Take a look at this article over at CNN. A video feature is available too. A Virginia man is suing the state lottery for breach of contract because the instant game he purchased had already sold all of the top prizes. While his plight has garnered some support while reviewing the various comments about this story, we think it’s fair to really examine the claims here in depth.

Mr. Hoover says he was felt ‘duped into buying these things’. I find that highly contentious; it’s hard to blame a third-party for an adult’s decision to buy a lottery ticket. If this guy has enough dough to retain a lawyer to sue the state lottery, I can’t believe he’s up in arms about losing on a scratch and win. Let’s get to the merit of his point though. His lawyer says, “It’s one thing to say it’s a long shot to win the $75,000, but it’s another thing to say you have no shot to win it”. Again, another statement I’m not exactly comfortable with. In fact, the Virginia Lottery does display it’s available prize listings, just like the NJ Lottery, on its website. If Mr. Hoover wanted to make an informed ‘investment’ in instant games, surely it is his responsibility to review all material available for him to understand the prizes left and what his odds actually are. We’ve outlined this on our strategy post rather comprehensively.

The question then becomes, if a game’s top prize is cleaned out, should it be pulled from shelves? According to the article, Virginia ‘no longer’ allows games without top prizes to be sold. It’s not clear how recent that policy is. It is my belief, however, that games should NOT be pulled just because the top prize is gone. Here in NJ, the tickets say that we can win ‘up to’ a certain amount of money. That includes all of the smaller prizes, which in some cases, are a fairly large return against the purchase price of the ticket. Let’s look at Gold Dust, a $10 NJ instant game. The $1M and $250K prizes are gone, as openly displayed on the available prizes website. However, there are still (11) $10,000 prizes available, which represents over a 1,000% gain for a player. I’m not saying I would recommend anyone to play a game with the top prizes gone, but if you do, you certainly have a chance of winning more than you bet. Being that the maximum I’ve ever won on a single ticket is $56, I’d be happy with a $100 winner, let alone a $10,000 winner. To say this is ‘false advertising’ or to expect the lottery to mobilize it’s vendor network to start pulling cards when the highest prize goes is a bit of a stretch in my opinion.

The game Mr. Hoover is suing VA for.

Here’s what concerns me. Let’s say the lottery comes out with some blockbuster new $1M instant game. Let’s also just say, by chance, that the (3) $1M tickets are sold in the first week due to incredible demand and a little bit of luck. NJ quickly nixes the game, and besides a lot of smaller prizes, now has to set aside the $3M for the winners. Without the revenue from the rest of the game, to let the odds play out (essentially, to let the lottery make its 65% on as much of the game as possible), how in the world does the lottery stay in business? Can you imagine if slot machines turned off after someone won the progressive jackpot? Seriously. Not to mention, what constitutes an acceptable prize level? In our Gold Dust example above, is the lottery to abandon an untouched lot of $250,000 cards on the table because three people got lucky and won the top prize? The only way the lottery can reliably function is to sell as much of the games as they can. In many states, they are already borrowing against future lottery revenues to finance state government projects. The lottery may need to better inform people about the remaining prizes and their individual odds, but to start pulling games when the top prizes go not only damages the lottery, but damages that player that might have won the $10,000, $50,000 or $250,000 ‘lesser’ prizes.

I think there are some major problems with the lottery. I don’t like the egregious 55% payout on $1 games here in NJ, and I don’t like that a $20 ticket has the same 65% payout as a $2 ticket. Much like slot machines, higher-risk players should be rewarded with better odds ($100 slot machines often pay 99% or more over time). That said, the administrative task of pulling active tickets when the top prizes are gone can’t be cheap, and the more expenses we put into the lottery the less we’ll be able to win in the future.

My advice to anyone who agrees with the $85M lawsuit? Read our strategy section. Research the rules, odds, and available prizes left. If there isn’t a great card left where you buy them, go somewhere else or don’t play! We’ll keep everyone updated on the status of this lawsuit as developments are made public.

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