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Orome

Albuquerque, New Mexico
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February 20, 2013
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Feb 20, 2013, 12:44 am

So, despite knowing better I have begun playing scratchers on occasion. I have been looking at the state lotto website and paying careful attention to top prizes not yet won and end of game schedules. I noticed on one game in particular that ended not long ago and only 1 out of 5 top prizes were ever claimed.

My question is, how do a state lottery determine when to phase out games? Do they normally phase out games when there are still top prizes that have yet to be won? If so, what's to stop a state run lottery from keeping the winning tickets in the bottom 1/4 of tickets to be shipped out to retailers and then ending the game after 75% of the tickets have been sold?
ScratchSmarter

Skippack, PA
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February 21, 2013
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Feb 21, 2013, 1:59 pm

Quote: Originally posted by Orome on Feb 20, 2013
So, despite knowing better I have begun playing scratchers on occasion. I have been looking at the state lotto website and paying careful attention to top prizes not yet won and end of game schedules. I noticed on one game in particular that ended not long ago and only 1 out of 5 top prizes were ever claimed.

My question is, how do a state lottery determine when to phase out games? Do they normally phase out games when there are still top prizes that have yet to be won? If so, what's to stop a state run lottery from keeping the winning tickets in the bottom 1/4 of tickets to be shipped out to retailers and then ending the game after 75% of the tickets have been sold?

If only 1 of the 5 top prizes were ever claimed, then the state REALLY made out with that game and the players really lost.

The state cannot force where the winning tickets are in the printing of the tickets. If they did, the word would get out that the entire game is corrupt and then no one would play. They have to stick with randomly printing and distributing the games to retailers.

All of the top prizes are randomly printed throughout the game's printing (which is all done at once). If you've evern noticed on some state's websites, you'll see a notification of a 'reprint'.....this means, basically, they lost their butts on the first printing...all of the top prizes were awarded early on the distribution and now they have to do a complete re-print because they're sitting on too many unsold tickets where there are no top prizes remaining. This is the opposite of your scenario above.

I would guess that the states shoot for a goal of selling at least 50% of their printed tickets before they set an end date for the game and then they hope that most of the top prizes to be awarded are on the second half of the printed (not distributed to retailers) so they show up on the website as "top prizes" remaining & still in good standing.
Jon D

Los Angeles, California
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Feb 21, 2013, 6:38 pm

Quote: Originally posted by ScratchSmarter on Feb 21, 2013
If only 1 of the 5 top prizes were ever claimed, then the state REALLY made out with that game and the players really lost.

The state cannot force where the winning tickets are in the printing of the tickets. If they did, the word would get out that the entire game is corrupt and then no one would play. They have to stick with randomly printing and distributing the games to retailers.

All of the top prizes are randomly printed throughout the game's printing (which is all done at once). If you've evern noticed on some state's websites, you'll see a notification of a 'reprint'.....this means, basically, they lost their butts on the first printing...all of the top prizes were awarded early on the distribution and now they have to do a complete re-print because they're sitting on too many unsold tickets where there are no top prizes remaining. This is the opposite of your scenario above.

I would guess that the states shoot for a goal of selling at least 50% of their printed tickets before they set an end date for the game and then they hope that most of the top prizes to be awarded are on the second half of the printed (not distributed to retailers) so they show up on the website as "top prizes" remaining & still in good standing.

To clarify a few things, you are typically dealing a few different entities here:

1. Scratch ticket manufacturer, like Scientific Games

2. Scratch distributor/vendor, like GTECH, they provide the "turnkey" solution of machines support systems

3. Your state Lottery, which is just the lottery commission and various administrative people

The ticket manufacturer knows EXACTLY where the top prizes are. Yes, the initial order is printed in bulk, but in batches of tickets equal to the odds on the top prize, say 600,000 or so. There would be 1 top prize per batch, not randomly distributed throughout the entire printing. And the odds and number of prizes would be exactly the same for each batch, or subsequent re-orders of x batches. The tickets are printed in packs of 30-300 tickets depending on denomination, with a minimum prize total per pack around 35-45%. There is nothing random about scratch tickets at all. You could call the insertion of prizes in printing a pseudo-random schedule, but not random.

The trick is to hide the location of top prizes within batches from low level workers in the distributor/vendor and state lottery people. The distributor manages the ticket distribution and inventory and tries to maximize the game within the limits of the printed batches. But nobody is supposed to make out big. Games have an expected run time and end date, but some games sell well, some don't and they pull them early. Any excess is supposed to be paid out in some way, like promotions and extra prizes on future games. The lottery is not like a for profit corporation, it has a fixed percentage by law to pay out in prizes.

What you want is transparency from your lottery. NM lottery does not seem to be very transparent. They only publish counts of top prizes remaining. PA lottery is a little better, showing the top 3 prize tiers. But what you want is like what CA lottery and a bunch of other states have, is publishing daily updates of every single prize level down to ticket value on every scratch game. That way you know precisely how much of the game is sold through, and what percentage of top prizes remain relative to the sales of entire game.

Don't settle for poor transparency in your lottery. Complain to your state lottery commission to have more scratch information on their website. All the back-end work is done by the distributor/vendor anyway, not them. If lame-o California could do it,(they changed only last year) then other states can.
Romancandle

Upacreek
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Feb 21, 2013, 8:53 pm

Thanks Jon D- good explanation!

I second that motion on transparency... IL Games are run like a for profit corporation. I believe we're the first state to privatize management of the state lottery.

I checked out California's Lottery page... holy smokes... nearly real time updates on remaining prizes! Makes the IL Lottery page look as shady as our politicians

Hmmm, now why can't they do that in IL?

When you don't have accurate and timely data posted on remaining scratcher game prizes, you have no idea if you're chasing prizes that either no longer exist or may never be distributed from the warehouse... that's a bad deal for players
Jon D

Los Angeles, California
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Feb 21, 2013, 10:00 pm

I checked out California's Lottery page... holy smokes... nearly real time updates on remaining prizes! Makes the IL Lottery page look as shady as our politicians

I think CA and IL are about tied for most despised state govt's. ;)

Yeah, don't take that from 'em! I've seen worse, like only weekly PDFs on top prizes. At least you have other top tier prizes, but still weekly PDFs publication of scratch remaining prizes is kinda lame compared to other states that have daily webpage updates of all prize levels.

Check TX lottery, they have full data and also tell you the minimum pack value for each game. Some other states detail all the different valid ways to win prize tiers as well.
redhot7

California
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Feb 21, 2013, 11:13 pm

>I checked out California's Lottery page... holy smokes... nearly real time updates on remaining prizes!

One crucial information is missing. They do not say where the claimed tickets were bought. One could contact the lottery office for the information but it's too much hassle and the information is not updated daily.
ScratchSmarter

Skippack, PA
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Feb 22, 2013, 12:34 pm

Jon D thatnks for details.....just curious where is this info coming from?

If you're saying that all of the top prizes are not in the initial printing, then the odds are not being properly represented on the sites. The states are simply advertising "PLANNED" top prized....not all of the top prizes would be in circulation because they wouldn't all be actually printed yet.

Under this scenario, the states would never need to do a 're-print'...they would just continue to order new batches. Am I missing something?
RedStang

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Feb 22, 2013, 1:21 pm

Depends on the game. They won't let special occasion and holiday tickets go on a few years until all prizes are gone.
Jon D

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Feb 22, 2013, 7:18 pm

Quote: Originally posted by ScratchSmarter on Feb 22, 2013
Jon D thatnks for details.....just curious where is this info coming from?

If you're saying that all of the top prizes are not in the initial printing, then the odds are not being properly represented on the sites. The states are simply advertising "PLANNED" top prized....not all of the top prizes would be in circulation because they wouldn't all be actually printed yet.

Under this scenario, the states would never need to do a 're-print'...they would just continue to order new batches. Am I missing something?

No source for the information, just my own original research gathered over the years and from talking to people at the lottery. So you can take what I say with a grain of salt and decide for yourself if it makes sense. Nobody knows for sure unless they are on the inside and write a tell all, but so far I have not seen that.

I think you misinterpreted what I said earlier about the ticket batches. Yes, all the top prizes and other prizes are there in the original print order of tickets, and the odds for the game would be exactly as stated, they have to be or else that would be fraud.

Say a game has 4 top prizes with 1-in-1,000,000 odds. This would be printed in 4 batches of 1,000,000 tickets for 4,000,000 total tickets. If the 4 groups of brackets below are the 4 batches of 1,000,000 tickets each, then the line kind of represents where the top prize is hidden in each batch.

[....|.....] [.|........] [.....|....] [......|...]

They don't just give all 4 batches of tickets to the retailers all at once. The distibutor manages the allocation of tickets to retailers slowly a batch at a time, only giving each store enough packs to last until their next refill visit. So you might have only 1 batch cracked open and in circulation initially in the first month, while the other 3 batches and their corrsponding 3 top prizes are sitting in their warehouse. This is just an example. Real allocations vary by size of game and size of your state.

And if the game sells real well, they may re-order more, in whatever multiple of top prizes they want. Say they want to add 2 more top prizes, well then they order 2 more batches from the printer. They've added 2,000,000 more tickets to the game, but the odds for the game stay the same.
Romancandle

Upacreek
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Feb 22, 2013, 10:48 pm

Thanks... another good explanation Jon D.

I've always been curious about how this works with scratchers and I think you're definitely in the ballpark on the process. Texas does post quite a bit of detailed information on the web with scratcher games.

Let's say there are 3 top prizes with 1 in 7,000,000 odds of hitting just one of them. Using your example of batches (3) that would be 21,000,000 tickets for just one scratcher game! That can't be right?

How much can retailers stock on their shelves/machines just in that first batch alone for that single game? As you know, there are many other scratcher games they have to make room for too...

Where I'm going with this... (in theory)... in order to truly have a shot at the jackpot within that first batch, every single ticket in that batch should be available for purchase at one point in time across the entire state- right? Not sitting in a warehouse waiting to be distributed etc.

How can that be possible… we’re talking 7,000,000 tickets? Can retailers stock that much?

It’s the like the example most lottery pages post on their websites… let’s say you have 100 balls in a bag… 20 are red, 80 are white. You have a 1 in 5 chance of pulling out a red ball when you reach into the bag etc. In this case, all the prizes and tickets are available at one point in time (when you reach in the bag etc.)

Well, if retailers can’t physically stock all 7,000,000 tickets in their inventory across the entire state, then how do the odds work in that case?

If they can’t stock them all, then technically there are only specific moments in time when that jackpot ticket is actually available for purchase anywhere throughout the state within a single batch- right?

Otherwise (in theory), if all 7,000,000 were stocked and somebody had the resources to canvas the entire state in one day and buy up all the tickets available in that batch, then they should find the winner. Very expensive way to find one for sure...

But if retailers can’t stock that many tickets… say only 1,000,000 at a time within a 7,000,000 batch, then the odds are zero until it becomes available for purchase or is snapped up by someone else etc.

What am I missing or mixing up here? Wow, that was a long post- sorry
Jon D

Los Angeles, California
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Feb 22, 2013, 11:44 pm

Quote: Originally posted by Romancandle on Feb 22, 2013
Thanks... another good explanation Jon D.

I've always been curious about how this works with scratchers and I think you're definitely in the ballpark on the process. Texas does post quite a bit of detailed information on the web with scratcher games.

Let's say there are 3 top prizes with 1 in 7,000,000 odds of hitting just one of them. Using your example of batches (3) that would be 21,000,000 tickets for just one scratcher game! That can't be right?

How much can retailers stock on their shelves/machines just in that first batch alone for that single game? As you know, there are many other scratcher games they have to make room for too...

Where I'm going with this... (in theory)... in order to truly have a shot at the jackpot within that first batch, every single ticket in that batch should be available for purchase at one point in time across the entire state- right? Not sitting in a warehouse waiting to be distributed etc.

How can that be possible… we’re talking 7,000,000 tickets? Can retailers stock that much?

It’s the like the example most lottery pages post on their websites… let’s say you have 100 balls in a bag… 20 are red, 80 are white. You have a 1 in 5 chance of pulling out a red ball when you reach into the bag etc. In this case, all the prizes and tickets are available at one point in time (when you reach in the bag etc.)

Well, if retailers can’t physically stock all 7,000,000 tickets in their inventory across the entire state, then how do the odds work in that case?

If they can’t stock them all, then technically there are only specific moments in time when that jackpot ticket is actually available for purchase anywhere throughout the state within a single batch- right?

Otherwise (in theory), if all 7,000,000 were stocked and somebody had the resources to canvas the entire state in one day and buy up all the tickets available in that batch, then they should find the winner. Very expensive way to find one for sure...

But if retailers can’t stock that many tickets… say only 1,000,000 at a time within a 7,000,000 batch, then the odds are zero until it becomes available for purchase or is snapped up by someone else etc.

What am I missing or mixing up here? Wow, that was a long post- sorry

The main thing you're missing is the middle man: the distributor/vendor. They run everything. The state lottery guys don't have the expertise in house, it is contracted out to the distributor. Also, 1-in-7,000,000 odds are pretty extreme on scratch games, which are likely in the 1-in-1,000,000 ballpark, more or less.

You'd be surpised how many tickets they go through. Take California for instance. We got about 20,000 retailers. So if a game has 1-in-1,000,000 odds, and that batch is printed in packs of 100 tickets, you need 2,000,000 tickets or 2 batches to give 1 pack to each retailer just to start the game. Some stores go through 2 packs a day, some take a week to go through just 1 pack. The refills will be needed no matter what, but the distributor controls the inventory. Big high volume stores will always be stocked extra and rarely run out of new games. But smaller low selling stores don't get stocked well, and are forced to sell other games they have in stock instead. The retailers are not allowed to hoard stock of tickets, the distributor controls that.

As far as odds, the reality is that the odds do *technically* change as the tickets are moved around and sold. The theoretical game odds are the same, but since everything is pre-printed and your store is likely distributed a pack with no large prizes, well then your chances of winning big are diminished. Such is the nature of scratch games. But that is not necessarily any worse than the traditional lottery games, you are just dealing with location as well as time and selection.
Romancandle

Upacreek
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Feb 23, 2013, 12:14 am

Ahhh… the middle man. Very informative post- thanks again!

I was just trying to figure out how many retailers there might be in IL- best guess 5-10K. CA bigger market than IL.

IL has at least one scratcher with 7 mil odds- $20 ticket.

So once again, transparency is key as you indicated before. Without knowing the volume of sales for a particular game, in addition to exactly knowing when and where the jackpots were sold… well, then you best have lady luck on your side.

Either way, I’ll keep chugging away, grabbing them loser... at least I can take one for the team…

-RC

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