Pipe Shop Lucks Out: Allowed to Keep Lease and Sell Lottery Tickets

Hiland’s Tobacco Locker, a small pipe and tobacco shop that was threatened with eviction for selling California Lottery tickets from the Laguna Hills Mall, has been granted a reprieve.

“Yes, he can sell lottery tickets now,” Anne Cox, a spokesman for Ernest Hahn Inc., the San Diego-based shopping center owner, said Friday.

Although the Huntington Beach-based tobacco retailer is still violating the terms of its lease by selling the tickets, “we’re not pursuing it on a legal basis at the moment,” Cox said. “But that doesn’t preclude pursuing it in the future.”

Plans for Booth Delayed

Cox said she did not believe that newspaper publicity over the planned eviction had led to the company’s decision. Rather, she said, the mall’s plans to open an information booth and make that the only source of lottery tickets for the mall had been delayed. As soon as that booth opens, possibly around Christmas, Hahn may once again ask the tobacco shop to stop selling tickets.

However, Craig Hepner, general manager of Hiland’s Tobacco Locker, interpreted the Hahn decision a little differently.

“It appears as though they’ve conceded defeat,” he said jubilantly.

Hepner said he had talked with Hahn Vice President Tom Stephenson and was told that, “as far as the eviction notice, it was a mistake.” Stephenson was unavailable for comment Friday.

Nov. 3 Deadline

Earlier in the week, Hahn officials said the tobacco shop had until Nov. 3 to stop selling tickets or move out. Lottery ticket sales are not permitted in the store’s “usage clause” with the mall, they said.

The officials said they are enforcing that clause at all 30 of their shopping malls in California. In a related case, a merchant at University Towne Center in San Diego had tried to sell lottery tickets. The merchant backed down after being warned that he was violating the usage clause, Cox said.

That left Hepner apparently the only Hahn tenant to fight for the right to sell lottery tickets. Although his store was served with an order to desist on Oct. 3, the day the California Lottery began, the store has continued to sell the $1 “instant-winner” tickets at a rate of about 400 a day and to post a large lottery poster in the front window.

Hepner has contended that the “usage-clause” argument is unfair, saying that until Oct. 3 lottery tickets did not exist. He also suggested that Hahn was shutting down the tobacco store’s lottery sales so that the mall could have a monopoly on such business when it opened its own ticket booth.

‘Run by Mall Management’

Earlier this week, Hahn officials had said that any booth selling lottery tickets would be operated by a private contractor and not by Hahn. But Cox said Friday that she believed that an information booth would be “run by the mall management office” and that any proceeds from its sales of lottery tickets would go toward booth operations.

Meanwhile, state lottery officials said they had not seen any application for a ticket booth at the Laguna Hills Mall. They cautioned that a free-standing kiosk whose main purpose was to sell lottery tickets would probably not meet the lottery’s requirements for a retailer.

If Hiland’s was forced out of the lottery business by the mall, and then the mall wanted to sell lottery tickets, the mall’s application would get close scrutiny, said Ulysses Carter, the lottery’s Orange County director.