Update: Feb - 2002 - How the story ends ... The TLC proposed the same thing on Dec. 21 and again, players objected for a 3rd time. Then, the TLC revised the rule a 4th time and adopted it on 2-12-02 without letting anyone read the revisions. They stated that they were relacing the word "may" with the word "shall" regarding the amount 6 of 6 winners will receive making the rule specific regarding all payouts. (That's what players wanted.) However, in the 3rd proposal, they deleted the sentence that stated that "no prize shall be less than $5" and players objected but the TLC ignored those comments. So, the rule no longer guarantees that "no prize will be less than $5" except the 3 of 6 prize is still guaranteed to be no less than $5. It's now conceivable that 4 of 6 players could receive less than $5 under the new rule. This would be like changing the rules in poker where "sometimes" one pair would beat two pairs!

End Feb. 14, 2002 Update - Not you can read the the beginning to the end if you haven't already!

Sept. 8, 2001

The Texas Lottery is currently attempting to pass a rule that allows them to pay the top prize winners the amount they advertise instead of a percentage of sales. Did you know that: (1) the TLC has overpaid jackpot winners by $59 million since Sept 1996 - in spite of the written rule and advertising that states, "prize amount varies due to pari-mutuel calculations" (2) they've cheated some players out of their share of sales and (3) in June, players opposed this proposed rule change but the TLC edited, then "re-proposed" the same rule, then they threw out our comments.

Because it's literally impossible to say "exactly" how much a jackpot is before sales are tallied, if adopted, this means for "every" win, the TLC will either be adding funds or pulling funds to make good on every win.

To help you understand - the best example is the recent $280 million Powerball jackpot. We all "heard" that the jackpot was worth an "estimated $280 million." But after sales were tallied, it was determined that the jackpot was actually worth $294.8 million. Because the payouts are "pari-mutuel calculations," the four lucky winners are splitting $294.8 million - not the $280 million they advertised. The Powerball pays the amount in the pot - which is a set percentage of sales - just like Texas is suppose to be doing - but aren't. This is how Lotto games are designed - it's secure and above reproach - but Texas wants to change their rules.

In July 2000, I began posting Lotto Texas sales and the amount in each prize category for the players. Since July 2000, all Lotto Texas winners were either paid the EXACT amount in the prize pool or the EXACT amount required that gave a return of the amount advertised - down to the penny - it was whichever figure was the "highest." However, prior to this date, this was NOT the case.

Here's five (5) different ways the TLC has paid
6 of 6 winners since Sept 1996:

One (1)
(Overpaid but winner didn't receive the full amount advertised)
("Overpaid" means the winner received more than what was in the prize pool.)

January 15, 1997 - The jackpot was advertised at $35 million, there was one winner. Annual pay. The investment costs for a return of "$34,281,310.40" was $19,569,877. Total sales were $59,437,118 meaning the amount in the prize pool was $19,019,878 (32%). The TLC overpaid this winner by $549,999. (The winners first check was $1,715,310 and the next 19 checks were $1,768,000 making a total payout of $34,281,310.40. Why not $35 million? How did the TLC arrive at the figure of $34,281,310.40? Notice the overpayment was $1 dollar short of $550,000.)

Think these are "weird figures?" Here are some others ... and there's more too ....

Jackpot $8 million - TLC overpaid by $275,000 - winner collecting exactly $7,466,511

Jackpot $4 million - TLC overpaid by $200,000 - winner collecting exactly $3,545,716.91

Jackpot $34 million - TLC overpaid by $275,000 - winner collecting exactly $32,463,891.85

Jackpot $8 million - TLC overpaid by $215,001 - winner collecting exactly $7,605,640

Tell me - how did the TLC determine who to overpay? And by how much to overpay them? Why did some get more than others? Tell me, how is this fair to anyone?

Two (2)
(Overpaid and winner received the EXACT amount advertised)

June 3, 1998 - An advertised $45 million jackpot. Three winners - 1 winner chose Cash Value Option and the other two chose Annual Pay. Investment cost for the 2 annual pay winners was $16,294,488. The CVO winner received a lump sum payment of $8,147,244. Total paid out by the TLC was $24,441,732. Total sales were $68,540,569 meaning there was only $21,932,982 (32%) in the prize pool. The TLC overpaid these winners by $2,508,750 - which was the exact amount needed to get a return of exactly $45 million. (The annual pay winners are receiving $600,000 per year for 25 years - this totals $15 million each.)

Why did these people get the EXACT amount the TLC advertised while others didn't, and what drives Linda Cloud to "over-estimate" the jackpot figures? Let me summarize a few more, but remember, there are more.

Jackpot $4 million - TLC overpaid by $749,386 - winner collecting exactly $4,000,000

Jackpot $29 million - TLC overpaid $312,299 - winner collecting exactly $29,000,000

Jackpot $7 million - TLC overpaid by $857,030 - winner collecting exactly $7,000,000

Jackpot $4 million - TLC overpaid by $451,157 - winners collecting exactly $4,000,000

Is this good business? How is the School Foundation Fund getting their full commission from sales? This is terribly unfair to Texans.

Three (3)
(Underpaid - winner received the amount advertised but less than the amount in the prize pool)

On November 7, 1998, the jackpot was advertised at $20 million. There was one winner and she chose annual pay. For a return of $20 million, the TLC invested $11,283,424 for her. Sales were $36,366,951 meaning there was $11,637,424 in the prize pool (32%). The TLC short changed her by $354,000 because they only invested $11,283,424. (She's receiving 25 payments - $800,000 each - exactly $20 million.)

She is NOT the only winner who did NOT receive the full amount that was in the prize pool - there are others who were short-changed by even greater sums. Keep in mind, the TLC ceased "under paying" winners after I started tracking sales and posting the data on the internet. Don't you think this point sends a distinct message as to how the winners were suppose to be paid according to law?

For the record, the last winner short-changed was Juan Rodriguez. He won the $18 million jackpot on Feb 9, 2000 and was under paid by $74,858. He opted for the CVO. The amount in the prize pool was $8,999,265, the investment amount needed for an $18 million return was $8,924,407 and he received $8,924,407. (This is WRONG.)

Let me summarize a few more ... but remember, there are more ....

Jackpot $38 million - Prize Pool $19,188,557 - winner shortchanged - collected $19,043,700

Jackpot $18 million - Prize Pool $10,105,272 - winner shortchanged - collected $9,948,152

Jackpot $33 million - Prize Pool $18,488,904 - winner shortchanged - collected $18,263,308

Jackpot $20 million - Prize Pool $10,746,554 - winner shortchanged - collected $10,018,880

Winners have no idea how much they are entitled to when they win. They simply TRUST the TLC to tell them. But the TLC doesn't share all these details with them. Did you know that attorney's say they have no recourse unless they go public with this? And FYI - Money is not the issue here - the issue is the principle of this thing - These folks were not treated fairly - they were cheated. I believe amends must be made by the state or the media will have a field day not to mention how the people of Texas will respond - So far, I've identified 13 jackpot wins where multiple winners were short-changed. Again, keep in mind, "short-changing" players was only done PRIOR to my posting this data on my web site - since then none have been short-changed.

Four (4)
(Received the EXACT amount that was in the prize pool and more than the advertised amount)
(This is how the winners should be paid)

On March 7, 2001, the jackpot was advertised at $85 million, there was one winner and they chose the Cash Value Option. The investment costs for a return of $85 million was only $48,786,362. However, the amount in the prize pool was $51,214,323 and the winner was paid $51,214,323 - the exact amount that was in the prize pool.

If I had not been posting these numbers, I believe this couple would have only been paid $48 million like others between Feb. 1997 and July 2000. It was shortly after this win that the TLC proposed to change the rule so they could start paying the amount advertised "legally." WHY on earth would the TLC want to do this unless they were up to no good?

Let me show you some others that received the exact amount in the prize pool. This is the way all winners should be paid - there should be one rule and one way to calculate the amount won by 6 of 6 winners ... (I'm showing investment costs for a return of the amount advertised just for your information) ...

$40M Jackpot - Prize Pool: $22,637,040; Costs: $22,222,400 - Winner Collected: $22,637,040

$10M Jackpot - Prize Pool: $5,301,652; Costs: $5,242,040 - Winner Collected: $5,301,652

$26M Jackpot - Prize Pool: $34,121,101; Costs: $31,998,672 - Winner Collected: $34,121,101

$9M Jackpot - Prize Pool: $5,035,303; Costs: $4,734,988 - Winner Collected: $5,035,303

Five (5)
(Under the circumstances this one should not be left out ... Winner received the exact amount in the prize pool but less than the amount needed to make good on the advertised amount.)

The two March 24, 1999 winners split the exact amount that was in the prize pool - each winner received $4,974,076 making the total pay out $9,948,152 which was exactly 32% of 31,087,979 - (total sales for this win). But - according to documents supplied by the Comptroller, the cost to invest for a return of the advertised amount ($18 Million) in this case was $10,105,272. Now, why did the TLC overpay the winners before and after this win to make good on the advertised amount - the March 6, 1999 & April 3, 1999 wins - but fail to pay this win like the others? For the record, the March 24th winners were actually paid correctly - but why? And was this fair? Here are the specifics -

4-3-99 - $10M Jackpot - Prize Pool: $5,179,660; Costs: $5,510,028 - Winner Collected: $5,510,028

3-24-99 - $18M Jackpot - Prize Pool: $9,948,153; Costs: $10,105,272 - 2 Winners Split: $9,948,153

3-6-99 - $4M Jackpot - Prize Pool: $1,561,745; Costs: $2,220,995 - Winner Will Collect Exactly: $4,000,000 (TLC invested $2,220,995)

Unless the TLC intends to "purposely under-estimate" jackpots, paying the amount advertised is a bad deal for the state and grossly unfair to the people. Every dollar taken in was to be divided by 7 groups - each receiving a set percentage of sales that totaled 100%. Tell me, because of the $59 million in "over payments," who didn't get their share from Lotto Texas sales - the school fund, the players or the TLC?

This proposed rule change was originally posted in the Texas Register in May 2001. But the TLC started receiving comments so they decided the rule needed "editing" - Yet they never posted that they were re-writing it, they never withdrew it, and when the new rule was posted in the Texas Register on August 10, they never even mentioned it on their web site until I called their hand on it. But Kim Kiplin says that all the comments the TLC received between May through August 10 have been discarded so players who opposed this rule change have to comment again. There is something seriously wrong with this picture.

The people oppose this rule change and I have comments from people statewide - they want what's in the pot - Players have spoken but the TLC doesn't listen - instead, as you can see, they look for ways to divert. It is my opinion that Linda Cloud, Kim Kiplin, Toni Smith and Keith Elkins is running the TLC into the ground and someone needs to stop them. They want to change this rule so they can keep the starting jackpot at $4 million - no jackpot is "suppose" to have a "minimum" - that's why it's a "game."

Lotto sales are down and Ms. Cloud is grasping at straws - Unfortunately, she cannot see the real reasons sales are down - she created losers and losers lose interest and eventually quit playing. Further, retailers want more money but the TLC refuses to increase their commissions - for many retailers, selling lottery products is not worth their time or effort anymore. Can you imagine how far that $59 million could've gone towards incentives for retailers to increase their sales? Lastly, the TLC has lost its integrity - they've deceived players. How far are you going to let them go? Who is going to listen to the people? Do you think it's fair to pay some winners more than others? Won't you please help us? We're currently in a 30 day comment period (it actually ended today but we've called for a public comment hearing). This rule will be ripe for adoption during the Commissioners meeting this month. One phone call to the Commission could halt this plan - if, of course, you agree with what's been said.

Thank you.

Dawn Nettles
Publisher
Lotto Report
P. O. Box 495033
Garland, Texas 75049-5033

A comment for you ...
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NO to 16TAC - 401.305 & 401.312

I believe all winners should receive the same exact percentage of sales - No winner should receive more or less than other winners. Pay us what we have coming - nothing more and nothing less. We do not approve of the TLC paying the amount they advertise. That figure should represent ONLY the estimated amount the winners will receive.

NO to 16TAC - 401.302 - Scratch Tickets

I believe the TLC should tell players how many scratch tickets were printed and how many prizes there are for each prize before selling the tickets. This information should be available at EVERY retail outlet for people who inquire. Do not delete paragraph “K” that states, “a game report must be completed showing the number of prizes claimed at the end of each game.” This information should be a matter of public record.

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