Texas Lottery Commission Chairman C. Thomas Clowe told lawmakers Wednesday that the public was deceived by recently inflated jackpot estimates and vowed the agency would take action to keep it from happening again.
Clowe said lottery Executive Director Reagan Greer was responsible for the deception but declined to say if he should be fired.
"This was a deception, and it was wrong," said Clowe, who opened nearly four hours of testimony on the inflated jackpots before the House Licensing and Administrative Procedures Committee. "It has to be dealt with. It's a state agency, and it's the public's business."
Several lawmakers said the revelation of inflated jackpots erodes public confidence in a game that depends on the trust of its players. In the Senate, a bill has been filed that would make the lottery subject to the Texas Deceptive Trade Practices Act, which generally regulates advertising.
"We have to develop the trust of the people of Texas to continue to buy the lottery," said Rep. Chente Quintanilla, D-El Paso. "But if they are going to be given wrong jackpots and ideas they might not get paid ... the people of Texas are going to quit buying."
Greer, who signed off on the inflated jackpots, apologized and called the episode a "black eye" for an agency.
"We're going to fix this situation, and we're not going to let it happen again," Greer said.
Clowe, Greer and several lottery managers were asked to explain how and why an estimated jackpot for the June 8 Lotto Texas drawing was set at $8 million even though staff reports estimated sales could cover only $6.5 million.
And even after the commission held the jackpot at $8 million for the June 11 drawing — the first time in the game's history that a carry-over jackpot hasn't increased — sales estimates still remained just below supporting the advertised amount. However, enough tickets eventually were sold to support that jackpot.
Further examination revealed jackpots had fallen short of the advertised amounts twice before, in October and February. Each involved an advertised $8 million jackpot that couldn't be supported by ticket sales.
Lottery commissioners have also learned that staff raised questions about jackpots as far back as March 2004.
Clowe, who chastised Greer at a lottery commission meeting last week, said it would meet again July 11, when it could change how estimates are set. He suggested personnel decisions could be made.
Greer, who called the inflated jackpots a mistake and not a willful deception, said he'll work to regain the commission's confidence.
He said he signed off on estimates provided to him by staff without double-checking them because he trusted their accuracy.
The estimates came from Product Manager Robert Tirloni and Lee Deviney, the commission's director of financial administration. Deviney was fired June 14.
Lottery officials refused to say why he was dismissed but insisted Wednesday it was unrelated to the jackpot controversy and said the timing was coincidental.
Greer promised to pay closer attention to the twice-weekly estimates and would get more people involved in the future, including Commissioner James Cox. Jackpots could also be based on the most conservative sales estimates.
Rep. Mark Homer, D-Paris, said the problem might be avoided if the lottery had more guaranteed jackpots instead of estimates.
The problem emerges at the $8 million level because that's the first jackpot that can no longer be covered by lottery reserves if ticket sales lag behind the advertisements. When a ticket matches all five numbers and a Bonus Ball, the jackpot returns to $4 million.
One lawmaker defended the commission and noted the jackpots are advertised as estimates and not guaranteed.
"I think we're making a mountain out of a molehill out of some of this," said Rep. Tony Goolsby, R-Dallas. "I wonder if people ought to be more aware that an estimate is an estimate."