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Originally Created: March 16, 2000
Updated: Oct 7, 2015
(Oct 8, 2015 - Fixed minor typo)
- Part 8 -
The Tax Break Shenanigans of J. Winston Krause
In 2008, Commissioner Krause sued the IRS to get a
refund of interest and penalties he had paid for a disallowed
deduction and income. The disallowed deduction ... he
bought Canadian dollars for $20K; claimed he paid
$2.8 million; he showed a loss of <$2.7 million> yet
he had sold the Canadian dollars for $19.5K. A 2010
5th Circuit of Appeals quote ... "Krause's Tax
Chicanery" A very interesting and telling story
about the man who Chairs our Lottery.
Part 8 Posted April 6, 2014
A Must Read For Texas Players.
Click graphic above ...
I Asked Governor Abbott ... When Lottery Players (Consumers)
Feel Wronged by The TLC, Who Can They Call For Help?
My letter to the Governor (5/21/15), Click here (pdf)
Governor's letter to me (5/26/15), Click here (pdf)
(NO, I did NOT alter Abbott's letter)
Gary Grief replies as requested by
Governor Abbott (5/29/15) Click here pdf
NEW - 6/13/15 My reply to Gary Grief's
letter, click here, pdf
FY15 Ends - Online Sales
Powerball Will Be
Texas' Fun 5's
Fun 5's Scratch
Media Coverage - Fun 5's
- Jilted Players -
- Meet Kelly Cripe -
Will Texas Honor
Texas Player Buys
Editorial & Opinions by Dawn Nettles
10/07/15 - I think ya'll will all enjoy this posting ... it includes a funny on Gary Grief and Bon Jovi ... a serious note about reserve monies and Down's Syndrome and finally, you can all watch the the press conference given by the latest Powerball winner.
Hopefully, today's posting will be short because I really do have a lot of work to do!
I attended the Commission Meeting at the TLC on Monday, Oct 5. The Texas Lottery had posted another rule change for Powerball so I thought I'd better find out what was coming down this time. So that I don't keep you in suspense about the rule change, it doesn't have anything to do with the odds or how the game is played. Rather, it had to do with monies held in reserve - in otherwords, excess prize money they anticipate having and keeping.
When the item came up for discussion and after staff tried to explain - unsuccessfully to the Commissioners - Gary Grief, the Director, tried explaining it in layman terms. In his explanation, he told the Commissioners that "all players loved 'guaranteed' jackpots." Of course, I knew this was NOT true. The only people who love guaranteed jackpots are the folks running the lotteries.
Briefly, here's why - when they "guarantee" a jackpot, they purposely under-estimate larger jackpots. By "guaranteeing" an advertised amount, then a lottery is only obligated to pay the amount needed to invest to get a return of the amount advertised. The winners do NOT recieve all money in the jackpot prize pool from this "pari-mutuel" prize. (This is how TX cheated winners years ago.)
To see how Powerball jackpot winners were shortchanged, click here and scroll down to the chart where I show you how much was in the winners prize pool vs the amount they actually paid the winners.
The lotteries say - in their defense of this practice - that they also guarantee starting jackpots which sales do NOT support. I say - STOP doing it. Jackpots should be amounts supported by sales but lotteries think otherwise.
Anyway, back to guaranteed jackpots. Our new Commissioners have no idea that many years ago the TLC tried to change the Lotto Texas rule to "guarantee the advertised jackpot amount" too. Fortunately, the Commissioners refused to allow them to make this change. They refused because of the "cheated winners issue" and the "theory" that a lottery had to be completely transparent.
Guaranteeing jackpots is NOT in anyone's best interest. This is why California's games are all pari-mutuel games. Interestingly, the Powerball rule clearly states - repeatedly - that the jackpot prize shall be a pari-mutuel prize then it also states that sometimes it shall be guaranteed. I just wonder which is the case?
I pointed this out to the Commissioners yesterday after Gary had just told them Powerball was a "guaranteed" jackpot game. In essence, I made two comments that I promised I would put in writing for the new Commissioners to consider. I told them the rule they adopted last month was vague, conflicting and ambiguous. I was encouraged when I heard the Commissioners specifically say they wanted the lottery to be transparent.
I have NOT had the opportunity to read the proposed changes yet - what I know is that staff did NOT give the commissioners the entire rule to review. When I write my comment, I will share it with all of you.
On to the funny yet unbelievable experience I had at the Commission ...
Is this an example of transparency? WOW - to think, he's a Public Servant treating a citizen of Texas this way and our tax money pays his salary.
I don't think Gary's words "Have a nice day" are his own words. I think he took them from Bon Jovi. Click here and enjoy!
An update to the heart warming video I showed in August - thanks for your comments of appreciation for posting it ... Here's another one ... A successful life in spite of many hardships ....
Powerball winners press conference ...
In closing ...
8/25/15 - Just a short message - Only two comments for today.
Yesterday I posted the story about the new Powerball rule that the states will start playing on Oct 7, 2015. Texas will most likely adopt the new Powerball rule on Thursday, Aug 27 even though they should pull out of the game. But this is not a likely scenario because Executive Director Grief joined Powerball and pulled out of Mega Millions. For the life of me, I never could figure out why he did that. Of course, there's always speculation but I don't report on rumors and speculations.
Of course, now that I think about it, Mr. Grief was instrumental in creating and selling the Monopoly game too but he never hesitated in pulling out sooner that the other states. He really hurt the other states by doing that - in my humble opinion, of course. Plus he didn't seem to hesitate on reneging on honoring Monopoly's 2nd Chance Drawing prizes that players won. It's still too much for me to believe our state lottery can notify a player that he won a prize then when it comes time to pay up, refuse to pay what was actually won. Gawd ... that's horrible.
Anyway, I got carried away again. Ya'll watch the video and song on YouTube and be sure to read about the changes to Powerball. One thing about it, you will ALL understand why Powerball had to change the game.
7/15/15 - I received the most unique email this morning. I felt compelled to post it for all to read! I sincerely want to thank this player not only for his kind words but for his sharing his findings with me. Everyone should find his discovery amusing .... Here's his message ...
What a discovery he made. Thanks Dave, you did GOOD!
7/6/15 - A few things - the Cash Frenzy ticket, my plea for Consumer Protection for lottery players and AG Ken Paxton ...
About that scratch ticket game #1690 - Cash Frenzy. As many of you know, this game started Monday, June 15, 2015 and was closed on the same day - officially at 4:57 p.m. Hmmm .... is what I thought when I started receiving your messages. Reports show the game was closed due to validation problems - "validation file from the manufacturing vendor is causing tickets in the game not to validate" and to eliminate "player and retailer impact."
An Interesting Observation
Usually when the TLC issues a close date on a scratch game, G-Tech reps will leave the games in the stores until the last minute. Often times, retailers can still activate new packs after a close date has been issued. But not on this game - Cash Frenzy.
Two firsthand experiences encountered on closed scratch games ...
But on another occasion, the TLC issued a close date on a $50 ticket. The day the close date was announced, G-Tech reps were in stores picking up the $50 tickets as quickly as they could. I know this for a fact as I followed her to roughly 7 stores watching. Just in case you are wondering why they wanted these tickets picked up ... well, the $50 game still had a top prize that was unclaimed. The top prize amount was in the millions. Anyway, one retailer begged to keep the $50 ticket explaining that it was a good seller and a good profit for him, but she refused to let him sell his tickets.
Now interestingly, on the new Cash Frenzy ticket that closed the day it started, retailers reported ... 1) they could not activate packs by early afternoon on the day it began; 2) the game was already removed from their systems by the 2nd day; 3) some received phone calls telling them to pull the game immediately and 4) none had any problems validating tickets for their customers. Two clarifications on what I just said - I do not know if it was corporate offices calling the stores or G-Tech/TLC calling the stores to pull the tickets and needless to say, I can't speak for validations statewide. I can only report what I hear and my own personal experiences. In this case, my tickets validated correctly and other players reported no validation problems. See my validation ticket ...
As for what's really going on, I asked the TLC for an explanation but they didn't respond. Imagine that! Apparently they don't want us to know. I have made an open records request in an attempt to find out what's up. When I find out, I'll let you in on it. In the meantime, do know that these tickets were off the streets faster than I've ever seen a ticket disappear!
Finally, many of you are thinking that "G-Tech screwed up again." I don't think this is right. I think this ticket was produced by Pollard Banknote - not G-Tech. (FYI - The TLC has 3 instant ticket vendors - they are Scientific Games (Sci Games), G-Tech and Pollard Banknote.)
Next subject ... an update to the letters I sent to the elected officials which was a plea for Consumer Protection for lottery players ...
You've already seen the letter I received from the Governors office - a very unprofessional letter, but what you haven't seen is how they refereed it to the TLC. Here's the header from the email where they forwarded my letter to the TLC for a response ....
Now let me explain what's wrong with this ... Director Anthony Sadberry died in late Oct 2008. Apparently the Governors office doesn't even have a current directory of State Agency's employees. Their letter named Grief but they forwarded my letter to Mr. Sadberry and his two assistants. How very sad it is to see this kind of errors coming from our Governor's office.
I did receive a letter from the Lt. Governor too. As you will see though, it is a BS letter that fails to address anything that I said much less the issue of Consumer Protection for lottery players. Also, now I find I'm on his email list to receive his newsletters which I did not request. I see what he's doing with email addresses - using them for spam. Anyway, click here to read his letter.
Mr. Grief asked Katelind Powers, the TLC Open Records Coordinator, to respond to the two unresolved issues I asked to be resolved. Specifically, the issues were ... 1) release documents the AG said they had to release and 2) my being deleted from receiving meeting notices. Here is the letter I received from Ms. Powers on behalf of Mr. Grief - click here, pdf. As you see, the TLC plans to exclude me from receiving meeting notices. How 'bout that, they send these notices out to others but are refusing to send them to me. I would file a complaint with the AG but he probably wouldn't do anything about it. I did file a complaint with the State Auditors office but have not heard back from them yet.
Because neither my State Senator, Senator Hall, nor my State Rep, Representative Sheets, have responded to my communications, I plan to meet with them personally. This is something I should have done a long time ago. Senator Hall's staff simply forwarded my communications to the TLC too. This is really bad. I say this because they always say, "write your legislator and let them know how you feel." But they don't seem to address the issue you are concerned about and in my case, they haven't written back.
I think I finally figured out why TX doesn't want to give lottery players Consumer Protection.
Bottom line, I believe if lottery players had consumer protection, someone would challenge this very issue. The state feels they would lose. And I believe the State would lose in a court of law. If our officials wanted to continue running a gambling operation, they would be forced to make changes to their games. I think the TLC has convinced our elected officials that giving players consumer protection would hurt their pocketbook. How very sad this is.
About AG Ken Paxton's current mess ...
Many of you have asked if I can explain the allegations to you in simple language. In a nutshell, Paxton has been accused of referring clients to a financial adviser and receiving a commission for the referrals. Allegedly, his clients had no idea that Paxton was being paid for the referral. Then he would receive a commission on all future transactions so long as the client remained with the adviser. On this kind of deal, the sales person [Paxton] makes the initial sale then he sits back and collects a commission on everything the client buys in the future.
The one thing ya'll need to know - financial advisers receives commissions whether your investments make money or lose money.
Years ago, I told the TLC Commissioners that I had received an allegation from a very large financial institution that someone inside the TLC had been referring lottery winners to financial advisers - a sign that some TLC employee may be getting a kick back. The Commissioners thought I lied so they filed a complaint with the DA of Travis County against me. The DA came after me with force - but backed off real fast when they determined I did NOT lie and the very reputable firm had reason to suspect someone from inside the lottery was referring winners to advisers. This story made all the papers - both while I was being investigated then after I was cleared which only took a couple of days.
As you can see, referring people without disclosing you are being paid to refer folks is SERIOUS business.
Funny thing - the TLC dropped this issue like a hot potato and never tried to find out IF an employee had been referring lotto winners to someone.
One thing of interest - Paxton's spokesperson(s) have been quoted as saying that Dallas County and Travis County DA's investigated but didn't move forward "implying" he was innocent. Well, ya'll need to know that these DA's said it "wasn't in their jurisdiction." If any County is to indict Ken Paxton, it has to be his home County - in otherwords, Collin County - which is where the case is now. A Grand Jury will see the evidence and decide if the evidence supports an indictment. Time will tell.
Anyway, this is what the allegations against Paxton are all about.
Paxton is also RIGHTFULLY in hot water over the Supreme Court ruling on Gay marriages. How dare he not uphold his oath to support and defend the Constitution of the United States. He is supposed to put all personal beliefs aside but it appears to me that he thinks his opinion is the only one that counts. I ask you, how can we trust Mr. Paxton to be our Attorney General - to uphold the laws of the land?
It has also been reported that 150 Texas attorneys have filed a complaint against Paxton with the State Bar of Texas. Good for them!
An interesting read on the Paxton ordeal, read the Burkablog in Texas Monthly.
5/29/15 - Just a short note to give ya'll a heads up on the latest news.
Breaking news ...
There was no mention of who the Governor has appointed to replace the departing Commissioners. My guess is that we'll find out after the session ends next week.
With a fruit basket turn over such as this, you can only imagine the feelings of anxiety TLC executives must be feeling knowing they have FOUR new bosses coming in. WOW - this is big news.
Powerball changes coming ...
Mr. Tirloni is correct in that it will be easier to win $2 for matching the bonus number but as we all know, we don't buy Powerball tickets in hopes that we "win" $2. (The ticket costs $2 so our "winnings" would be $2) We play to win the jackpot which will be much harder to win. The odds will be 1-in-292,201,333. (They were 1-in-175,223,510)
Can you imagine what I thought when I heard staff telling the commissioners that it will be "easier to win" Powerball? My guess is that they will also promote "easier to win" as they promote the changes just like they did the the last time they changed the rule in 2012.
I will give ya'll complete details on the rule change after I have a chance to read the rule.
Letter from the Governor ...
I don't have an anutomated comment section ...
So - Send me an email if you want me to post a comment from you.
More later ...
5/21/15 - I don't know how many of you heard about the man who won $2 million playing Powerball but was afraid he couldn't collect his money because he wasn't a US citizen so he got his neighbor to collect his winnings for him. After the neighbor collected the money, the neighbor failed to pay him his share so he sued his neighbor. Today the two men settled after a 3 day trial.
Well - it's good they settled but I'm afraid the Texas Lottery will go after both parties now! I say this because IF the man who collected the prize wrote on his claim form that the ticket was his and he bought it, then the TLC may go after him for making fraudulent claim.
It will be interesting to see what happens next - as we all know, the TLC will do almost anything to make a dollar!
Tomorrow or Saturday I will try to post my latest news on the Fun 5's ticket. So watch for it - I think you'll be happy to see that I spoke up for all of us. In the meantime, do watch the attorneys blog page too.
4/28/15 - On Sunday 4/26/15, I posted that the liability shown by G-Tech and the TLC for Saturday's Powerball April 25th drawing was wrong. But as it turns out, I miscalculated and I owe the TLC and G-Tech an apology. I always try to be accurate and most of the time, I am. But this time I erred so I'm going to show you what caused me to make this mistake.
So many of you inquired ... what did this mean, how does it affect the players and how did I figure it out. Now that I've posted that I was mistaken, ya'll are asking, "How did I make this kind of mistake?" To answer this question, it's much easier for me to show you than it is to try to verbally explain it to you ... so here goes.
First, I need to start with what the word "liability" meant. Very simply put, this is the amount that players win from a given drawing. To arrive at the "liability" for any draw, you only need two numbers - how many winners there were and what was the prize amount - called "payouts." Then one multiplies the prize amount by the number of winners for each prize category. Then one totals all prize categories to arrive at the "liability."
So here's how it all came down for me ...
I did all my normal work - Cash 5, Lotto Texas, Pick3, Daily 4 & All or Nothing but I could not do Powerball because I didn't know how many winner there were. I waited for my "official" Powerball reports to come in but the MUSL group was very late that night too. I was so tired that I just couldn't stay up to post the information that I generally post at night. I went to bed without posting the Powerball info.
Now here's where I went wrong ... on Sunday morning, I obtained ... 1) all states total winners, 2) TX winners and 3) California winners from the Powerball website. It had been a very long time since I obtained my TX info from Powerball's website and I had completely forgotten that Powerball's (MUSL) "winners" posting was NOT "user friendly."
Let me show you why I say this - then you should understand how and why I erred. It was an honest mistake. I'm painting you a picture ...
Remember, I initially used Powerballs data and confirmed
In concluding my explanation ..
The Lotto Report
P. O. Box 495033
Garland, Texas 75049-5033
(972) 681-1048 Fax