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If, after you have read these letters, you
have something to say, may I suggest
you click here. This will take you to the
"comment page" which gives email links and
addresses for various VIP people to chose
from. If every one of you would send one
message to just one of these people on this
page, we probably wouldn't have these battles.

First Letter:
August 15, 2002

Update: This letter was published in its entirety by the San Angelo Standard Times on August 19, 2002. The heading was "Lottery boycott may be needed" Congratulations Robert, you wrote a fantastic letter on behalf of the people of Texas! Here is a link if you want to read the story in the paper. It's the 2nd editorial. http://www.texaswest.com/archive/02/august/19/2002081918.shtml

Dawn,

Here is a copy of letter I sent to San Angelo Standard-Times. They are pretty open to reader comments. I'll let you know if its printed.

I'm thinking about sending it to Austin and Dallas papers. Haven't had any success in the past. I think the Austin lottery reporter only prints what Cloud says. (May I also suggest you send your letter to the Houston Chronicle, San Antonio Express News, Corpus Christi Caller Times, Ft Worth Star Telegram and the Associated Press. If you need their fax numbers, let me know and I'll provide them to you.)

Letter to Editor - Written by: Robert B., San Angelo
(Name and phone number included but deleted for publishing on my site.)

Hold on to your wallets!

The Texas Lottery Commission is at it again! This time, the commission is studying the possibility of getting more of your money by implementing a multi-level (Powerball-type) lotto game.

A game requiring players to pick 5 of 42 numbers and then pick 1 of 42 numbers was discussed in detail at the commission's July meeting.

The chance of winning such a lottery is one in 41 million, but a so-called lottery expert attending the meeting suggested that players are more interested in big jackpots, not the odds of winning or losing.

While the big jackpots produced by the national Powerball and Mega Millions lotteries are dramatized in the news media, little is said about the downside, which is that such games guarantee that millions of players will invest and lose millions of dollars building those jackpots.

The bottom line is that the games allow politicians to laugh all the way to the bank with their pockets full of cash while the players count their losses.

True, lottery profits in Texas are deposited in the School Foundation Fund, but this is a ruse because every lottery dollar deposited frees up a dollar politicians can use for other programs.

An appalling aspect of the July meeting is that raising more revenue was the only reason stated for changing the game. Whether or not players want or would support such a game was never mentioned, nor was possible negative impact on the lottery itself discussed.

Thousands of players left the lottery when the current lotto game was implemented about 2 years ago. Thousands more will leave if the proposed game is implemented.

I, for one, am outraged that 4 people have the power to unilaterally change our main lotto game. However, I realize that objections will fall on deaf ears. The news media isn't interested and our elected officials have shown little or no concern in what the lottery commission does, so long as the stream of easy cash into state coffers remains unbroken.

Players who are unhappy with the commission’s tinkering of lottery games to raise more revenue for the state might want to visit http://www.lottoreport.com/ and lend their support to a growing interest in a lottery boycott.

Robert B.
San Angelo

2nd Letter:
August 15, 2002

To: lottoreport@lottoreport.com
Subject: They must think.....(NOT)

Dear Dawn,

I have been an avid fan of The Lotto Report for a couple of years now however until recently, I bought it once a month so that I could verify the Lottery numbers and try to educate myself about the "Texas Lottery." I would like to take a moment to "Thank You." It seems that you Dawn, are just about the only "Voice of The People" (with any kind of power) that there is here in Texas. We need more people with power to stand up and challenge these blooming IDIOTS that run the TLC.

About 2 months ago I started reading about how the dollars from ticket sales where actually broken down, as in, who gets what and what goes where. I was appalled to
discover the following results.

First, The Texas Lottery Commission keeps entirely too much for their part. Example: August 10, 2002. The total ticket sales were $23,496,784.00, (this was for the roll - 5 draws) with the 6 of 6 winner receiving $9,465,984.00 (this was the investment cost). TLC took $10,573,553.00 (yes, they receive 45% of total sales but their "share of sales" is divided too) and they're claiming that it costs $9,465,984.00 to generate $23,496,784.00 in ticket sales for one month. (No, a complete explanation follows your letter on this statement.)

What a CROCK! If they had 1000 people making a $1,000.00 a week, that's still only $4,000,000.00. Where's the other 6.5 million dollars? As a business owner of 18+ years, I will never believe that 1 months worth of operating costs the exact same dollar amount (to the dollar) as what the 6 of 6 jackpot winner will receive. (Explained in my response)

From a marketing standpoint, you cannot advertise a 16 million dollar jackpot, generate 23.5 million in sales and then tell your customers that they're only going to
get 9.5 million of that 23 mill. before taxes. They WILL stop playing! If you go out in the street and ask people how much they think they're going to get from a 16 M. pot
most people will tell you that they're going to get in the neighborhood of 8 million dollars AFTER TAXES! (Definitely covered in my response!)

Now here is what is happening right now in Texas. People are starting to realize the reality of The Texas Lottery is that by the time taxes are taken out of that 23 million dollar jackpot they'll be lucky if they get 6 million dollars and they see that as another government RIPOFF! (The Aug. 10th draw was a $16 million pot and total sales in the 5 draws leading up to the $16 million pot was $23 million- unfortunately - players don't understand that all the 6 of 6 winner has won was a percentage of total sales, very specifically, a percentage of that $23 million. I hope I am successful in explaining this in my response below)

Hmmm, so the state gets 17 million (I think you meant $10 million) and I get 6, when they advertised 16 million? That's REALITY and it's going to be this same REALITY that kills the lottery in Texas.

Now, you want to make it the biggest and best state lottery? As an example, when you have a 16 million dollar lottery you truthfully advertise a 16 million jackpot that the winner will receive 14 million before taxes and watch what happens. The state will now generate maybe 27 or 28 million in sales. They can now clear 10 or 11 million after all the winners have been paid. The State now has a Lottery that will be solid and will be around for years to come. (Yes, we definitely need truth in advertising and I have addressed this below too.)

Right now the people that run the Texas Lottery Commission are Greedy. (Actually, I think the appropriate description would be to add "egotistical" to your phrase - you see, they are competing with ALL lotteries to be in the number ONE position in lottery sales world wide and are doing whatever necessary to achieve that goal) As a business owner I can tell you from experience, customers will not allow a business to be greedy. When they [players/customers] start feeling ripped off, they'll stop buying from you. It's not the only game in town, either. Turn on a computer there are dozens of lotteries on the Internet. (Yes and the Texas Lottery is trying to get rid of their "competition" too.)

Dawn, I been thinking about this for a couple of weeks and I just had to express myself. I figured if I wrote to the TLC they'd just throw it out. If you think it's reader worthy, let your customers read it, please. Thanks, Dawn and I hope you have a GREAT DAY! (Thank you. Now, please read my response and let me know if you end up with a better understanding on how lotteries operate.)

Sincerely,
John S.

P.S. If you think it'll do any good, send it to a State Rep/Congressman....whatever. (I am posting your letter but you need to send it to your state rep. I have just provided a page with just links and addresses for everybody to use for expressing their sentiments. Ya'll start writing now. This is an election year! Click here AFTER you've read my response below.)

My Response to Johns Letter

John & Fellow Lottery Players:

I need to clarify and explain several things to you. First, the "August 10th date" was the date there was "finally" a Lotto Texas winner. The number, "$23,496,784" was the "total sales" for five (5) lotto Texas drawings leading up to that win. This is called the "roll."

Lotteries take the "total sales" for each drawing and divide the sales into "shares," then they ante up accordingly or are suppose to. But there are many catch 22's which there really shouldn't be.

In Texas, from each Lotto Texas drawing, "shares," are divided in this manner: First, from total sales for each drawing, the players are suppose to receive 55% and the remaining 45% is theirs [the states].

Now, 100% of the "states share (45%)" is divided in this manner. The retailers receive 5%, the TLC receives 7% and the school fund receives 33%. You can see that this equals 45% and accounts for 100% of the "states share of sales."

The "players share," which should be 100% of their 55% of sales, is divided in this manner. The 6 of 6 winner(s) receive 68.24%; the 5 of 6 winners receive 5.07%; the 4 of 6 winners receive 12.51% and 12.18% goes into a pool for the 3 of 6 winners. Remember, the 3 of 6 winners receive a "guaranteed prize amount" and that's why we say "their share" goes into a "pool." Actually, each prize category has it own "pool." Now, if you add these percentages up, they only equal 98%. Hmm ...

Where's the 2% you ask? They place 2% of the "players share" in what they call the "reserve fund." The reason? Because there is a "guaranteed" prize of $5 and the 2% is set aside should there ever be shortage to pay the 3 of 6 winners. (Players should demand that all prizes be pari-mutuel - you will see why in a minute.)

Does the TLC need that 2%? ABSOLUTELY NOT! Since inception of Lotto Texas through today's date, Aug. 15, 2002, 3 of 6 winners have held winning tickets that ONLY amounted to $434,799,075. Yet the 3 of 6 winners "share of total sales" amounted to $470,593,494. As you can see, the 3 of 6 share from sales was more than sufficient to cover the actual amount won in "guaranteed" prizes. The overage totaled $35,794,419.

Now, let's not forget, they [the Texas Lottery] still has that little ole 2% - the money they've held in reserve to cover shortages. You know how much that was as of Aug. 15, 2002? Sit down. OK.

The TLC has withheld, from the players share of sales - $83,965,874. These funds were placed in the "reserve fund" from just Lotto Texas sales alone.

So, let's see. If we add the amount never needed from the "3 of 6 winners share of sales" to the amount in the "reserve fund," which was created to cover 3 of 6 shortages, we now have a grand total of $119,760,293 that rightfully belonged to the players. ALL other prizes were paid by dividing the "shares" among the winners - called "pari-mutuel" payouts but also were "rounded down" to even dollars.

Did you know the Lotto Texas rule(s) said, "Prize Pool Shall Be A Minimum of 50% of Sales" then it was changed to say, "Prize Pool Shall Be A Minimum of 55% of Sales" Do you have any idea what all this means?

Now, let me throw in one more tidbit to top this off. The "unclaimed prize fund." That's the prize money that was never claimed. At this point, I think it is very important to tell you that some of this money was never claimed because players depended on the lottery terminals to check their tickets for them. There is no way to know how many winning tickets were thrown in the trash can because players didn't know they were winning tickets. Players have never been warned or forced to check their own tickets - even though the TLC knows that the lottery terminals CAN and DO make mistakes in reading tickets. It is for this reason that I have a very bitter taste about that unclaimed prize money. It does not come back to players either.

Anyway, because of my exposure on this issue, I am currently having difficulty obtaining up to date unclaimed prize figures from the TLC. Would you believe that in July they told me they did not know how much unclaimed prize money was transferred in May! Either way, I can tell you that the unclaimed prize figure is in the neighborhood of $370 MILLION since inception of the Texas Lottery. This is unclaimed prize money from all games. But, it's still the players share from tickets actually sold.

With regard to the "advertised jackpot amounts" - example: "$16 million." You know, the amounts you see on the billboards and on your lotto tickets that you THINK the lottery has, cash in hand, to pay you should you win. This is the biggest misconception of all. The figure you see advertised is the figure they "estimate," but now Texas guarantees to be the minimum amount, the 6 of 6 winner will receive after his share of sales has been invested for 25 years. It is exactly the same principal as putting $100 in a saving account and leaving it there for 25 years. How much do you think would be in your savings account at the end of 25 years from your initial $100 investment?

The lotteries have brought "head-aches" upon themselves and are definitely guilty of "gross misrepresentation in advertising." Ironically, this particular "misconception" didn't become a problem for the lotteries until they started offering the "cash value option" to players. A Linda Cloud special - she copied other states ideas on this one!

My speculation would be that the idea of offering "Cash Value Option" was derived as a result of lotto winners who wanted to take responsibility of investing their own winnings/money.

When the Cash Value Option began, winners thought they were getting "the shaft" when they only received what was actually their "true and real share of sales." It's very unfortunate that most people "believe" that if they win the lotto, then they have won the amount they've seen on the billboards. They believe that amount of money is just sitting in Austin waiting to be picked up - they have no idea that what they really won was just a percentage of total sales and that the advertised figure was only a "true figure" after the money had been invested and earned interest over a 25 year period. But this is not what the signs leads the people to believe.

Advertising is powerful and has a tremendous influence on the people. If a private industry advertised in the manner that lotteries advertise, the Attorney General would go after them. Just ask Publishers Clearinghouse - the Sweepstakes!

Let me address the "investment cost figure of $9,465,984" that you questioned. This is how much money the lottery would have to invest to make good on the advertised $16 million jackpot. To try to make this very clear for you, the TLC pays the first years payment upfront - divide $16 million by 25 years and that equals $640,000 per year. So, the TLC pays the winner the first payment of $640,000. In the meantime, the Comptroller determines that the TLC will have to invest $8,825,984 to get a return of $640,000 per year for 24 years to make a total payout of $16 million.

In this case though, the winner chose Cash Value Option which means the Texas Lottery must pay him the "investment cost" because it cost more to get a return of $16 million than what the 6 of 6 winners share of sales was.

If you will remember, the Texas Lottery recently tried to change the rule where they would ONLY pay the "advertised" amount but we [players] opposed this rule change. The reason ... because the Texas Lottery could have easily "under-estimated" jackpot figures resulting in 6 of 6 winners not receiving their "rightful" share of sales. So, the outcome was that the Tx Lottery chose to "guarantee" the "advertised jackpot amount" OR the "6 of 6 winners share of sales," whichever figure was the greatest. This is determined by how much it cost to invest to get a return of the amount advertised vs the amount in the 6 of 6 prize pool.

Example: Let's pretend the jackpot is advertised at $10 million and there IS a 6 of 6 winner. Let's also pretend that the 6 of 6 winners share of sales totaled $5,234,333 but it took $6,000,000 to get a return of $10 million over 25 years. In this case, and only in Texas, the winner will receive $6,000,000.

If, on the other hand, it only requires $5,100,000 to invest for a return of $10 million, then the winner would receive $5,234,333 (and only in Texas) - which is truly his share of sales but IS more than what it takes to get a return of $10 million.

Got it? I hope so! It took us 9 months to make the TLC "guarantee" that players would receive AT LEAST the amount in the prize pool which is the same as "their share of sales."

Now, at this point, let me tell you too that not all 6 of 6 winners received what they "really" had coming. This issue is pending. The TLC actually "shortchanged" some winners. The Texas Lottery Commission owes those people money and they should just pay them but they will wait until they are forced down. Sad but true.

Readers Beware - Other states DID pass the rule to pay the "advertised" amount. But in those states, there was no one there who was keeping tabs on their lotteries activities. Players have no knowledge of how these "little rule changes" really effect them. Anyway, I won't go there now.

But, if you are reading this and you want to know, just call your lottery and ask for: 1) the "prize allocations," 2) the total sales figures for each draw in a "roll," 3) exactly how much the winner was paid, 4) and ask for the investment cost. Then figure it out by simply adding up the sales, figure the 6 of 6 winners share then see if they got it.

Hint - If I were you, I'd figure two rolls - pick a small jackpot then figure the most recent big jackpot.

Regarding "taxes." Boy, what a subject. And, when you break down the amount of money the lotteries take in and keeps in excess of what was really suppose to be returned to players, it's very disturbing that the players prize monies goes in taxes too. Both state and federal governments do really well from lotteries.

This is a huge topic ... so I'm only going to say that, yes, they take 28% right off the top of your prize money and then you will probably have to pay more in taxes later. The states and feds get the biggest percentage of all revenues collected by lotteries.

First Step of Improvement ... Applicable to ALL Lotteries

While there are many issues that need addressing on behalf of the people vs the lotteries, some very important changes that need to be made by lotteries NOW are:

1) All prizes should be pari-mutuel prizes - NO guaranteed prizes - the lotteries should divide the percentage due to players and pay the exact amount including the cents. They will oppose this.

2) To be 100% FAIR to the people, there should be NO carry-overs, NO reserve funds and NO rounding down prizes. Players should receive their full share of sales from each draws sales. Regarding "rounding down" - you see, Texas only rounds down - they don't round up if it's over .50. If the winners share equates to $20.98 - they pay $20.

Just tally the recent Cash 5 prizes to see what I mean. It's suppose to be a 50% return of total sales to the players meaning that you should be able to double the total amount of all the prizes paid and that should equal total sales. It doesn't. They say they "round" the prizes to make it simple for the people. Baloney.

Example: On 8-15-02 - Cash 5 total sales were $633,991. The total prizes paid out were $311,662. As you can see, that's not half (50%) - at least by my calculator it's not! (Half would have made total sales equal $623,324)

The ONLY exception regarding "carry-overs" would apply to the top prizes for games like Lotto Texas - like if there is no 6 of 6 winner, then the prize money for that prize is carried forward until there is a winner.

3) The unclaimed prize money should be returned to players. PERIOD.

4) Retailers should be instructed to REFUSE to check players tickets for them. The retailers should only run a ticket through the terminal IF the players says to him, "I have a winning ticket. Can I collect." Not only would retailers love this, but then if prizes went unclaimed, it would truly be the players fault.

This would be my first reccommendation on how the Texas Lottery, and all other lotteries for that matter, could begin to restore faith among the people and become ethical. Something they clearly are not now.

In conclusion ...

If Texas and the Texas Lottery do not make changes soon, then I strongly suggest we vote the lottery out. And I want you all to know that I'd hate to see this happen but enough is enough. If our state officials can't take something good ... be fair & honest with it ... and be satisfied with the tremendous income it produces "naturally," then it's not good for the people.

I also want to tell you that I have a solution for all lotteries as to how they can create larger prizes and larger jackpots "naturally" without offering the people astronomical odds in playing the lotto, 6 of 6, games. I met with an attorney earlier this week and will be submitting a proposal to all lotteries next week. This "solution" has never before been done and it is the answer the lotteries have all been seeking for years. For players, it will make the games challenging - but it is FAIR. It will be interesting to see how the lotteries respond to me - especially Texas - I wonder, will Texas be the first to implement the highly sought after solution? Or will they be the followers?

3rd Letter:
August 19, 2002
Subject: ltr to Gov Perry
To: lottoreport@lottoreport.com

Dawn,

Here is content of an email I sent to Gov Perry via the governor's web site:

Governor Perry,
The Texas Lottery Commission is talking about replacing our pick 6 of 54 lotto with a multi-level game.

Since there is little evidence that lottery players want and can afford a Powerball-type game, there is speculation that you, with the aid of some members of the legislature, are pressuring the TLC for more revenue.

True, lottery proceeds are deposited in the School Foundation Fund, but everyone knows this is a ruse since every lottery dollar frees up a dollar to be used for other purposes.

You have an ambitious and expensive budget plan that will require more revenue. Please tell us that you WILL NOT EXPLOIT lottery players by allowing the TLC to implement a game that guarantees players will invest and lose millions to build a jackpot that would be won by one or a small number of players.

Will let you know if I get a reply. We have a reply - read on!

Robert B

September 22, 2002
Subject: Governor Perry Responds
To: lottoreport@lottoreport.com

Hello Dawn,

Here is a copy of a letter I received from Gov. Perry's office Saturday.

"To address your issue regarding pressure to increase lottery revenue, Governor Perry has not communicated such a directive to the agency. In fact, he recently asked all state agencies to identify budget savings and is committed to presenting a budget that is within the state's means.

So she may also be apprised of your views, I am forwarding your correspondence to Linda Cloud, Executive Director of the Texas Lottery Commission. I am also asking for her staff's response both to you and this office on the concerns you have outlined."

Signed by Dede Keith, Dep. Director of Administration and Constituent Services."

I wonder if Ms. Cloud will give the governor the same old 'bull' she is giving everyone else.

Robert B.
San Angelo, TX

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