Indiana lottery class action certified

by Walter Olson on July 11, 2008

Hoosiers who bought losing Cash Blast tickets may be eligible to claim refunds… at least if they’ve held on to tickets in the now-defunct game from the period May 2005-July 2006. (Jeremy Herb, “$20M lawsuit against Hoosier Lottery gets class-action status”, Indianapolis Star, Jul. 10).

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07.15.08 at 11:18 pm

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1 Paul Karlsgodt 07.11.08 at 5:16 pm

This one caught my eye too. One of the named plaintiffs, Jeff Frazer, reportedly paid $40,000 for 4,000 $10 tickets and considered his purchases an “investment” based on the advertised odds. http://classactionblawg.com/2008/07/11/hoosier-lottery-class-action-is-it-typical-to-spend-40000-on-lottery-tickets/

2 Todd Rogers 07.12.08 at 7:13 am

This could be like a tax rebate check from the poor.

3 DAV 07.12.08 at 12:55 pm

On the surface, the class action sounds reasonable. The state kept selling tickets after the prize was won but this is a problem inherent in every scratch off game. The operator is looking for a profit and that profit depends on a large volume of tickets being sold. Things being what they are, the big prizes will be gone about the time 50-67% are sold and sometimes before 99% are sold. It’s also necessary to understand that the state isn’t gambling. It has an almost guaranteed profit — provided a sufficient number of tickets are sold. Interestingly, except for the time factor, there is no significant difference between a scratch off and a random drawing.

Is the class action reasonable? Perhaps, but only if its goal is to stop scratch off type games.

Are the plaintiffs reasonable? Yes, but with a caveat.

I play the horses. It’s possible with a lot of work and careful planning to make a modest profit. This is because it’s possible to find bets that pay more than break even. State lottery games however are losing propositions. (math alert: break even payout = bet cost/probability of winning).

I’ve never understood the mentality of “investing” in a negative cash flow venture (one with payoff below break even). It’s like making a product for $300; selling it for $295; then trying to make up the difference in volume. Sounds more like gambling to me.

In racing circles a person who “invests” a lot of money on a one time event for an anticipated 5% profit is called a Bridge Jumper. Presumably it’s assumed such a person took out a mortgage to finance the venture. (IOW: Bridge Jumper = Stupid Bettor)

Still, the large “investor” in scratch offs is the only one paying attention to the odds of winning. The rest are either spur-of-the-moment buyers or those who become glassy-eyed at the thought of any calculation. The “investors” must constitute a mighty small group.

OTOH, the very same “investors” should have a deep understanding of the game which includes the knowledge of the possibility of buying tickets after the chance of winning has gone to zero.

Conclusion: the class action is a dumb idea but gives the “investor” another shot at winning.

4 Tracy 07.12.08 at 9:20 pm

There was recently a story out of UVA where a prof was going to sue VA for a ridiculous sum (80M?) over scratch offs. His complaint was that they continued selling tickets after the top prize was claimed. Since most every state post notice (online and usually at stores on request) when the top prize was claimed, and 90% of people dont play just to win the top prize I have a hard time justifying this lawsuit going forward.

I think most people play scratchers for the momentary rush that comes with gambling. Its more of a spur of the moment or impulse purchase then a calculated risk.

I know when I used $20 in scratch offs as reward for my employees it worked better then $20 in cash.

5 Happy Fun Ball 07.13.08 at 12:12 pm

What I think is being missed here is that the state offered….wait for it…EXACTLY what they are suing for. Plus a small (read large) and unearned, lawyer fee.

Every time I see a case like this it see that the lawyers, like everbody else, realize that not everyone who is “entitled” to a rebate is going to do the legwork or even know about it. Of course, the lawyer is just trying to help everyone get their fair share right?

Not even close. They know that most will not even receive the rebate, but that each one will count towards computing their fee. The more counted, the higher the fee. That’s why we have opt out instead of opt in provisions for class actions.

6 Deoxy 07.14.08 at 3:37 pm

What I think is being missed here is that the state offered….wait for it…EXACTLY what they are suing for. Plus a small (read large) and unearned, lawyer fee.

This is one thing which absolutely burns me up. It also happened with the “million little pieces” book thing. The lawyer does absolutely nothing but take in free money. How is that ethical?

Oh, yeah… lawyers.

7 edith milburn 07.16.08 at 9:40 pm

what if they were trying to get these not winning tickets out of the peoples hand by doing a mail in contest on $10.00 tickets, and by giving these people coupons for $10.00 to use on lottery tickets.

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