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Having a lottery machine: Now that's the ticket

Insider BuzzInsider Buzz: Having a lottery machine: Now that's the ticket

Critics raise questions as retailers play by the rules and win scores of jackpots

New Jersey's 10 most frequent winners of lottery jackpots have one thing in common: Luck.

But five of those top 10 winners have something else going for them: A store that sells lottery tickets.

"We play, we win," explained Mahendra Vora, standing behind the counter of Everything Nice, a stationery store on Bergenline Avenue in West New York that he owns with his wife, Sudha.

Together, the lucky couple has claimed 175 jackpots between 2000 and 2004, worth a combined $360,000. He said he "played all the time," but declined to say how many tickets he buys.

"We're just lucky sometimes," he said.

It's hard to imagine anyone much luckier, especially when it comes to the state's twice-daily Pick-4 drawings.

The Voras have claimed 119 Pick-4 "jackpots" — tickets that pay about $2,500 and therefore must be reported to the state and Uncle Sam for tax purposes.

The odds of winning a single Pick-4 jackpot?

10,000 to 1.

It is not illegal for retailers like Vora to play or win the lottery. And New Jersey, like every state with a lottery, programs its terminals to make it impossible for a winning ticket to be sold or printed after a drawing.

The state also reviews winning claims by dealers "to ensure the integrity of the lottery has not been compromised," according to a Treasury Department spokesman.

Regardless, critics say any lottery that permits dealers to play or win has a serious integrity problem and is exposing itself to the potential for tax evasion or other illegal activities.

"It's a bad policy," said Carl Zeitz, a former member of the state's Casino Control Commission, which regulates gambling in Atlantic City. "You want to assure the public that the game is honest, and the people who are involved in the game shouldn't be playing the game."

By contrast, dealers, security guards and other licensed casino employees are not allowed to gamble in their own casinos, or other casinos owned by their employer, said Daniel Heneghan, a commission spokesman.

"You can't have a person after a shift as a dealer for a card game turning around and playing," Heneghan said.

The Star-Ledger earlier this month printed a three-part series showing the state's growing dependence on the lottery to plug its budget gaps. The investigation analyzed five years of lottery sales and found a distinct pattern of lottery sales rising in areas where income levels fell.

As part of that project, the newspaper obtained a database of lottery winners from the state. An analysis of the most frequent jackpot winners found five retailers among the top 10.

Interviews the past two weeks found many possible explanations: luck; retailers who buy winning tickets at a discount from people who don't want their earnings reported; dealers buying tickets that were incorrectly entered; and even retailers on the fringes of addiction who buy so many tickets they can't help but score several jackpots.

Pramod Patel, who owns two convenience stores in Morristown and was 10th on the list of winners, said he often buys more than $50 of tickets a day just from "mistakes" — tickets his customers reject because store clerks type in the wrong numbers.

To illustrate, he reached into his pocket on a recent afternoon and pulled out a mixed wad of green bills and pink lottery tickets he said he had purchased that day.

Patel said he would rather buy the mistakes than void them, in part to save time but also for superstitious reasons: "It's usually the mistakes that turn out to be winners," he said.

Patel reported 80 jackpots, mostly Pick-4, between 2000 and 2004, good for $138,786.

When a player wins a jackpot of $600 or more, he or she must fill out paperwork and send it to Trenton to claim the prize. The primary purpose is to report the income for tax purposes — though taxes are only withheld if the prize is more than $5,000.

New Jersey also screens winners to see if they have defaulted on student loans or owe child support.

Several people said winners often skirt regulations by submitting winning tickets through a proxy.

Retailers "buy winning tickets from customers all the time," said Charles Shakor, a former lottery seller who owns a supermarket in Old Bridge. "There is no doubt."

A retailer, he said, might pay $3,000 for a $4,000 winner — a discount the actual winner is happy to accept because they get the cash immediately and without any taxes or other documentation.

The retailer may or may not ultimately pay taxes on the winning ticket, he said, but it's much more difficult for the government to trace once the proceeds are mixed with other cash transactions at a convenience store.

"I have definitely heard stories about people who regularly claim prizes on behalf of other people," said Todd Northrop, a Somerset County resident who runs "Lottery Post," a Web site with 20,000 registered members. "It is not only common to avoid things like child support, but also to manipulate taxes."

While illegal immigrants are entitled to collect lottery winnings, many don't know the rules and sell tickets to a proxy, said Rich Cunningham, who runs a workplace safety program in New Brunswick.

"At one point there was a buzz going around that if you claimed a lottery jackpot, that would attract attention to you and people were getting sent home because of it," Cunningham said. "You get these kinds of urban legends all the time among immigrants."

Patel, however, said he knows the rules and would never cash a customer's ticket under his name.

"I don't do that," he said.

Officials from the Treasury Department and the New Jersey Lottery, which generated $2.3 billion in lottery sales last year, denied repeated requests to comment on the possible reasons why dealers were winning so often.

Critics, meanwhile, say it's an issue that demands attention.

"If retailers are winning this often, in my mind it would at least set off red flags," said Alicia Hansen, a lottery expert at the nonpartisan Tax Foundation in Washington, D.C. "Perhaps the state is getting so much money from these stores it wouldn't care too much."

Zeitz said the issue speaks to a fundamental conflict of interest.

"The lottery commission is self-regulating," he said. "It regulates the game, but it also sells the game, so it has every incentive to keep pushing sales."

Newark Star-Ledger

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41 comments. Last comment 11 years ago by Iesha Kelly.
Page 1 of 3
wizeguy's avatar - animaniacs04

United States
Member #15143
May 10, 2005
414 Posts
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Posted: December 27, 2005, 9:36 am - IP Logged

WTG Todd, another plug for Lottery Post! Thumbs Up

 

    Jake649's avatar - scene sunovermountains.jpg

    Canada
    Member #2673
    November 2, 2003
    497 Posts
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    Posted: December 27, 2005, 10:30 am - IP Logged

    There is another possible reason for retailer wins that was not mentioned in the story. Retailers who "steal" tickets from customers. A customer redeems a ticket and the retailer either claims the ticket did not win anything or won only a small prize. The retailer then keeps the ticket to claim as their own.

    There have been court cases in Ontario where this practice has been proven to have happened.

     

    Good luck,
    Jake

      Avatar
      Coastal Georgia
      United States
      Member #2653
      October 30, 2003
      1866 Posts
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      Posted: December 27, 2005, 10:31 am - IP Logged

       

       

      "Patel, however, said he knows the rules and would never cash a customer's ticket under his name.

      "I don't do that," he said. "

       

      No, but they will scan scratch off tickets to see if they are winners prior to selling them if they can get away with it.

       

                                     

                    

       

       

        Avatar
        New Mexico
        United States
        Member #12305
        March 10, 2005
        2984 Posts
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        Posted: December 27, 2005, 10:49 am - IP Logged

         

         

        "Patel, however, said he knows the rules and would never cash a customer's ticket under his name.

        "I don't do that," he said. "

         

        No, but they will scan scratch off tickets to see if they are winners prior to selling them if they can get away with it.

        Can they actually do that?  Scan an unscratched ticket and know it's a winner?

        J

        Absorb the good, ignore the bad, weigh the ugly.

        It's about number behavior.

        Egos don't count.

         

        Dedicated to the memory of Big Loooser

         

          RJOh's avatar - chipmunk
          mid-Ohio
          United States
          Member #9
          March 24, 2001
          19831 Posts
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          Posted: December 27, 2005, 11:00 am - IP Logged

          I've seen people buy a bunch of scratch-off tickets and ask the clerk to scan them for winners without ever scratching them.  I never knew if the clerks were being honest when they scan/scam them and said "you didn't have any winners", but it was faster than scratching and checking them visually.

           * you don't need to buy more tickets, just buy a winning ticket * 
             
                       Evil Looking       

            Avatar
            Coastal Georgia
            United States
            Member #2653
            October 30, 2003
            1866 Posts
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            Posted: December 27, 2005, 11:02 am - IP Logged

            Jack--I know that scanning the bar code on the back tells the tale, and they still need to have the three digit code from the front, but the key words are" if they can get away with it".

            DD

             

             

                                           

                          

             

             

              Avatar
              Coastal Georgia
              United States
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              October 30, 2003
              1866 Posts
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              Posted: December 27, 2005, 11:07 am - IP Logged

              I've seen people buy a bunch of scratch-off tickets and ask the clerk to scan them for winners without ever scratching them.  I never knew if the clerks were being honest when they scan/scam them and said "you didn't have any winners", but it was faster than scratching and checking them visually.

               

              I Agree!  That's what I'm talking about.

              Because of this practice I am very careful where I purchase scratch offs.

              If they scan too many without punching in the 3 digit code, they can get in trouble, but they can always claim "computer error"....

               

                                             

                            

               

               

                four4me's avatar - gate1
                MD
                United States
                Member #1701
                June 18, 2003
                8364 Posts
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                Posted: December 27, 2005, 11:37 am - IP Logged

                 

                 

                "Patel, however, said he knows the rules and would never cash a customer's ticket under his name.

                "I don't do that," he said. "

                 

                No, but they will scan scratch off tickets to see if they are winners prior to selling them if they can get away with it.

                Can they actually do that?  Scan an unscratched ticket and know it's a winner?

                J

                Rip I don't think so the numeric code they enter to see if it's a winner or what amount to pay out is under the latex at least that's the way the tickets in Maryland are. There is also a bar code they scan it's on the back of the scratch off. When they scan any scratch off ticket that information is sent directly to a central PC at lottery HQ. I think they would get suspicious if a retailer continuously scanned tickets from a pack of tickets. Then again I could be wrong a retailer might be scanning a whole pack of tickets if the bar code on the back is the actual confirming bar code then the retailer might be keeping most of the winners and selling the losing scratchers. .  

                  truecritic's avatar - PirateTreasure
                  Michigan
                  United States
                  Member #22395
                  September 24, 2005
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                  Posted: December 27, 2005, 12:05 pm - IP Logged

                  If they can scan a bunch of tickets before they are scratched, they why would they sell them?  Just pull out the winners and claim them all and sell all the losers.  (Or save a few small winners for friends, maybe).

                  Doesn't make sense if that is true.

                  As to "proxy" tickets...                                                                                      Is that the going rate for selling a winning ticket?  20% discount?

                    RJOh's avatar - chipmunk
                    mid-Ohio
                    United States
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                    March 24, 2001
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                    Posted: December 27, 2005, 1:16 pm - IP Logged

                    If they can scan a bunch of tickets before they are scratched, they why would they sell them?  Just pull out the winners and claim them all and sell all the losers.  (Or save a few small winners for friends, maybe).

                    Doesn't make sense if that is true.

                    As to "proxy" tickets...                                                                                      Is that the going rate for selling a winning ticket?  20% discount?

                    I don't think anyone would be stupid enough to purchase tickets if they weren't on the original roll of tickets.  Even if a retailer knew there was a winner on the roll, he would have to undo the roll to scan it and tear out the winning tickets and that would be obvious to any player.

                    A retailer wouldn't make much  if he cashed in tickets for a 20% discount since he would probably be in that tax bracket unless it was a way to laundry dirty money.  I would think he would only offer 50% of its value.

                    I wonder if New Jersey is the only state where half of the top lottery winners sell lottery tickets?

                     * you don't need to buy more tickets, just buy a winning ticket * 
                       
                                 Evil Looking       

                      truecritic's avatar - PirateTreasure
                      Michigan
                      United States
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                      Posted: December 27, 2005, 2:04 pm - IP Logged

                      RJ 

                      >I don't think anyone would be stupid enough to purchase tickets if they weren't on the original roll of tickets. 

                      There are plenty of stores in MI that sell individual instant tickets all the time, because they keep them in their register drawer.

                      Also, we have plenty of party stores that hang strips - in fact I would say it is unusual to be buying from a roll.  Can't remember the last time I saw a roll.

                      The article said $4,000 - figured that was a $5,000 full face value?

                      Oops, read it wrong - guess my question should have been 25%. Quote per the article "A retailer, he said, might pay $3,000 for a $4,000 winner"

                        Avatar
                        Coastal Georgia
                        United States
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                        October 30, 2003
                        1866 Posts
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                        Posted: December 27, 2005, 2:22 pm - IP Logged

                        They come in rolls here in GA, but the rolls can be re-rolled if necessary....

                        Yes, it would leave gaps in the roll, but most people will never know unless they ask for a certain amount of the same game and notice that the serial numbers on the bottom of the ticket are out ouf order.

                         

                                                       

                                      

                         

                         

                          RJOh's avatar - chipmunk
                          mid-Ohio
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                          Member #9
                          March 24, 2001
                          19831 Posts
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                          Posted: December 27, 2005, 2:37 pm - IP Logged

                          truecritic,
                           
                          I used to drive up to Michigan to get BigGame tickets before MegaMillions came to Ohio and I still will drive to Indiana to get PB tickets when its jackpot is over $200M and I never noticed scratch-off tickets hanging around like that.  I seldom buy scratch-off tickets but I certainly would not buy any if they weren't peeled off a new/tight roll.

                          Having seen some players buying tickets and having the clerk check them for winners without scratching them and then discarding them, I would be suspicious of buying any tickets just laying around.  I could probably do just as well checking the trash for discarded tickets.

                          Selling scratch-off tickets from a strips taken off a roll or a single tickets taken off a roll laying in a draw sounds a small store scam to me.  I can picture a major store chain doing business that way. 

                           * you don't need to buy more tickets, just buy a winning ticket * 
                             
                                       Evil Looking       

                            Avatar
                            BILOXI, MISSISSIPPI
                            United States
                            Member #19651
                            August 3, 2005
                            621 Posts
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                            Posted: December 27, 2005, 3:04 pm - IP Logged

                            il has a self scan i wish ga would get them