- TLC's Deceptive Advertising -
Will We Ever Get Them To Stop Deceiving Us?

Posted: Tuesday, Oct 17, 2006

Prof who calls what's advertised 'bait-and-switch' gets invited to agency's hearing

Houston Chronicle
October 17, 2006

AUSTIN — Lottery players, take out your tickets for a lesson in advertising.

On Monday, the Lotto Texas jackpot stood at $10 million.

Ticket-holders might assume they'd collect $10 million if they struck the big prize. It says so on the face of the ticket.

And if they looked again at the ticket, they might assume they'd have a 1 in 71 chance of hitting the $10 million jackpot.

In fact, regardless of what the front of the ticket says, the odds someone would win the big jackpot was 1 in 25.8 million. Not 1 in 71.

And the lucky winner who went to Austin to collect his jackpot in a lump sum would probably walk away, before taxes, with only $5.9 million, about 40 percent less than the advertised amount. A winner who opts to collect over 25 years would get the full $10 million, minus annual taxes. And it doesn't take a mathematics teacher to tell you that $10 million in today's money would be worth a lot less stretched out over a quarter century.

So what gives? How does the Texas Lottery Commission advertise jackpot amounts that most winners won't see and odds that have nothing to do with the big prize?

"No one's forced them to do differently. Unless someone pushes them, I don't think they (will) go out and do things better on their own," said Gerald Busald, a math professor at San Antonio College who urged the agency four months ago to be more truthful in its advertising.

As it turns out, Busald might have become enough of a gadfly to prompt change.

Last week, he received an e-mail from an agency employee informing him that staff members are evaluating the recommendations and could implement some of them.

He was invited to attend Wednesday's commissioners meeting, where, according to spokesman Bobby Heith, the issue is on the agenda.

Busald said the commission's practices amounts to "bait-and-switch advertising." He's urged a number of changes. Among them:

•To clearly state the prize amounts, in both the lump sum and over 25 years, on the front of each Lotto Texas ticket and on the commission's Web site. For MegaMillions, it would be cash amount and the annuitized amount paid over 29 years.

•To clearly state on the front of the tickets, on the Web site and on billboards the odds of winning the jackpot, not the overall odds of winning anything. For example, a player betting $1 on the Texas Lotto has a 1 in 75 chance of winning $3; 1 in 1,500 chance of winning $50; and 1 in 89,600 odds of winning $2,000. The odds that a $1 ticket will result in any prize is one in 71. The odds of winning the jackpot: Let's just say they're quite a bit longer than that.

The North American Association of State and Provincial Lotteries, of which Texas is a member, advises members against "directly or indirectly misrepresenting a person's chance of winning a prize." It further states that the "odds of winning must be readily available to the public and be clearly stated."

Advertising should state alternative cash and annuity values where reasonable and appropriate," the association says on its Web site.

Jim Leigh, a professor at Texas A&M's Mays Business School, called it "misleading" for the state to include overall odds above the jackpot total.

"It's puffery," he said. "They're making things a little bit rosier than they are."


Other Stories

There's still a chance for Lottery to lose even more credibility
by Ken Rodriguez - San Antonio Express-News
Click here to read these two stories

Integrity/Ethics Reaches New Low For Texas,
Georgia and Wisconsin Lotteries
By refusing to accept IRS Form 5754 from pool players, these states
are not only creating hardships for winners but are also failing in
their fiduciary duties in assisting with the collection of past due
child support, student loans and state owed taxes. A MUST read
if you play in group/pools. Posted 10/9/06. Click here.

Agency enlists help from outsiders
The search is on for a new leader after jackpot scandal
By LISA FALKENBERG Houston Chronicle Austin Bureau

About Grief, Kiplin & Morris
by Dawn Nettles - The Lotto Report - Click here

Email To Lawmakers Reveal ...
Commissioner and Executive staff was aware of jackpot shortages
Click here.

Auditors Worries Vanish From Final Report
Click here.

Read the easy 2 step process for estimating jackpots.
Click here and read the June 30, 2005 entry.

How Texas Lottery Advertised Make-Believe Payoff For Suckers
Ken Rodriguez - San Antonio Express News, Click here

Attorney General investigating advertised Lotto jackpots
Ft. Worth Star Telegram (6/9/05), Click here

Lottery panel to consider changing jackpot policy
This one makes me MAD! We don't want guaranteed
jackpots, we want truth in advertising and a guarantee
that we'll receive 100% of our share of sales.
Ft. Worth Star Telegram
(6/10/05), Click here

Lotto Critic Efforts Pay Off
Dallas Morning News (June 11, 2005)

The Lotto Report
Dawn Nettles
P. O. Box 495033
Garland, Texas 75049-5033
(972) 686-0660
(972) 681-1048 Fax

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