award 78 percent of its revenue — most of it in smaller prizes but anchored by two mammoth grand prizes.
It was pulled after selling less than 15 percent of the tickets printed; no grand prizes were awarded.
On an Internet bulletin board devoted to core lottery players, one poster lamented to his peers: “I don’t know why they are pulling it, but … I was playing this game for months and feel they must have made a whole lot of money and paid out very little.”
Indeed, by then, the game had raised about $63 million in sales.
It awarded about $38 million in smaller prizes.
The payout rate ended up being just shy of 61 percent, 17 percentage points less than the designed rate of 78 percent. […]
Because of when games were ended, and payout rates being lower than designed, the excess money was counted as profit — a metric for which Northstar was judged.
So, if I’m reading this right, the company apparently ordered far more scratch-off tickets printed than could possibly be sold, which would greatly lower the odds that somebody actually buys a winning ticket. Then, the game was canceled without any big payouts.
If that is the allegation, the Tribune doesn’t clearly spell it out. But it sure makes it look that way.
Also, for grand prizes that cost $1 million or more to fund, Illinois’ payout rate was about 60 percent, while New York’s was about 80 percent, Pennsylvania’s was 83 percent, Texas’ was 88 percent and the rate was 100 percent in Florida, Massachusetts and Ohio.
So, something seems to be amiss here.
…Adding… Some commenters are reflexively pointing to Gov. Rauner as the source of this problem. But Rauner is the one who has fought the privatized lottery manager from back before he was even sworn in. And then he made good on that threat once in office.
I know the Rauner hate can be strong, but some of you really need to take a breath.
posted by Rich Miller
Tuesday, Dec 13, 16 @ 9:47 am
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A scam perpetuated by someone in Bruce Rauner’s government? Get out.
Comment by Michael Westen Tuesday, Dec 13, 16 @ 9:50 am
Which begs the question. Unless you are afscme do you really miss Pat Quinn??
Comment by Almost the Weekend Tuesday, Dec 13, 16 @ 9:52 am
Michael Westen, it appears the scam was perpetuated prior to the time that the State began working on cancelling Northstar’s contract.
It appears to me that Northstar made a bet that by offering large prizes but significantly reducing the odds, that lottery players would be so enamored with the big prizes that they would play despite the diminishing odds.
What did we expect would happen when we privatized the thing? Isn’t this what someone would anticipate a private company operating for profit would do?
Comment by Juice Tuesday, Dec 13, 16 @ 9:54 am
Change the rules- all printed tickets are to be sold. Game continues till all printed tickets are sold, no matter how long that is.
Comment by Thoughts Matter Tuesday, Dec 13, 16 @ 9:54 am
Did you guys read the articles? The Illinois Lottery isn’t run by Illinois government anymore. The Lottery was handed over under Quinn, with bipartisan support.
Comment by Realist Tuesday, Dec 13, 16 @ 9:55 am
This is really disturbing. The lottery is supposed to be a reliable cash cow for the state, but if this turns out to be as bad as it looks, it will even further damage the lottery’s reputation. Remember when we weren’t even paying small time winners? How much revenue is being lost to other states because of our gas and cigarette taxes alone? Illinois has a huge border with several states that have lower taxes on those items. So, if you go get your gas, cigs, and lotto at a station just across the bridge or just across the border, you’ll pay far less in aggregate taxes for the year. And, if you actually win a scratch off jackpot you might actually get paid. How embarrassing is it that our state doesn’t even run a gambling ring correctly? The ruse is to keep the game going and keep the folks believing they could win…not to remove all doubt that its a scam by simply never paying what is being promised. Sheesh.
Comment by hot chocolate Tuesday, Dec 13, 16 @ 9:58 am
I didn’t know you could end games before someone won the big prize. That seems to be a bait-and-switch pulled on the class of players.
The Trib story could use some sharper editing, particularly on whether Northstar had a profit motive for pulling games.
Comment by wordslinger Tuesday, Dec 13, 16 @ 10:05 am
I’ve always considered all gambling, and especially the lottery, to be a fool’s game. After all, it is designed for the customer to ultimately lose. Apparently now in Illinois, it is actually criminally rigged for the customer to lose. Does this really surprise anyone at all??
Comment by BigDoggie Tuesday, Dec 13, 16 @ 10:06 am
Capfax commenter blames Rauner for something he didn’t perpetuate (he actually terminated the Northstar agreement)? Get out.
Comment by Phenomynous Tuesday, Dec 13, 16 @ 10:06 am
Weird that Tribune didn’t quote Michael Jones who steered the lottery ship into the ground when this was happening…
Comment by Not Again Tuesday, Dec 13, 16 @ 10:09 am
Well, the lottery is still funded better than the state pension fund.
Comment by Blue Bayou Tuesday, Dec 13, 16 @ 10:10 am
Madigan, and the scratch off lottery that he controls.
Comment by Big Joe Tuesday, Dec 13, 16 @ 10:11 am
There is a side issue here as well. were the grand prize tickets ever printed at all. and if so was the batch with the grandprize kept unreleased in a warehouse.
Something not discussed is the conflict of interest that goes with my hiding the ball comment. Northstar was a company created by the vendore who make and print the tickets. So the people who actually have control of the ticket printing also had a profit interest in those tickets never being found. It may be mucjer deeper then the Tribune doscovered. Since the printer owned Northstr they could easily rig the printed tickets to hide the prize in a warehouse or even never print it.
Comment by Ghost Tuesday, Dec 13, 16 @ 10:16 am
They were not scammed. There was no fraud involved. The Games were merely ‘Reformed’./s
Comment by yeah Tuesday, Dec 13, 16 @ 10:18 am
The Sunday story gave Michael Jones a huge pass. Weird — really weird.
Comment by Roland the Headless Thompson Gunner Tuesday, Dec 13, 16 @ 10:19 am
“In the casino the cardinal rule is to keep them playing and to keep them coming back. The longer they play, the more they lose and in the end we get it all…”
Comment by Jaded Tuesday, Dec 13, 16 @ 10:20 am
Actually, Not Again, Jones enforced the contract with Northstar, fining them $100M, and terminated them in 2014 for lack of performance and business tactics like those described in the article.
Comment by Silence Dogood Tuesday, Dec 13, 16 @ 10:23 am
“money”
“illinois”
“something amiss”
Nope, sounds about par for the course! /s - maybe a little
Comment by WhoKnew Tuesday, Dec 13, 16 @ 10:23 am
I try to avoid these tin-foil hat moments, but what safeguards are there to prevent Northstar from holding back the big winning tickets in the warehouse and just ending the game early so the winning tickets never hit the stores. The Tribune doesn’t go so far to allege this, but doesn’t go into much detail on how such a practice is prevented. It seems to convenient that Northstar has no idea where the winning tickets are (birther me suspects there may not always be a ticket) or suggests the winning ticket was lost or not claimed by the purchaser.
Comment by Jon Tuesday, Dec 13, 16 @ 10:24 am
Private corporation making profits and screwing the working class folks of Illinois. Watch out ‘merica it is only going to get worse.
Comment by ILGOV2018 Tuesday, Dec 13, 16 @ 10:28 am
Wow and I was so close to winning…
Comment by Nieva Tuesday, Dec 13, 16 @ 10:31 am
Lottery says the grand prize winning tickets could have been sold (and lost or never claimed) since they do not know where those tickets are all the tickets printed or when or where they are shipped.
They should have a general idea, it is in this batch of 100,000 tickets, etc and announce when those are shipped so everyone knows it is out there. Sales would skyrocket. Would be like the golden ticket of Willy Wonka!
Comment by Anonymous Tuesday, Dec 13, 16 @ 10:36 am
“I just don’t think we should promise people things we don’t deliver.”
Pretty much describes Illinois State government.
Comment by Sir Reel Tuesday, Dec 13, 16 @ 10:40 am
I believe there was a story a couple months ago about lottery players that were upset that the State was still selling scratch off tickets where all the grand prizes had already been won, so there was actually no chance that they could win the grand prize. By the company doing it the way described in the article, it should usually allow a player to have a chance at the grand prize (provided they aren’t purposefully holding back the winning tickets…)
Comment by My button is broke... Tuesday, Dec 13, 16 @ 10:46 am
There’s no scam.
The objective of the lottery is to make money for the State at the expense of desperate people who can ill afford it.
It’s like the 1.4%ers say….if God didn’t want us to make money from poor people he wouldn’t have made so many of them.
Comment by Anonymous Tuesday, Dec 13, 16 @ 10:51 am
I wait in line at a Convenience store every morning to pay for coffee while these poor folks are getting scammed. Now I feel twice as sorry for them. Just takes a buck (or ten) and a very bad dream…
Comment by A guy Tuesday, Dec 13, 16 @ 10:53 am
It’s called the idiot tax for a reason
Comment by Rogue Roni Tuesday, Dec 13, 16 @ 10:57 am
Call it the fools tax.
Comment by Liberty Tuesday, Dec 13, 16 @ 11:04 am
Private corporations taking over state functions almost always means profit motive is placed before institutional fairness. This is but one example.
But I don’t play the scratchoffs, and only play the big jackpots when they are $200M or larger. So my overall outlay is maybe $25/year. Not that much of an impact on the finances.
Comment by Jake From Elwood Tuesday, Dec 13, 16 @ 11:10 am
Anybody. Have any idea how much the whistle blower in this case is going to get. Why did they keep quite so long. Threat of retaliation. Maybe. Ticket sales are down because you get instant payout. On video gambling
Comment by Hhood Tuesday, Dec 13, 16 @ 11:33 am
===all printed tickets are to be sold. Game continues till all printed tickets are sold, no matter how long that is.===
You never know how popular a given game will be until after people start playing it. If the rule is changed to require selling a game until all of the tickets are sold you may have some games around for years and crowding out some newer and more popular games. So you can print fewer tickets and reduce the prizes for that can be given out and thus reduce the appeal of the game to gamblers. Either way, a state that needs revenue very bad will take in less from the lottery. Is this good for Illinois?
Comment by Small town taxpayer Tuesday, Dec 13, 16 @ 11:51 am
===- ILGOV2018 - Private corporation making profits and screwing the working class folks of Illinois. Watch out ‘merica it is only going to get worse.===
Oh hey, Ald. Pawar. How are you today?
Comment by MacombMike Tuesday, Dec 13, 16 @ 12:01 pm
While he’s investigating gambling, maybe Rep. Lang also ought to ask why the $1M Racing Board ’surplus’ isn’t being returned to General Revenue. Racing Board wants to award it to the tracks instead. I guess they need it more than the State.
Comment by northsider (the original) Tuesday, Dec 13, 16 @ 12:21 pm
Not mentioned in the article is the special games where a percentage of sales were supposed to go to causes like Veterans programs. I wonder if that actually happened.
Comment by Anonymous Tuesday, Dec 13, 16 @ 12:39 pm
That was me at 12:39. On mobile device.
Comment by FormerParatrooper Tuesday, Dec 13, 16 @ 12:40 pm
Oh for the good old days when bookies and numbers guys were on the square.
Comment by weltschmerz Tuesday, Dec 13, 16 @ 12:52 pm