Santa Anita Accuses Lottery of False Ads, Threatens Suits

Santa Anita Race Track, admittedly hurt by competition from the California Lottery, accused state officials Monday of using “false and misleading advertising and marketing tactics” in the promotion of the lottery’s latest “instant-winner” game.

Alan F. Balch, senior vice president and general manager of the Arcadia track, objected specifically to three claims about the Three-Of-A-Kind game made in television commercials and newspaper advertisements distributed throughout the state:

That the individual player “could win . . . as much as $25,000. Instantly!”

That “the overall odds” of winning “are better than 1 in 6. Which means they’re better than ever.”

That there is a “growing grand prize of $3 million or more.”

While lottery officials continued to insist Monday that “there is nothing misleading or false” about these claims, Balch disagreed.

First of all, Balch said, the only players paid off in cash at the time and place of purchase are holders of $2 and $5 winning tickets. He noted that those with $100, $1,000 and $25,000 winning tickets must fill out paper work and submit their tickets to lottery offices for payment, a process that often takes several weeks.

Second, Balch, using figures provided by Gerald I. Eyrich, an associate professor of economics at Claremont McKenna College, argued that the odds on winning are not better than 1 in 6, they are actually worse than 1 in 10. These odds are not “better than ever,” Balch said, because in the lottery’s previous game, the odds were approximately 1 in 9.

Third, Balch said, the “grand prize of $3 million or more” is not prompt payment of $3 million or more, but actually an annuity of $120,000 a year ($150,000 minus 20% withheld for taxes) or more stretched over a period of 20 years.

Balch told a news conference that Santa Anita has sent letters to the state Lottery Commission and to the Los Angeles affiliates of the ABC, CBS and NBC television networks demanding an immediate end to any false and misleading advertising about the lottery.

Los Angeles attorneys Bert M. Cooper and Charles F. Palmer, representing the track, said they were “prepared to pursue litigation” against the commission and the television stations if these demands were not met.

Bob Taylor, a spokesman for Lottery Director Mark Michalko, who was away from his office and unavailable for comment, denied all of Balch’s charges.

“Everything we have done in our advertising has presented everything up front and in an open manner,” Taylor said.

“When you play the game and get one of those $25,000 tickets, you know instantly that you have won,” he said. “Getting paid takes a reasonable amount of processing time. The public understands that. I don’t think the term ‘instant’ is misleading.”

The dispute over the odds centers on the question whether the 35 million free tickets offered as payoffs in the Three-Of-A-Kind game can be considered prizes.

Balch and Eyrich contend that they are not prizes, and the two men say that by removing them from the total of about 70 million individual prizes, leaves odds of greater than 1 in 10.

Taylor contends that they are prizes, and he says that the odds including them are correctly advertised at 1 in 6.

“A free ticket is, indeed, a prize, because it gives you a free chance to win money,” he said. “And with the free tickets, the odds are better than ever before, just as the advertisements say.”

As for the top grand prize, Taylor said, “the advertising makes it clear--as we have said throughout--that it’s an annuity.”

“Every retailer in the state has brochures that clearly spell out how the grand prize is paid out,” he said.

Under questioning by reporters, Balch conceded that business currently is off at the Arcadia track “between 8% and 15%,” a drop he attributed, “in part,” to competition from the lottery.

Race tracks in other states experienced similar drop-offs when lotteries were introduced there. Many sources close to the industry believe that there is only a finite amount of discretionary income available for wagering, so the introduction of any new game of chance will reduce the money available for other forms of gambling.

“There’s only 12 eggs in a dozen,” Morris Alhadeff, president and chief executive officer of the Longacres race track in Renton, Wash., told a reporter last month.

“No matter what you do, there’s only so many residual dollars,” Alhadeff said. “People have to spend money on feeding themselves and housing themselves and transporting themselves to work. Only after that comes football, baseball, the lottery, racing. There’s only so many of those dollars.”

Officials at two other local tracks seem to be adopting the philosophy that if you can’t beat ‘em, join ‘em. Racing fans at Hollywood Park and Los Alamitos find that lottery tickets are offered for sale there on racing days.