LEXINGTON The Virginia Lottery sells scratcher lottery tickets that offer the public a chance to win several different prizes -- ranging from the reimbursement of the cost of the ticket to a "grand prize," which for some games is $1 million. In late July 2007, a friend alerted me to the Beginners Luck product offering a grand prize of $75,000. He indicated that data published on the Virginia Lottery's Web site showed that there were an exceptionally high number of grand prizes (and other high-dollar prizes) remaining. I examined the data and concluded that the tickets were actually very good investments. I then began purchasing tickets in hopes of winning one of the grand prizes.

Over the next few weeks, I tracked the Beginners Luck game as the Lottery posted daily updates to its Web site. In doing so, I realized that the numbers posted online violated basic laws of statistics.

There were several possible explanations (including outright fraud), so I began working with attorneys to craft information requests under the Freedom of Information Act. I also began cataloguing all scratcher games offered by the Lottery during the previous five years. The investigation conclusively revealed several relevant facts.

First, in all or nearly all of the scratcher games, the tickets prominently display a statement that reads something like "Win Up To $75,000!" People play to win the top prize -- if a player has a choice between a game where no top prizes are available and a game where they are available, the customer will play to win a top prize.

Under Virginia law, the ticket itself is a contract between the Lottery and purchasers, so the Lottery must provide purchasers with a chance to win the grand prize advertised on the front of tickets. To reinforce this idea, the Lottery created a specific policy that requires the Lottery to stop selling lottery tickets for a specific game once the last grand prize has been claimed. That policy was and is prominently displayed on the Lottery's Web site and it is referenced on the back of the scratcher tickets.

Second, I would contend the Lottery orchestrated and repeated, during at least a five-year period, a scheme designed to circumvent both Virginia law and the Lottery's own rule to stop selling tickets once the last grand prize has been won. The scheme worked as follows: For a given scratcher game such as Beginners Luck, the Lottery would produce an initial shipment of tickets. If sales were strong, the Lottery would produce a second shipment of tickets that was identical in appearance to the first shipment. In essence, the Lottery would start a new game but not tell its customers and not pull the tickets from the first game. The Lottery would then place this second shipment of tickets in line behind the tickets from the first shipment. On July 24, 2007, the last grand prize for Beginner's Luck was claimed from the first shipment. I bought my tickets on August 1, 2007 and purchased tickets from the first shipment but I, like other Virginians, did not know I had zero chance to win the top prize. My investigation has revealed there were 241,932 Beginner's Luck tickets sold after July 24, 2007 where players had no chance to win the top prize. The second shipment contained additional winning tickets, but those tickets were unavailable to customers until the remaining first-shipment tickets were sold.

In its public statements about this discrepancy, the Lottery claims its online data was accurate but in fact it was false. My investigation reveals the Lottery posted false data online that showed there were six top prizes available in August, 2007 when in fact there were zero available because the Lottery was still selling its stale tickets from the first shipment. When the first-shipment tickets were finally sold, the second-shipment tickets would hit the shelves and people would have a chance to win a top prize again, with no one knowing that for some period of time in the middle, there was zero chance for people to win the top prize. Further, the Lottery's Web site in August, 2007 also made reference to "At Start" grand prize tickets and it manipulated this number as well by stating there were 12 available At Start when there were only 6 grand prizes available in the first shipment of Beginner's Luck and these had been sold by July 24, 2007.

Third, the data collected shows that the Lottery orchestrated this scheme at least 50 times over a five-year period from 2003-2007, and in doing so collected nearly $85 million dollars by selling stale tickets for which purchasers won absolutely nothing. There is reason to believe that the true damages may be substantially higher.My desire was and continues to be to reform the Lottery system so that it is both fair and understandable to the people of Virginia. In that light, prior to filing my claim, my attorneys met with Lottery representatives to discuss ways that we might repair the situation. The Lottery refused to do so, at which time I decided to file a lawsuit. The lawsuit seeks two main things. First, it seeks to force the Lottery to put specific procedures in place to ensure that none of the practices described above will occur again. The Lottery has issued vague statements about this since the lawsuit was filed but nothing concrete. Second, it seeks to force the Lottery to refund whatever money the Lottery made illegally from the sale of stale tickets. We firmly believe that a reasonable solution exists: one that will both restore the people's confidence in the Lottery and rightly disgorge the illegal profits made by the Lottery.

In the weeks since the lawsuit was filed, the Lottery has released various statements and has conducted a series of interviews. In those statements and interviews, the Lottery offered at least three relevant pieces of information. First, the Lottery acknowledged that it sold stale tickets for which the buyer had no chance to win a grand prize. Second, the Lottery indicated that it had conducted an internal investigation into the allegations against it. I firmly believe that the results of the Lottery's investigation should be made public because the Lottery, as a state agency, is accountable to the people of Virginia. Third, the Lottery indicated that scratcher players knew there were no grand prizes remaining because the Lottery's Web site reflected that. This statement is completely and demonstrably false, which shows the Lottery's apparent willingness to continue misleading the public. Finally, after the lawsuit was filed, my attorneys told the Lottery I would be glad to review the Lottery's internal investigation and compare them with mine. To date, the Lottery has refused, which reinforces my belief they do not want to reform and improve the Lottery.
Contact xxxxx at (000) 000-0000 or xxxxx@timesdispatch.com. Contact xxxxx at (000) 000-0000 or xxxxx@timesdispatch.com. Staff writer xxxx contributed to this report.