Legality’s the Rub in Giveaways of Lottery Tickets by Retailers
Lottery ticket giveaways that require the purchase of a product may be putting some of the state’s largest retailers on the wrong side of the law, lottery officials say.
The state Lottery Commission has requested an opinion from Atty. Gen. John Van de Kamp on whether the giveaways--popular promotions at supermarkets and other businesses during the game’s opening days--are legal, Bob Burton, a deputy attorney general assigned to the lottery, said Thursday.
In the meantime, lottery security and legal officials acknowledge that they have given conflicting advice to merchants about the propriety of the giveaways. And merchants generally say they are surprised to learn that there are legal questions about the promotions.
“I’m sure there is considerable confusion out there right now,” Burton said. “We don’t know the answer as yet.”
In any event, he said, prosecutions are unlikely; instead, merchants will be expected to abide by whatever legal conclusions are reached.
Many of the promotions are similar to one advertised this week by Alpha Beta. The supermarket chain is offering one free ticket with a $10 minimum purchase. During the lottery’s opening week, Vons and Safeway stores gave away free tickets with the purchase of 12-packs of soda.
Two San Diego florists are handing out tickets when customers buy roses and a University Avenue pizzeria is giving away a ticket with the purchase of a pizza. Dow Stereo-Video promises as many as 150 tickets for buyers of selected sale merchandise.
The supermarket chains and several other retailers say they cleared the promotions with California Lottery officials before launching the giveaways with full-page newspaper advertisements and a barrage of television commercials.
“We have not been asked not to do it,” said Bonnie Lewis, a Safeway spokesman in Downey. “In fact, we have re-verified with the Lottery Commission that this is an appropriate promotional effort on our part.”
Suzanne Dyer, a spokesman for Vons, said she was “real surprised” that lottery officials now were questioning the promotions.
“They set the whole thing up with us,” she said.
Alpha Beta officials could not be reached for comment Thursday.
One legal question clouding the giveaways is whether they constitute an illegal lottery independent of the game run by the state, Burton explained.
“You couldn’t buy a lottery ticket and then go out and hold a lottery to give that ticket away,” he said. “So the question is, if you buy a six-pack of Coke and you get (a ticket) for free, is there anything illegal about that?”
Further, lottery officials say that the promotional giveaways may illegally undermine the $1 price for tickets established by the Lottery Commission.
“Under the statute, you can’t sell them for more or less, but you can give them away,” said Hal Diaz, the Lottery Commission’s security operations chief for Southern California. “If they require a purchase, how much of that is going to pay for the ticket? That’s the question.”
Some merchants say the lottery’s new-found concerns contradict information given to retailers during training sessions before the lottery began.
“They told us we could do anything we wanted to do with the tickets except sell them at a discount,” said Mike Romagnolo, president of Dow Stereo-Video.
Romagnolo said vice detectives from the San Diego Police Department contacted him about the promotion last week, but dropped their inquiry after receiving assurances from lottery officials that the giveaway was legitimate.
“It’s our own investment,” said Zina DeLuca, whose family owns Little Italy Pizza on University Avenue, which is giving away a ticket with each pizza purchased. Retailers already have paid the state for any tickets they give away in promotions.
Romagnolo said retailers face ticket promotions by their competitors. “Everybody in the world is giving them away,” he said.
Burton acknowledged that lottery attorneys, by failing to coordinate their responses, initially may have given their blessings to some of the giveaways. But commission lawyers, he said, now have settled on advising retailers that giveaways requiring a purchase may violate state law, and that the merchants should consult their own attorneys before undertaking such promotions.
Bob Nieto, a special agent in the lottery’s San Diego office, said he is even more blunt in his advice to merchants considering giveaways that require a purchase. “We’re just telling people it appears to be criminal, and we’re suggesting they don’t do it,” Nieto said.
The attorney general’s office is less settled about the legal issues. Steve White, chief assistant of the office’s criminal division, said giveaways that do not require a purchase would also be scrutinized in Van de Kamp’s opinion on the lottery.
“We’ll look at laws regarding consumer protection, laws regarding lotteries, laws about gambling,” he said. “There really is a lot of law to look at.”
Lottery officials are not hankering to prosecute retailers if the promotions are deemed illegal, according to Burton. Rather, once a clear policy is established, merchants will be expected to follow it, he said.
“I genuinely believe that, on most of these, the retailers are not intending to violate the law,” Burton said. “They want to do promotions.”
Meanwhile, lottery officials in Sacramento announced that, in its first week of operation, the California Lottery not only outstripped predictions but set a national sales record. Players plunked down $80.1 million to participate in the state’s new gambling game.
Lottery Director Mark Michalko said Thursday that first-week sales were “far in excess of anything we could have predicted.” They surpassed the previous one-week record of $57.8 million set in New York during a frenzied week in August when that state’s Lotto game offered $41 million in prize money.
Figures released by Lottery Commission officials show that, in total, there were 8.9 million winning tickets since the games began at 12:30 p.m. Oct. 3. Of those, 8 million brought the smallest prize of $2 and 1,168 brought the largest instant “scratch-off” prize of $5,000.
In addition, 960,000 ticket holders won $5 prizes, 20,000 won $100, and 3,000 won $500. Two thousand tickets brought $1,000 prizes. That all adds up to $32.14 million.
To view the outcome another way, the 80.1 million lottery tickets produced about 71 million losing tickets.
Lou Ritter, the lottery’s chief of security, said that, despite the record number of tickets sold, officials have yet to discover a single ticket having been tampered with in an effort to fraudulently collect a prize.
But Ritter said his office is investigating reports that “a handful” of lottery retailers have been offering to buy back $100 winning tickets from customers in hopes of getting in on weekly drawings that could qualify them for as much as $2 million in additional prize money.
Only $100 winners are eligible for the larger prizes, and Ritter said it is feared that some winners may not know that when they agree to sell their tickets back to the retailer.
Officials also announced that the initial drawing to select 10 participants among the $100 winners for a chance at $2 million in prize money will take place at 11 a.m. Oct. 15 at the Pico Rivera Sports Arena in Pico Rivera.
The 10 winners of that drawing will be eligible to spin a wheel on a TV program Oct. 28 to determine what additional prizes they will win. The large prize wheel offers amounts ranging from $10,000 to $2 million. All of those who are selected to spin the wheel will win at least $10,000.
