New law would stop Illinois Lottery from selling tickets after top prizes are gone

Jun 7, 2018, 7:53 am (24 comments)

Illinois Lottery

The Illinois Lottery would have to provide players with daily updates on how many top prizes remain in scratch-off games — and wouldn't be able to keep selling tickets for those games indefinitely — under a proposed change in state law.

The bill was introduced by Sen. Steve Stadelman in response to an investigation that found that the lottery was continuing to sell instant games, in some cases for weeks or months, after all top prizes had been claimed, with little warning to players.

"The article really motivated me to take a look at the lottery's policies and procedures," said Stadelman, a Rockford Democrat and Senate Gaming Committee chairman. "At the very least, what the lottery has been doing is horrible optics. It doesn't inspire trust among players, and if the optics aren't good, that doesn't help the lottery in its long-term goals of having a game that people enjoy and ultimately raising money for the state."

The investigation found that from November to March, players purchased more than 3 million tickets — costing them more than $20 million combined — for games that no longer had a top prize available. At one point, that was the case for nearly 1 out of every 6 games on sale.

The April report also found that while the lottery has long provided an online list of remaining prizes, it's only updated once every week, and sometimes every two weeks. There is no requirement that this list be posted in stores where tickets are sold.

And while the fine print on the backs of tickets states that the lottery may continue to sell games after all top prizes have been claimed, there is little opportunity for players to learn that information prior to buying tickets, which range from $1 apiece to as much as $30.

The lottery defended the practice, pointing out that the games without top prizes still had other prizes available to win.

But for Stadelman, that wasn't good enough.

"The bottom line is transparency," he said. "The lottery needs to be as transparent as possible so people believe there is integrity in the game, because if there's no trust, that's going to hurt their their ability to sell tickets."

Stadelman's bill would require the lottery to provide daily online updates of the number of prizes left for each active instant game. The proposal would also require the lottery to post its policy and to end a game within 45 days of the last top prize being claimed.

The lawmaker said he met with officials from the lottery and its new private manager, Camelot Illinois, before crafting the bill.

"Much of what we've drafted reflects the conversations we had," he said. "I think they realized the problem as well."

Lottery spokesman Jason Schaumburg said the lottery "did not help create the language in Sen. Stadelman's bill," and said the agency had no position on it.

A Camelot spokeswoman said the proposed measure aligns with the company's views on instant game policy.

"We've conducted research and prepared a recommendation to the lottery that includes adopting a new policy that begins closure of instant games once the last top-tier prize has been claimed," spokeswoman Wendy Abrams said. "Once a new policy has been established, we plan to post it on the website. We are also working on updating the instant game prize report online every business day."

She added that the revamped website will automatically update the status of remaining prizes, almost in real time.

The bill was introduced last week and passed unanimously out of the Senate State Government Committee before the General Assembly adjourned for the summer. Stadelman said he'll be watching to see what steps the lottery takes over the summer to address how players are informed of available prizes and how games are ended.

"If there need to be further improvements (to the bill), I'm willing to look at it," he said. "I want to hold people's feet to the fire with this legislation."

Thanks for Sarge0202 for the tip.

Chicago Tribune

Comments

Bleudog101

Other states do the same thing and they even put it on their websites.

Transparency for the Illinois Lottery?  Hope so with all the trouble they've had paying out folks last couple of years.

music*'s avatarmusic*

Kudos to Senator Steve Stadelman. He is the Senate Gaming Committee chairman after all.

 Camelot, Illinois is being a responsible and new player here in the States. 

Coffee Tea

Coin Toss's avatarCoin Toss

This should have been a rule for every state with a lottery before they ever sold the first ticket. 

I'm surprised no one ever took them to court for false advertising.

Raven62's avatarRaven62

They shouldn't Cash In any Scratch Off Tickets until All the Tickets are Sold!

Bleudog101

Quote: Originally posted by Raven62 on Jun 7, 2018

They shouldn't Cash In any Scratch Off Tickets until All the Tickets are Sold!

Did you understand the article?   Your post certainly doesn't imply that you did. 

 

If the top tickets is sold, there is no point selling anymore.  The incentive to win let's say $1 million is gone once that ticket or those tickets are sold.

CDanaT's avatarCDanaT

Quote: Originally posted by Raven62 on Jun 7, 2018

They shouldn't Cash In any Scratch Off Tickets until All the Tickets are Sold!

Chair

JADELottery

How does the Lottery generate the money needed to pay those top prizes?

Wait a moment...

TheMeatman2005's avatarTheMeatman2005

Quote: Originally posted by JADELottery on Jun 7, 2018

How does the Lottery generate the money needed to pay those top prizes?

Wait a moment...

It comes from selling ALL of the tickets....including the "non-winning" ones as well.

They calculate a 50% profit after all is said and done.

TheMeatman2005's avatarTheMeatman2005

This reminds me of the Dead Donkey joke.

A man bought a donkey from an old farmer for $100. The farmer agreed to deliver the donkey the next day.

Come morning, the farmer drove up and said, "Sorry, but I've got some bad news. The donkey died."

"Well then, just give me my money back."

"Can't do that. I spent it already," replied the farmer.

"OK then, just unload the donkey."

"What're you gonna do with him?" asked the farmer.

"I'm gonna raffle him off."

"Ya can't raffle off a dead donkey!" exclaimed the farmer.

"Sure I can. Watch me. I just won't tell anyone he's dead."

A month later the farmer met up with the guy and asked about what happened with the dead donkey. "I raffled him off. I sold 500 tickets at $2 apiece and made a profit of $898."

"Didn't no one complain?" asked the farmer.

"Just the guy who won. So I gave him his $2 back." Thud

JADELottery

Quote: Originally posted by JADELottery on Jun 7, 2018

How does the Lottery generate the money needed to pay those top prizes?

Wait a moment...

If you guessed losing ticket sales, you're correct.

Setting incentive and deceptive advertising aside, there's a simple solution to getting all tickets sold; even the losing ones.

Here in Minnesota, we have a second chance drawing for losing tickets.

It's kind of like making those losing scratchers, raffle tickets.

In a way, all scratchers are really instant raffle tickets, they're dished out sequentially and you know you've won without the drawing.

The alternative would be a little more seedy, by making sure the top prizes are dished out near the end of a run, but that's just speculation.

In the end, the lottery needs to make a profit and pay for those winners, one way or another.

Stack47

I'm not sure if it's updated daily, but the KY Lottery site does show the number of remaining prizes in each scratch-off game and when all the top prizes are claimed, it shows "0 - Last Top Prize Claimed". 

A problem with the Illinois bill is if the top prizes are sold but not claimed, the lottery and the players would still not know. But the worst part is a law must be passed to force the Illinois Lottery to disclose the number of remaining prizes when it should be a condition of employment.

Tucker Black's avatarTucker Black

It is not necessary for the state lottery to sell all the tickets in order to generate a profit for the state. The % the state keeps overall is so large, and assuming they don't print all the top prizes early in the ticket run, it would be impossible for the amount paid out to exceed the amount wagered as of any point in time.

 

Here is an example from the Texas Lottery. Power 5's is a $5 scratcher with a top prize of $100,000. There are 5 top prizes, and 2 have been claimed so far.

The Texas Lottery gives you lots of information about their scratchers, which is nice. Here it is:

prize total number claimed total prizes so far prizes
$100,000 5 2 $500,000 $200,000
$1,000 67 42 $67,000 $42,000
$500 1,461 960 $730,500 $480,000
$250 1,422 973 $355,500 $243,250
$100 14,655 9,655 $1,465,500 $965,500
$50 84,350 55,947 $4,217,500 $2,797,350
$25 431,125 281,501 $10,778,125 $7,037,525
$10 524,983 335,562 $5,249,830 $3,355,620
$5 1,068,345 673,134 $5,341,725 $3,365,670
total 2,126,413 1,357,776 $28,705,680 $18,486,915

 

The total number of Power 5's tickets is 8,435,400. Multiply by $5 and the total wagered is $42,177,000.

The payback percentage is total prizes divided by total wagered. Total prizes is $28,705,680, so dividing gives us 68.06%.

68.06% times $5 is $3.403... meaning a $5 ticket wins an average of $3.40.

 

Now, let's look at the same figures, but rather than the entire ticket run, just the tickets sold so far. What is the payback percentage as of right now? We need total prizes won, which is in the above table, and we need total amount wagered so far. That number is not published. However, we can estimate it with a good deal of accuracy by using the number of tickets won in the lowest prize category. The reason for using lowest prize is because that one is the most likely prize to occur (if you do win). This results in the lowest variance, which in turn gives us the highest degree of accuracy.

So, take the number of $5 winners so far, 673134, and divide it by the total number of $5 winners, 1068345. You get 63%. Approximately 63% of the entire tickets have been sold, so 63% of 8,435,400 (total tickets printed) is 5,314,907 tickets. Multiply by $5 and you get $26,574,535 wagered.

The payback percentage, as of right now for this game, is total won 18,486,915 divided by total wagered 26,574,535, and that would be 69.57%.

The reason it's a little higher than the whole ticket run average of 68.06% is because 63% of the tickets have been sold but only 40% of the top prizes. This means that this game is a better game to play, relatively speaking. 68% for a lottery ticket is pretty good actually. The draw games are worse, only 50%.

 

Finally, to demonstrate that the lottery can easily stop selling tickets after the last prizes has been sold, let's consider this... suppose the next 3 tickets sold in this game are $100,000 winners and then the lottery immediately stops selling that game. That is the quickest way for the game to have sold all the top prizes, next three win, and then no more.

Let's do the same payback percentage calculation: total number of tickets sold is 3 more, and total amount wagered is $15 more. Total amount won is a whopping $300,000 more, far in excess of the measly $15 wagered to win that much.

$18,786,915 won divided by $26,574,550 wagered is 70.70%. The result is that the state gets a bit less profit than if they sold all the tickets (29.30% instead of 31.94%, minus expenses), but as you can see, they don't come anywhere close to losing money, and that is if the top prizes sell as quickly as possible, and that of course is totally unrealistic.

 

Assuming the top prizes were distributed more or less evenly throughout the ticket run, there is simply no way for the lottery to lose money on that game if they stop selling tickets after the last top prize has been won, since that will be after something like 75% of the tickets have been sold. They can't lose. By continuing to sell tickets that are worth significantly less, the lottery is making even more money for the state, and that pisses off players, who stop buying tickets. The shenanigans only work once on most people, so it's short-sighted and stupid.

Bleudog101

Quote: Originally posted by Stack47 on Jun 7, 2018

I'm not sure if it's updated daily, but the KY Lottery site does show the number of remaining prizes in each scratch-off game and when all the top prizes are claimed, it shows "0 - Last Top Prize Claimed". 

A problem with the Illinois bill is if the top prizes are sold but not claimed, the lottery and the players would still not know. But the worst part is a law must be passed to force the Illinois Lottery to disclose the number of remaining prizes when it should be a condition of employment.

I don't play scratch tickets here in Kentucky, but they do tell you about top prizes.

 

In Massachusetts they have two different payouts, one is $1 million and less and the other one still under Instant Prizes says Grand Prizes claimed.  Also in the winner's section it'll say the last million dollar prize claimed by so and so with their picture.

JADELottery

Quote: Originally posted by Tucker Black on Jun 7, 2018

It is not necessary for the state lottery to sell all the tickets in order to generate a profit for the state. The % the state keeps overall is so large, and assuming they don't print all the top prizes early in the ticket run, it would be impossible for the amount paid out to exceed the amount wagered as of any point in time.

 

Here is an example from the Texas Lottery. Power 5's is a $5 scratcher with a top prize of $100,000. There are 5 top prizes, and 2 have been claimed so far.

The Texas Lottery gives you lots of information about their scratchers, which is nice. Here it is:

prize total number claimed total prizes so far prizes
$100,000 5 2 $500,000 $200,000
$1,000 67 42 $67,000 $42,000
$500 1,461 960 $730,500 $480,000
$250 1,422 973 $355,500 $243,250
$100 14,655 9,655 $1,465,500 $965,500
$50 84,350 55,947 $4,217,500 $2,797,350
$25 431,125 281,501 $10,778,125 $7,037,525
$10 524,983 335,562 $5,249,830 $3,355,620
$5 1,068,345 673,134 $5,341,725 $3,365,670
total 2,126,413 1,357,776 $28,705,680 $18,486,915

 

The total number of Power 5's tickets is 8,435,400. Multiply by $5 and the total wagered is $42,177,000.

The payback percentage is total prizes divided by total wagered. Total prizes is $28,705,680, so dividing gives us 68.06%.

68.06% times $5 is $3.403... meaning a $5 ticket wins an average of $3.40.

 

Now, let's look at the same figures, but rather than the entire ticket run, just the tickets sold so far. What is the payback percentage as of right now? We need total prizes won, which is in the above table, and we need total amount wagered so far. That number is not published. However, we can estimate it with a good deal of accuracy by using the number of tickets won in the lowest prize category. The reason for using lowest prize is because that one is the most likely prize to occur (if you do win). This results in the lowest variance, which in turn gives us the highest degree of accuracy.

So, take the number of $5 winners so far, 673134, and divide it by the total number of $5 winners, 1068345. You get 63%. Approximately 63% of the entire tickets have been sold, so 63% of 8,435,400 (total tickets printed) is 5,314,907 tickets. Multiply by $5 and you get $26,574,535 wagered.

The payback percentage, as of right now for this game, is total won 18,486,915 divided by total wagered 26,574,535, and that would be 69.57%.

The reason it's a little higher than the whole ticket run average of 68.06% is because 63% of the tickets have been sold but only 40% of the top prizes. This means that this game is a better game to play, relatively speaking. 68% for a lottery ticket is pretty good actually. The draw games are worse, only 50%.

 

Finally, to demonstrate that the lottery can easily stop selling tickets after the last prizes has been sold, let's consider this... suppose the next 3 tickets sold in this game are $100,000 winners and then the lottery immediately stops selling that game. That is the quickest way for the game to have sold all the top prizes, next three win, and then no more.

Let's do the same payback percentage calculation: total number of tickets sold is 3 more, and total amount wagered is $15 more. Total amount won is a whopping $300,000 more, far in excess of the measly $15 wagered to win that much.

$18,786,915 won divided by $26,574,550 wagered is 70.70%. The result is that the state gets a bit less profit than if they sold all the tickets (29.30% instead of 31.94%, minus expenses), but as you can see, they don't come anywhere close to losing money, and that is if the top prizes sell as quickly as possible, and that of course is totally unrealistic.

 

Assuming the top prizes were distributed more or less evenly throughout the ticket run, there is simply no way for the lottery to lose money on that game if they stop selling tickets after the last top prize has been won, since that will be after something like 75% of the tickets have been sold. They can't lose. By continuing to sell tickets that are worth significantly less, the lottery is making even more money for the state, and that pisses off players, who stop buying tickets. The shenanigans only work once on most people, so it's short-sighted and stupid.

"It is not necessary for the state lottery to sell all the tickets...", this assumes all tickets are not sold.

"... The total number of Power 5's tickets is 8,435,400. Multiply by $5 and the total wagered is $42,177,000. ...", this assumes all tickets are sold.

These contradict each other; either all tickets are sold or they are not.

Since the beginning assertion is all tickets are not sold, the second statement cannot be a supporting argument.

Additionally, given a truly random dispersion of prizes, there's absolutely no way to say with 100% certainty that any of the prizes will be distributed evenly throughout the run.

Prizes can be clustered at the end, middle or beginning of a scratcher run.

In the end, it is in the best interest of the Lottery to get all tickets sold.

Hence, Minnesota's Second Chance Drawing.

There's nothing stupid about that.

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