W&L professor suing Virginia Lottery

ROANOKE -- The Virginia Lottery has taken in millions of dollars illegally by misrepresenting the prize money available for its "Scratcher" games, a Washington and Lee University business professor asserted yesterday.

Scott Hoover contends that the lottery has not ordered retailers to pull shipments of tickets from Scratcher games after the top prizes have been awarded, meaning players are buying tickets with no chance of winning the largest prize promised on the ticket.

A lawyer representing Hoover, John Fishwick, yesterday filed a notice of a claim with the lottery seeking refunds of $84.7 million to those who purchased an estimated 26.5 million tickets over the past five years. Fishwick said a lawsuit alleging breach of contract could be filed soon.

Lottery spokesman John Hagerty said officials had not seen the notice from Hoover and his attorneys, but that the lottery stands by its games.

"We have worked hard over the past 20 years to successfully build a reputation for integrity in the way our games are presented," he said in a statement.

Hoover said he began an investigation after he bought tickets for the "Beginner's Luck" game last summer and tracked the payouts online.

"It became apparent that the numbers posted online violated the basic laws of statistics," said Hoover, who has a doctorate in finance and has taught applied business statistics courses at Washington and Lee. The number of grand prizes available should go down at a certain rate, he said, but "it just wasn't doing that."

The game has six grand prizes of $75,000 in each shipment of tickets, Hoover said. The last grand prize was awarded July 24, according to information he and his attorneys obtained from the lottery under the Virginia Freedom of Information Act. Hoover said 241,000 tickets from that shipment were sold after that date, including the ones he bought in August.

Hoover said his analysis of lottery data indicated that 36.8 million tickets had been sold after grand prizes were awarded in more than 47 games since 2003. He said he only was asking for refunds for the estimated 26.5 million tickets that were bought after the grand-prize tickets already had been sold and yielded no prizes at all.

The problem arises in popular games when the lottery orders a new batch of tickets with additional top prizes, said Devon Munro, Fishwick's associate. "They sell out the old ones, and they do it knowingly," violating the Virginia Lottery's stated policy that it will pull tickets from shipments where the top prizes have been paid, he said.

"It tends to be a revenue-based decision," he said. "They do it for their best-selling games."

Said Fishwick: "What we think is that there's been real harm done here, and it shouldn't be brushed under the rug."