The Indianapolis Star reported yesterday on a class certified in a case filed in Marion County, Indiana against the Hoosier Lottery alleging that the lottery defrauded purchasers of its Cash Blast scratch game tickets by misrepresenting the odds of winning the top prizes after most of those prizes had already been awarded.
I haven’t been able to hunt down a copy of Judge Gerald Zore’s opinion, but based on the descriptions of the order in the Star article, there are a couple of potentially troubling aspects to the case. First, the court reportedly based the certification decision in part on 49 affidavits from people saying that they bought tickets “because they thought there were more prizes than existed.” Based on the Star’s description of the allegations in the case, the argument is that tickets continued to be sold with no change in the description of the odds even after most of the larger money prizes had already been claimed. However, it does not appear that this left purchasers without the opportunity to win any prize at all. Consequently, this does not appear to be the type of fraud case where the plaintiffs will be able to prove that no reasonable person would ever have bought a lottery ticket if the true odds had been made known. Common sense and experience suggests that there were probably thousands of people who bought tickets without a thought for the odds. If so, it is curious that the court would find relevant the fact that 49 affiants said that they did rely on the advertised odds in deciding to buy a ticket. Certainly, there would be some purchasers who relied on the published odds, and others who did not. Individualized reliance and causation issues would seem to come in to play in this case just as in most other consumer fraud class actions.
Second, one of the named plaintiffs, Jeff Frazer, reportedly paid $40,000 for 4,000 $10 tickets and considered his purchases an “investment” based on the advertised odds. His co-plaintiff, Jeff Koehlinger, paid another $2,470 for tickets. It’s hard to imagine how the court was able to get around the significant typicality and adequacy problems seemingly inherent in these individuals trying to represent a class of lottery scratch game buyers.
See this MSNBC link for more on Mr. Frazer’s story. The blog WalletPop has a commentary on broader societal implications that this case brings to light about the human cost of state-sponsored gambling.
While they’re at it, plaintiffs should go after the State of Indiana for selling an unregulated security!
My impression was that the complaint is not about the odds printed on the ticket but the misrepresentation of remaining prizes on the lottery’s website.
From the linked article: “On June 22, 2006 — more than a year after taking the flawed tickets off the market — the lottery noted on its Web site that seven of the initial 10 $250,000 prizes associated with the game remained available, the suit says.
“By July 7, 2006, after realizing it had too many prizes listed on its Web site, the lottery announced that the number of $250,000 prizes remaining had dropped to one. The number of prizes of $50 or more fell from 65,570 to 5,197.”
If there were, say 250,000 tickets remaining for a ten dollar game and you (think you) know that 65k of those will be worth $50 or more it makes economic sense to buy as many as you can. So you get a second mortgage and buy 4000 tickets. If the next day the lottery revises the number of remaining prizes worth more than $50 down to 5,000, I can see wanting to sue.
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What is even more troubling about this case is that the complaint does not allege that the Lottery overstated the “odds” of the game…just the number of “prizes remaining”. If you go to hoosierlottery.com, under thsir instant game info. you can see that they do not publish how many tickets are remaining…thus, a person has to pull that number out of their butt to determine what they believe their “odds” are for winning. The odds are printed on the ticket itself and in the game rules and they never changed.
Will be interesting to see how this one plays out as both sides get “lawyered up”.
I always check the web to see how many pay-offs are left because I thought they were not updating the list
and are still not doing it. Lots of people check what is left because why would you keep buying tickets when the prizes have already been awarded.
A good example is a game they put in called Frosty Fortune, the web site says all the top prizes are still out there and I doubt that is true. Have played it several times and have not won a single dollar!