By Alice Garland, executive director of the N.C. Education Lottery
One benefit of a state lottery is that as North Carolinians win the lottery, their prize money is subject to the collection of any debts owed to state and local governments.
The lottery makes every effort to ensure all debts are collected from every prize, $600 or more. No exceptions. So far, more than $11 million that would have gone uncollected has been collected from lottery prizes. That's a benefit to all whom the money was owed to.
Since winning lottery tickets are a bearer instrument — as they are in all states — there's been some speculation recently that a large number of North Carolinians are selling their winning tickets to avoid having debts collected from their prize money. One recent report contended that a "rough estimate" could add up to $1 million a year going uncollected.
(See Study: N.C. Lottery scammers have cheated state out of $7 million, Lottery Post, Dec. 7, 2016.)
The analysis was done by the state's Fiscal Research Division, the non-partisan fiscal and policy analysis arm of the legislature. It used lottery records but had no input or review from the lottery, and greatly overstated the extent of any problem that could exist. It contained a major error and used flawed assumptions.
The error involved double and triple counting of lottery winners and prizes. The analysis looked at multiple wins over three different time periods — one year, two years, and three years — and totaled wins from all three periods. Based upon the lottery's review of the analysis, the same wins were in each sample and thus counted two or three times. An accurate analysis would count each win only once, adding only the additional wins that occurred during the longer time periods.
Then, bad assumptions compounded the extent of the error.
One assumption was that all those multiple wins involved fraud committed to avoid debts. Over time, people who play the lottery regularly can win prizes regularly. The wins are random. They take luck. But they will happen. Players who do win frequently often put some of their prize money into purchasing more tickets. Without knowing the frequency of play, it would be difficult to determine if the wins were luck or fraud.
Then, an assumption was made that all such multiple wins involved a debt that had gone uncollected. Looking at the claims involved in the analysis you see this assumption is just wrong. Debts were collected from some of those claims. Some winners came back with more prizes, and had more debts collected from those new wins.
The lottery is open to ways to improve its operations, including the law governing debt collections. No one should be allowed to skirt the law. But just because something could happen, doesn't mean it is happening a lot. It's important on matters of public policy that the people are presented with accurate information and facts.
It is unfortunate that this "rough estimate," based on a miscalculation and flawed assumptions, tarred so many North Carolina lottery players as being dishonest. The lottery's experience is most winners come right in to collect their prizes and feel fortunate their good luck pays any debts they owe.