Lotto critic's efforts pay off
Jackpot frozen; woman said ticket sales couldn't support advertised prize

08:52 PM CDT on Friday, June 10, 2005
By KAREN BROOKS / The Dallas Morning News

AUSTIN – Dawn Nettles has been chipping away for years at the Texas Lottery Commission, trying to prove the agency is a corrupt body that swindles honest gamblers.

And while she has earned a reputation as a tenacious foe and a leading expert on the state lottery, her tangible successes in changing the rules, culture, games or leadership have been few and far between.

But this week, the Garland publisher and self-appointed lotto watchdog broke through the wall and found an allegation that stuck: The $8 million Wednesday jackpot advertised on Lotto Texas billboards across the state would have – if anyone had won – paid only about $6.5 million because of slow ticket sales.

Officials with Texas Attorney General Greg Abbott, a gambling opponent, responded to her complaint and said they'd look at her allegations of false advertising.

The commission took unusual action this week to fix the problem in the short term. Commission officials also say they'll discuss some of her concerns about how fairly the games pay the winners during a public meeting later this month.

"I didn't think I'd get any kind of response," Ms. Nettles said Friday. "I'm grateful that I did. I'm amazed. I'm getting e-mails congratulating me that we finally held them accountable."

And while commission officials say their immediate decision to adjust the jackpot estimates for this weekend – the first time they'll do that in the history of Lotto Texas – was already in the works when Ms. Nettles complained, they grudgingly give her credit for drawing attention to the larger issue of credibility and fairness in the lottery.

Changes may be on way
"Dawn has been a critic of this agency for quite some time," said Bobby Heith, spokesman for the commission. "And from time to time she has some good points."

The events of this week could result in some significant changes in how the Texas lottery is run – including how it adjusts the publicly advertised jackpot estimates when the sales don't live up to the hype, a change that already started this week. Today's estimated Lotto jackpot will once again be $8 million.

It would seem like a win for Ms. Nettles, who publishes the Lotto Report newsletter and another one on homebuilders from her home office. But even though her Monday complaint to the AG and Travis County district attorney grabbed the attention of the state's top gambling opponents and appeared to force the issue, at least somewhat, she sees a hollow victory and vows that she hasn't yet played her full hand.

"People are tired of losing their money," she said. "We need fair games."

Lottery commission officials say that as early as June 3, estimates began to show that if there were no winners in the June 4 jackpot, the projected $8 million jackpot for Wednesday might not be supported by enough ticket sales.

Mr. Heith said that officials determined that by looking at the size of the potential jackpot, past sales during that time of year and other factors.

Acted before complaint
Throughout the weekend, management discussed the probability of an underfunded jackpot and decided "early Monday, before we received her complaint" that the best way to handle it would be to freeze today's jackpot if nobody won on Wednesday, he said. That would give the gambling public several more days to buy tickets and fund the $8 million prize.

And it would be the first time the commission has not increased the jackpot after nobody has claimed the prize.

"They feel confident that we will reach sales enough to support that jackpot," Mr. Heith said.

The Travis County DA has yet to decide what to do with Ms. Nettles' complaint, but the AG's office, upon hearing of the commission's plans to discuss the payouts in its June 24 meeting and freeze today's jackpot, decided it was satisfied with how the matter was being handled.

Ms. Nettles is not. A supporter of the lottery when it started in 1992, she decided after about seven years that moves by the commission that made the lottery harder to win were a clue that it needed a watchdog.

For example, she says, there have been only 14 winners in 219 Lotto drawings since May 2003, the last time the lottery commission changed the number of balls used to pick a winner.

In the three years before that, there were 59 winners out of 292 drawings, according to figures she keeps on her Web site under the title: "Interesting but very sad statistics."

"What people really want is what's really in the pot," Ms. Nettles said. "That's the only way the state of Texas can guarantee the people a return on their money, and we want that guarantee. We want consumer protection, we want the guarantee that we'll get our share of the sales, and we want fair games."

E-mail kmbrooks@dallasnews.com

The Texas Lottery told players that they were playing for
$8 million on June 8 when in fact, they were not.

Texans expect and demand truth in advertising,
fair games of chance, consumer protection,
and a 100% return of our share of sales.

We don't have this now. It's time for serious changes.

Copies of my complaint letters follow.

This is my letter to the Attorney General and
the District Attorney of Travis County.

June 6, 2005

Attorney General Greg Abbott
Office of the Attorney General &
District Attorney Ronald Earle
Office of The District Attorney
Public Integrity Unit
P. O. Box 1748
Austin, TX 78767

RE: Texas Lottery - The Advertised $8 Million Jackpot - Deceptive Advertising

To Whom It May Concern:

The Texas Lottery is currently advertising the next Lotto Texas jackpot at $8 million. This is for the drawing to be held on Wednesday, June 8, 2005.

The problem is - if someone were to win - as per the Lotto Texas rule, the winner is entitled to 39.104% of roll sales which falls far short of revenues needed to fund a prize of $8 million - in fact, they only have enough to fund an estimated $6.5 million - at best. I feel the variance is entirely too high to support the amount they are advertising.

I contacted the TLC this morning to try to verify the factor applicable but they refused to tell me verbally. Because I am in the “lottery business,” so to speak, I track the rates/factors weekly and the rate I obtain is always higher than what Texas can obtain. Therefore, I am positive that the Texas Lottery can not fund the amount advertised.

Texans want and need pari-mutuel payouts as this is the only way a lottery can guarantee that players receive their share of sales - but - we also want and demand truth in advertising.

Just so that you know, the current Lotto Texas rule states that the TLC will pay the greater of either the amount in the prize pool or the “investment cost” for the first four (4) draws in a roll. After the 4th draw, a jackpot winner will receive 39.104% of roll sales. The TLC knew they would not have enough to fund $8 million but have chosen to falsely advertise the amount one would win if they won.

Your immediate attention to this matter would be appreciated. Consumers deserve to know the truth when it comes to purchasing lottery products.

Thank you very much.

Sincerely,

Dawn Nettles
Publisher

cc: Texas Lottery Commission

My Email to the Commissioners, Reagan Greer and Gary Grief

6-06-05

Subject: $8 Million Jackpot & Grievance Policy

Dear Commissioner Clowe, Commissioner Cox, Commissioner Olvera

I just wanted to be the one to tell you that I filed complaints with the AG and the DA of Travis County today regarding Wednesday's advertised $8 million Lotto Texas jackpot. I regret this but I feel the TLC should not knowlingly mislead the public.

As you know, the Lotto Texas rule states that the TLC will pay the greater of either the amount advertised or the amount in the prize pool for the first 4 draws in a roll. After the 4th draw, then they only pay the amount in the prize pool.

I certainly agree with paying pari-mutuel prizes - this is the only way to guarantee the people that they will receive their share of sales. But, I also believe in truth in advertising and if the jackpot is won, a winner would not receive $8M as stated.

I called Bobby Heith this morning and asked him what the factor was but he refused to tell me. He said I'd have to make an open records request. I do request jackpot estimates each Sunday but in this case there was not enough time to obtain the information thru channels so I was hoping the TLC would simply tell me the factor.

Since I obtain the factors from other lotteries easily, I was able to determine the approx costs for Texas. The rate I obtain is always higher than what Texas obtains so I am positive that a winner would only receive roughly $6.5 million and this is too far off the amount advertised. To me and others I've contacted today, this is deceptive advertising.

I've also been meaning to raise one more issue of importance. The TLC does not have an employee grievance policy. I took it upon myself to contact other state agencies - roughly 20 of them - and so far I haven't found one that doesn't have something in place for grieving employees. This includes the AG, Comptroller, State Auditors Office, SOS, Dept of Banking, Environment Quality Commission, DOT, CPS, Building and Procurement, plus many others.

The TLC is the only agency I found that doesn't have a grievance policy for their employees.

I would like to urge you to do the right thing and have the TLC provide an official source for employees to complain - if of course, they have a complaint.

Thank you for any consideration given to these two issues.

Dawn Nettles
P. O. Box 495033
Garland, Texas 75049-5033
(972) 686-0660