June 29, 2005
Truth in Lotto advertising

Oh, I hope someone liveblogs this.


Texas lottery officials could face tough questions and some nasty wrist-slapping today when they testify before lawmakers about inflating several Texas Lotto jackpot estimates.

But they would face more scrutiny under a bill filed Tuesday that forces the lottery to comply with laws against deceptive trade practices.

Sen. Jane Nelson said recent revelations that lottery officials advertised bigger jackpots than they could afford to pay out jeopardize the integrity of the game and the government that sanctioned it.

"It was deceptive. How can you put up a billboard that says you've got $8 million in the jackpot when they only have 6.5 in the kitty?" said Nelson, R-Lewisville. "If the public is not confident that what we're advertising is accurate, you will see, I think, sales will drop to a much greater extent. People have to have confidence, and if their government isn't being honest, then we're in bad shape."

[...]

The lottery's executive director, Reagan Greer, and several other lottery officials and staff members were expected to testify about the jackpots and other issues in today's meeting of the House Licensing and Administrative Procedures Committee.


Speaking of the unqualified Reagan Greer, I just now realized that I'd overlooked the fact that the jackpot overstatement was not a one-time incident.

Nelson's measure, Senate Bill 52, was filed just days after the three-member Texas Lottery Commission took Executive Director Reagan Greer to task for advertising the June 8 Lotto jackpot at $8 million even after it had become apparent that ticket sales would not support a grand prize of more than $6.5 million.

Under sharp questioning from the commissioners, Greer and other lottery executives acknowledged that they had inflated jackpots on at least three other times. The acknowledgement drew a stern rebuke from the commissioners, who said that lottery players have the right to demand truth in advertising from the agency.


And of course, it's even worse than that:

Texas lottery officials were explicitly warned last year that ticket sales might not be enough to fund advertised jackpots, but they took no action to prevent it.

Months later, the warnings proved true, and the lottery's executive director, Reagan Greer, nonetheless approved advertisements for inflated jackpots.

A March 23, 2004, memo shows that Mr. Greer and other top officials were given specific notice of the looming problem.

"This puts the agency in a position where we are advertising a jackpot amount (e.g. $8 million) that we may not be able to support," wrote Robert Tirloni, the lottery's online product manager.

[...]

In his memo, Mr. Tirloni proposed a number of measures to firm up finances. One suggestion allowing for up to eight jackpot increases to be guaranteed by the agency's budget, rather than ticket sales could pose a "precarious public relations situation," he wrote.

Currently, four straight increases can be funded by agency money. After that, a winner is guaranteed a percentage of ticket sales.

Mr. Tirloni also suggested cutting the size of jackpot increases between drawings with no winner, but he noted that might push lotto sales down even further.

Between Nov. 3, 2004, and June 11, 2005, the underfunding scenario Mr. Tirloni warned of occurred in four jackpots, though none featured a winner.

[...]

At a Jan. 7 Lottery Commission meeting, concerns about underfunded jackpots in other states were raised, according to a meeting transcript.

Mr. Greer has discretion to set jackpots. At that meeting, he and other top agency officials rejected a "hard-line" formula by which jackpots would rise or even fall depending on ticket proceeds.

"The advice that I have gotten up to this point has been very good, and, again, this has not been an issue," Mr. Greer said, even though by then, a November jackpot had been inflated. "I do have a comfort level with what the rule is now and appreciate the fact that in my position as executive director, I have that discretion."


I think it's long past time for Mister Greer to be shown the door.

If executive director Reagan Greer doesn't resign, the Texas Lottery Commission should fire him. Only a change in top leadership can properly send the message that the state of Texas stands for honest and fair games.

[...]

Hat in hand, Mr. Greer admitted to surprised lottery commissioners his bosses last week that he approved four inflated jackpots since the fall. He conceded that he should have "more closely" examined staff recommendations to routinely boost jackpots after nonwinning drawings to generate interest in the game. Yet the same Mr. Greer also said top officials knew more than a year ago that lagging sales eventually would fall behind jackpot needs.

[...]

The attorney general's office is juggling a hot potato in this case an allegation of fraudulent advertising by the state itself. If fair is fair, state officials need to be held as accountable as a grocer with the habit of deceiving customers by putting his thumb on the scale.

The lottery also faces tough questions today at a House committee meeting called to look into these shenanigans. Here's a suggestion for panel members: Ask Mr. Greer if he would patronize a business that made false claims in its advertising.


Amen to all of that. I'd just add one thing: When is Rick Perry going to demand an acceptable level of accountability from his hand-picked Lottery chief?

Posted by Charles Kuffner on June 29, 2005 to Jackpot! | TrackBack
Comments

"It was deceptive. How can you put up a billboard that says you've got $8 million in the jackpot when they only have 6.5 in the kitty?" said Nelson, R-Lewisville.

The legislator may not be aware that most states do not put the entire amount of a lottery jackpot up front. Since the full amount of a jackpot is based on 20 or more annual payments (New York has 26), the state only puts in the amount that is needed before interest. The accumulating interest covers the remainder of the payments.

Posted by: William Hughes on June 29, 2005 11:02 AM

Any time a man says "It's worse than that" and doesn't follow it up with "He's dead, Jim!" is a day wasted.

Posted by: Laurence Simon on June 29, 2005 2:11 PM

With all due respect to William, that's a technical expalanation that doesn't wash with the millions of Texans who buy lottery tickets and expect the games to be above question.

All of these scandals -- last year's illegal Las Vegas law firm contract, the make-believe jackpots, and the Lottery's scapegoting last week of its chief financial officer -- happened on Regan Greer's watch. Reagan Greer was Rick Perry's Bexar Co. campaign coordinator in 2002 and was recruited for the Lottery job by the Governor himself.

Wouldn't it be interesting if a Capitol reporter woke up long enough to ask Perry what he thinks about his appointee's performance in the job?

Posted by: Oh, Sarah! on June 29, 2005 2:35 PM