Discount Retail Chain Loses Lottery Reinstatement Bid

A Southern California retail chain that tried to sell California Lottery tickets at a discount lost its bid for reinstatement as a lottery retailer Friday in the first major legal challenge to the state lottery commission’s legal right to regulate ticket prices.

Superior Court Judge Richard P. Byrne rejected arguments that the fixed $1 purchase price on lottery tickets is an illegal price-fixing scheme, and also ruled that the commission is permitted to allow ticket giveaways by lottery retailers even while prohibiting cash discounts.

The challenge was brought by the 99-Cent Only Stores, a chain of 15 discount retail outlets that claims the $1 purchase price on lottery tickets violates its long successful marketing strategy of charging less than a dollar for everything on its shelves.

At the same time, the merchants feared a loss of customers if they could not offer lottery tickets, said Barry Silver, attorney for the chain. “There’s a danger in not being a lottery dealer. It’s a case of being damned if you do and damned if you don’t.”

Silver argued that allowing ticket giveaways conditioned on the purchase of groceries or automobiles while prohibiting cash discounts violates the equal protection guarantees of the Constitution.

But Deputy Atty. Gen. Christopher Foley said the commission has prohibited ticket discounting in an effort to reduce competition among lottery retailers, ensuring that tickets are widely available on a uniform basis.