Ontario lottery scandal

by Walter Olson on April 6, 2007

A major scandal has erupted in Ontario in recent weeks following reports that some lottery retailers have for years been cheating their customers out of winning tickets, instead cashing in the tickets themselves. Now the law firm of McPhadden, Samac, Merner & Barry has filed a would-be class action lawsuit on behalf of all persons who bought lottery tickets since 1975, charging that the lottery failed to exercise its responsibility to prevent cheating, and demanding C$1.1 billion including C$100 million in punitive damages.

Perhaps the most interesting question raised by the legal action is: assuming a remedy cannot be had against the rogue retailers, what is a suitable remedy against the allegedly negligent lottery authorities? According to CTV, the law firm has proposed to hold a “free lottery”, or, perhaps more precisely, a lottery that would compensate for past unfairness by enabling Ontarians to buy a ticket which would be eligible for a payoff above the usual. (Those who could prove they had played the lottery in the past would be entitled to one free ticket.) (“Class-action suit launched against lotto agency”, Mar. 28).

Details of the proposed “remedial” lottery are hazy in the CTV account, but a couple of practical difficulties immediately come to mind. Start with the assumption that a “remedial” pot would be fixed at a certain lump sum intended to punish the province for its past negligence — let’s say C$100 million — and that such a sum greatly exceeds a typical lottery pot. Since there is no upper limit to the number of tickets that purchasers could buy in pursuit of the extra-large pot, the province might in fact wind up making money on its penitential lottery, even taking into account the obligation to dispense a certain number of free single tickets to persons who could bring in the paperwork to show they were past lottery players. Alternatively, assume that the province undertakes to run a one-time penitential lottery with a higher payout than usual — say, 95 percent rather than the usual 40 or 60 percent or whatever. Again it’s possible that by stoking player interest in a much-publicized “good-odds” lottery, the authorities will come out ahead (perhaps having hooked many novices into buying their first lottery tickets).

The practical difficulties if the province is so rash as to promise a lottery with a payout of, say, 110 percent of the money put in, will be left as an exercise to the reader.

{ 5 comments }

1 ras 04.06.07 at 3:49 am

Free Rebates from the Stupid Tax, sign up here…!

2 Zubon 04.06.07 at 1:09 pm

You could make a payout of the normal amount plus a constant, but that again raises the possibility of profiting from it because of increased interest in the better payout. The least stupid version I can think of is a lottery at a break-even percentage payout plus the penalty on top of that as part of the prize.

Hmm, must ponder. Is there a non-absurd way to work through the idea of selling tickets for a chance to win the punitive damages? (And how does this apply to normal jackpot justice…)

3 Dibby 04.06.07 at 7:41 pm

Why are people relying on a store clerk to tell them if they’ve won? Comparing a few numbers is not rocket science. Maybe ras is right about the Stupid Tax.

4 Ryan Frank 04.07.07 at 11:36 am

I must admit I am also curious on how customer were ‘cheated’…. Most lotto tickets/games are fairly easy to understand if you won or not.

5 Craig 04.10.07 at 12:34 pm

Canadian lottery terminals have a quick scan method for checking your tickets. While some places have a self-scan device for customers, in others this is unavailable.

Since they only display numbers for the most recent draw in the store, if you have an older ticket, you’re probably going to hand it to the clerk to scan. It beeps, indicating a prize, but the cashier-side display isn’t visible to you. He tells you you’ve won a minor prize, like $10. Later, he or a confederate cashes in the ticket that won $100K.

This scam mostly works on casual lottery players; the hardcore check their own numbers before ever trying to cash in. Casual lottery players, though, may have bought the ticket on a whim weeks before when buying milk at a convenience store, and just be checking it because they happened to notice it cluttering their wallet.

Comments on this entry are closed.