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California Lottery under fire for giving away $212,500 in Scratchers on 'Ellen'

Feb 6, 2020, 5:32 pm

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California LotteryCalifornia Lottery: California Lottery under fire for giving away $212,500 in Scratchers on 'Ellen'Rating:

SACRAMENTO, Calif. — Comedian Ellen DeGeneres drew wild cheers from the studio audience of her television talk show in December when she announced each person in attendance would receive a $500 bundle of Scratchers tickets from the California State Lottery.

Lottery officials saw it as a publicity boon, but a whistleblower complaint filed by some lottery employees argues the agency's giveaway of the tickets — which have a combined face value of $212,500 — should be investigated as a "misuse of funds," according to documents obtained by the Los Angeles Times.

The controversy comes just weeks before a state audit is scheduled to be released on lottery finances in response to a string of recent scandals that included allegations of wasteful spending, improper gifts and nepotism. State Sen. Ling Ling Chang, R-Diamond Bar, requested the audit last year to determine whether money is going as promised to public schools. California voters approved the lottery in 1984 with an understanding that 34% of sales revenue would go toward education, though the Legislature in 2010 relaxed that requirement to give managers discretion to follow "best practices."

Chang is concerned that the amount of money reserved for schools is not growing at the same rate as lottery revenue. She said the auditor should also look at the giveaway of Scratchers on the Dec. 3 episode of the "The Ellen DeGeneres Show."

"This concerns me because, bottom line, the mission of the California Lottery is to provide supplemental funding to California public schools," Chang said. "I want to know how this contribution affects supplemental funding to California public schools. Does it help? I don't think so."

Chang said the California State Lottery should have been reimbursed by DeGeneres' show for the tickets provided. She has also questioned the handling of the tickets after a YouTube blogger who was not in the studio audience said she was given a $500 packet of Scratchers by someone affiliated with the show.

The whistleblower complaint was sent to the state auditor and Gov. Gavin Newsom by a group of lottery employees, who alleged that some gift packs that did not go to the audience were improperly left with show staff and not accounted for.

A spokesperson for the governor did not provide a comment, but officials with the California Lottery confirmed producers of the show were given at no cost 425 packets that each included 72 Scratchers tickets with a face value of $500 per packet.

The promotional act giving away more than 30,000 Scratchers tickets was done to create positive publicity for the games with the intent to increase sales, said Russ Lopez, a spokesman for the lottery. The value of having the game touted by DeGeneres on her show was worth far more than the revenue lost by giving the tickets away, Lopez said.

He said the "total media value" received in California from the promotional segment on the national show was about $1.6 million, as calculated by Horizon Media, a consultant firm advising the lottery that based the valuation on standard industry-media rates. The lottery also buys advertising for its games.

"The Ellen Show offered a unique opportunity to increase consumer awareness of California Lottery's contributions to public education while helping to drive sales of Holiday Scratchers," Lopez said. "This promotional opportunity allowed the lottery to achieve significant cost savings compared to buying the equivalent in media exposure via a traditional ad buy."

Chang disputed Lopez's claims.

"I don't think giving away lottery tickets generates more sales," she said, adding that the giveaway may result in some audience members winning prizes into the millions of dollars, which would take money away from schools.

Lopez said that providing the tickets for free "complied with all state regulations" regarding the use of promotional tickets to build awareness of lottery products.

"Ellen DeGeneres is a beloved television personality and she is also a huge supporter of public schools and public education," Lopez said. "Her philanthropic efforts to education are widely known and we appreciated the opportunity to share the lottery's work and its mission on-air during her show. "

The giveaway was part of DeGeneres' "12 Days of Giveaways" holiday promotion, during which she announced the audience gifts with late-night talk show host Jimmy Kimmel. The pair also gave the audience at the Dec. 3 show a $500 Visa gift card, $500 in beauty products, $300 in new clothes and a trip to a beach resort, and all of the products were plugged by the two comedians.

"Maybe you could make one of our audience members a millionaire," DeGeneres told Kimmel before they unveiled the lottery gift. "Would that be amazing?"

Kimmel then made a pitch to viewers to buy holiday-themed Scratchers tickets from the California Lottery.

"I know something that can make them absolutely filthy rich this holiday season," Kimmel said. "Give the gift of Scratchers from the California Lottery. Their mission is to provide funding to California schools for programs like music, reading art, technology — all that kind of stuff."

DeGeneres then turned to the audience and announced: "You are all getting a $500 package of Lottery Scratchers."

When the audience cheers subsided, DeGeneres joked, "You have to let me know if any of you hit it big. I get half."

Representatives for DeGeneres did not respond to requests for comment on the giveaway and whether any of the show's staff received packets of Scratchers.

Retired lottery sales representative Charlotte Belasco said past promotions have required ticket giveaways to be conditioned on the purchase of other tickets.

"I think somebody needs to take a very close look at how the lottery is distributing their Scratchers tickets," said Belasco, who retired from the lottery last year. "This is money taken right out of education."

In a Dec. 24 video, YouTube personality and comedian Colleen Ballinger said that a friend affiliated with "The Ellen DeGeneres Show" gave her a $500 packet of Scratchers as she held up a pile of cards.

"He gave us $500 worth of Scratchers," she said. "It's going to take an entire day to scratch them all." So far, the video has 434,000 views.

Ballinger did not respond to a request for comment from a representative.

Lopez said lottery officials were not told after the show how many Scratchers packets were provided to members of the studio audience and how many were left over and given to other people, but he said that the packet that ended up in the YouTube video is the only one lottery officials know of that did not go to the audience.

"It was Lottery's understanding that all gift boxes were to be distributed," Lopez said. "We subsequently learned that an extra gift box was supplied to a popular influencer which provided additional media exposure, endorsement and promotional value for Holiday Scratchers games at no extra cost to Lottery."

In addition to a state audit, Chang said there should be a legislative investigation into the giveaway.

"It seems like it was handled improperly," the senator said.

The giveaway is just the latest in a series of controversies over the use of lottery resources.

Hugo Lopez stepped down as director of the California Lottery in June after a previous state audit questioned agency spending.

The audit in April by Controller Betty Yee alleged that there had been more than $305,000 in improper or questionable spending over the previous four years that included travel, food, gifts to employees and entertainment expenses.

Improper expenses included $21,666 to give staff logo-branded swag such as T-shirts, backpacks, lip balm and iPad cases, with the agency saying the purchases were "learning aids" and "training tools," the audit said.

"The lottery was created to fund schools and nothing more," Chang said. "Unfortunately, media reports over the past year have painted a negative picture of the California State Lottery as an agency under fire for wasteful spending and nepotism."

LA Times

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35 comments. Last comment 8 months ago by KY Floyd.
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cottoneyedjoe's avatar - cuonvFT

United States
Member #197033
March 28, 2019
548 Posts
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I would bet good money those free scratchers were mostly duds and small prizes to ensure relatively little money was paid out. CALottery knows very well what is in the every roll they get from IGT, Scientific Games and Pollard Banknote. It is well within their abilities to make sure giveaways don't contain top prizes. Even the most badly managed lottery isn't going to tell IGT "Surprise me!" and leave the geographical distribution of scratchers prizes up to pure chance. Nobody would be that dumb.

... Sooper dooper top seekrit winning numbers: 5 16 17 24 33 52 ...

    music*'s avatar - DiscoBallGlowing
    USN United States Navy
    Fresno, California
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    August 2, 2014
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    I voted for California State Controller Betty Yee. She is very professional.

     Winning with Scratchers is very difficult. The winners are shown but the losers are kept silent. Same goes with draw games. 

     Education funding is the goal and not funding prizes. The House always wins. 

     Thank You for supporting the schools. It is a drop in the bucket but it makes you feel good.

     "We are all in this together!" 

      ekem6078's avatar - winter
      TN
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      Member #88773
      March 23, 2010
      2347 Posts
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      If Ellen, paid for all the tickets to be given away on the show.  The Calif. Lottery isn't out any money. They're her to give away if she chooses too.  So what's the big deal.  I'm sure they didn't give them to her for free.   I wish I was on that show them lol. 

        Avatar
        New Member
        GREENACRES,FLORIDA
        United States
        Member #188989
        March 31, 2018
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        If Ellen, paid for all the tickets to be given away on the show.  The Calif. Lottery isn't out any money. They're her to give away if she chooses too.  So what's the big deal.  I'm sure they didn't give them to her for free.   I wish I was on that show them lol. 

        Employees of the California lottery complained the tickets were given away.I do not think she purchased them.I wish I were there too!

          Stat$talker's avatar - animated sphere.gif
          700 light yrs West of Milky Way Galaxy's Center
          United States
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          September 1, 2019
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          Since there were no reports thus far of any big winners, then obviously California Lottery knew ahead of time that the tickets to be given away were basically duds...!! The Companies that make the scratchers most likely told them...

          ...MATH... The final Stochastic frontier...

          These are the Lottery Voyages of Stat$talker..!!

          The ongoing Mission,..to seek out the Laws of "Probability Math"...

           to master its rules to invoke...to Conquer ALL Major Jackpots..!!

          ...To boldly go,... Where NO Player has gone before...!!

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            Simpsonville
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            January 22, 2015
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            Since there were no reports thus far of any big winners, then obviously California Lottery knew ahead of time that the tickets to be given away were basically duds...!! The Companies that make the scratchers most likely told them...

            I wouldn't bet on your last sentence.   Here they had a news segment on the plant in Georgia and the lightning speed tickets are produced and said they don't know where winning tickets are.

            Don't habitually watch Ellen, but a couple of years ago Powerball when it was a billion + $ plus she gave a ticket to each audience member.

              ekem6078's avatar - winter
              TN
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              March 23, 2010
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              Employees of the California lottery complained the tickets were given away.I do not think she purchased them.I wish I were there too!

              I think the Employees still got paid what was due them. It wasn't any money out of there pocket.  I maybe missing something here, but NO State Lottery is going to just give tickets away for free to anyone even Ellen.  If so TN would you PLEASE send me 500 of them.   If the State of Calif. did do this for free, than it is wrong.  But I don't believe it for one second. No No

                Avatar
                Chasing $ Millions.
                White Shores- California
                United States
                Member #136473
                December 12, 2012
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                Oh boy, another Whistleblower...

                 * Voice of Reason *   

                 

                People who say it cannot be done should not interrupt those who are doing it- George Bernard Shaw.

                  Avatar
                  New Member

                  United States
                  Member #136775
                  December 18, 2012
                  5 Posts
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                  If Ellen, paid for all the tickets to be given away on the show.  The Calif. Lottery isn't out any money. They're her to give away if she chooses too.  So what's the big deal.  I'm sure they didn't give them to her for free.   I wish I was on that show them lol. 

                  Ellen did NOT pay for the lottery scratchers. Someone from the California Lottery gave them to her for free to promote the California lottery. This is why California lottery officials are angry because the $212,500 it cost for those tickets, none of that money will be going to California education. I agree with officials, Ellen should reimburse California lottery for the cost of these tickets.

                    KY Floyd's avatar - lysol avatar.jpg
                    NY
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                    October 16, 2005
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                    "I don't think giving away lottery tickets generates more sales," she said, adding that the giveaway may result in some audience members winning prizes into the millions of dollars, which would take money away from schools.

                    She sounds like a moron to me.  Normally there's no reason a legislator needs to know how the lottery works, but if you're going to criticize something they do then you should know enough to make your criticism accurate, and she obviously doesn't have a clue.

                    If the regular retail price of the tickets is $212,500 then the lottery's actual cost is roughly half of that, depending on what percentage of the retail cost goes to prizes. Sure, there's a chance that somebody could  have won a million bucks, but it doesn't change anything because the lottery doesn't sell individual winners and losers. The lottery sells enormous numbers of tickets with an average payout that's about 50 cents for every dollar of the retail price. Whatever the actual total payout was for those tickets the lottery was never going to recover the money. The best they could do is sell the tickets for the retail price and pay out all of the prizes anyway.

                    Giving the tickets to the show so they can be given to the audience is advertising, plain and simple. Maybe it's not the best place to spend their advertising budget, but it's definitely advertising, and it has a value that's comparable to what they would have paid for commercials totalling the amount of time the show talked about the tickets. Google tells me that a 30 second ad costs 50 to 60k, so the lottery needed a whopping 60 seconds to cover their actual costs of providing the tickets. It's all of 2 minutes if we figure that giving the tickets away reduced the lottery's revenue by 212k by causing all of the recipients to not buy tickets based on getting them for free.

                      TheGameGrl's avatar - Lottery-012.jpg
                      A long and winding road
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                      Ellen did NOT pay for the lottery scratchers. Someone from the California Lottery gave them to her for free to promote the California lottery. This is why California lottery officials are angry because the $212,500 it cost for those tickets, none of that money will be going to California education. I agree with officials, Ellen should reimburse California lottery for the cost of these tickets.

                      And you 'KNOW' this how? 

                      In my state .. a business can order tickets to be picked up for fundraisers and giveaways.  The batch is secured and the lottery is paid at time of pick up. 

                      I detest marketing in all it's facets so on that note ...I can't chime in that it was money well spent ...by any entity.

                      2500,2202,4441,6506,202, *13***

                        db101's avatar - RB55Ms1

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                        December 14, 2019
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                        Giving away tickets on a show watched by millions all over California is smart advertising. It might be more effective than buying a commercial spot because people are conditioned to tune them out or use the break to do something else before the show starts again.

                        I think Joe is right that the lottery made sure there wasn't a big prize in the giveaway pack. A lot of the audience is from out of state so what good does it do give a million dollars to someone from Arkansas, for example, who is unlikely to buy California lottery tickets again.

                          music*'s avatar - DiscoBallGlowing
                          USN United States Navy
                          Fresno, California
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                          I think that no one knows where the winners are. It would lead to corruption if someone knew. The temptation to cheat would be too immense.

                           "We are all in this together!" 

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                            Chasing $ Millions.
                            White Shores- California
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                            The CA lottery generates enormous amounts of money, but to hear some of these folks who have the whistleblower hotline on speed dial complain about every little thing is ridiculous.I can understand if the CA lottery was operating at a loss, but leave it to a lonely fool or fools who have nothing better to do than find fault with just about everything in life.
                            Probably complain about the colors of a rainbow or a sunset for all l know. 

                             * Voice of Reason *   

                             

                            People who say it cannot be done should not interrupt those who are doing it- George Bernard Shaw.