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Continued ...

Read about the TLC employees ... Click here and read Oct 9th entry.
See and hear what our legislators were told about VLT's, Click Here.

June 22, 2004 - The $145 million winner arrived at the El Paso claim center yesterday to claim their money but were told they'd have to go to Austin to collect. As I understand it, the claim center had them speak with staff at TLC headquarters where it was determined that they probably were the real winners. While I completely understand the TLC not releasing personal information on the winner, there is absolutely NO EXCUSE for not telling the public/media IF the winner is a Texan or from another state or country. They claim they don't know but I don't believe them.

I've received word that the winner is from Juarez, Mexico - though I consider this information to be "unconfirmed" until the TLC puts out the official word.

IF the winner is from any other state or country, this means Texas is losing $82.5 million dollars as this is how much was in the jackpot prize pool. Always remember, the winner is just like a commissioned sales person - when you win, you've won a percentage of "roll" sales - in this case - the last 33 draws which equates to $82.5 million.

Texas winners spend their money in Texas and this fuels our economy. They buy cars, houses, land, swimming pools, boats, firetrucks, build community centers, add on to schools - the list goes on and on. And this is exactly what this winner will do but IF he's from another state or country, he'll do it where he's from and it will fuel their economy - not the Texas economy.

Texas will lose tax income from these purchases and the private sector loses potential business. Texas is already in a financial crisis - they've raised fees and fines on everything from speeding tickets to fishing licenses to license plates - you name it - it increased.

To answer your questions regarding the financial breakdown regarding this win ...

- 100% - Total Roll Sales -
Last 33 draws


48% State's Share
52% Players Share

48% - From the States Share ...
5% goes to 16,000 retailers $10,557,707
7% TLC administrative costs $14,780,790
36% goes to the school fund.
It reduces the amount taken from the general revenue fund to fund schools. It is not EXTRA money for the schools.
52% is SUPPOSE to go to PLAYERS But
Here's What Players Actually Won
37.104% goes to the JACKPOT winner $82,569,716
Low tier prize winners won (only won 12%). This does NOT reflect what players collected. Much goes unclaimed and is kept by the state. $25,168,782
Total Won by Players - Last 33 draws $107,738,498
Players Shorted <$2,061,657>

If you think that the shortage of $2 million is bad, then you should also know that since they started the 5/44 game, players have been shorted by $5,736,051 just since May 3, 2003. And IF the jackpot winner is really from Mexico, then Texans & Texas has just lost 37% of the total sales in this last roll - $82.5 million.

Our leaders have given us a game Texans probably won't win just so they can generate triple digit jackpots by creating Texas losers first ... the state receives national press which brings out of state people in to buy lottery tickets ... but because more tickets were probably sold to out of state folks, then the chances that an out of state person will win is greater than a Texan winning.

All of you complain that there are too many winners from Houston - well, the truth is that more tickets are sold in Houston so they have a greater chance of winning. The same things applies in this case. The more tickets sold to out of state folks - the greater the chance that they'll win and carry Texas money home.

My testimony at the Sunset hearing covered these exact issues. I'll be posting it as soon as I can.

I have just updated the audited sales page so you can see how the TLC is doing for FY04 in comparison to previous years.

June 9, 2004 - Just a short note to tell you that I have lots of news for you but haven't had time to post. I just buried a very close, dear friend yesterday and that has taken all my time. I did attend the two legislative meetings in Austin and will be posting my testimony plus much more. I plan to start working on this editorial tomorrow. I'm still here and yes, I'm still watching them!

In the meantime, read these two stories ... (both are here on my web site)

Players suing G-Tech, Scientific Games, name Texas Lottery as "co-conspirators"

San Antonio Students Prove Texas Players Have High "Mega-Q" and Mega Millions sales projections short by $152 Million

More later.

April 16, 2004 - Editorial by Dawn Nettles - Opinions expressed are mine and mine alone. A lot of different issues covered today ... from lottery sales to sin taxes to VLT's to taxing soft drinks to using credit cards for lottery purchases to internet lottery sales to, is the TLC wasting taxpayer money ... and finally, I have questions I'd like answered ...

I've updated the sales page to include the first 7 and one-half months of fiscal 2004 so you can see firsthand how lottery sales are trending for the state. While the TLC compares "sales to date" and quotes those figures to the press, I feel as though we need to see how sales are trending to get a true picture of things.

Total sales for fiscal 2003 were $3,125,170,361.
Average monthly sales would be $260,430,863.
Monthly sales times 7 months (Sept 1 through March 30) = $1,823,016,044
plus another one-half month (April 1 through April 15) makes the
trending sales for fiscal 2003 - $1,953,231,973.

Total sales for fiscal 2004 (7 and 1/2 months) = $2,036,973,481.
As you can see, this is an increase in overall sales of $83,742,008.

Now, when you compare sales by product for 2004, scratch ticket sales are up by $80 million and Pick3 sales are up by $13 million compared to 2003 sales. So this means that just these two products alone account for MORE than the total overall sales increase for fiscal 2004.

Bottom line is ... the addition of two new games - Mega Millions & Megaplier - and the matrix change to Lotto Texas and Cash5 have failed to produce the increase of revenue the TLC promised our lawmakers. Lawmakers were promised a sales increase for each game - especially those that had rule changes. But they have not seen an increase as a result - in fact, they've seen a loss in potential revenues.

May 7, 2004 marks the 1 year anniversary since the matrix change to Lotto Texas. In comparing sales for the first 99 draws under the 5/44 matrix to the last 99 draws under the 6/54 matrix, sales are down by <$159.6 million.> There are 6 more draws to go and by the end of those 6 draws, my forecast is that Lotto Texas sales will be down by <$170 million> and I'm being very conservative in my projections.

Mega Millions and Megaplier have only brought in $123.5 million. Of the $123.5 million in new revenues, Texas has sent $30 million to out of state jackpot winners that fuel other states economy - not ours. Winners in Texas spend their winnings in Texas and this is what helps to fuel the Texas economy. Texas is gambling on the "to come" with Mega Millions, I'm not sure that in times like this that it's worth the gamble for the state or the People.

Cash5 sales are down 13.1% and Texas 2 Step sales are down by 27.9% for fiscal 2004.

I think the worst news is that the Mega Millions group is already contemplating a matrix change to Mega Millions. They want to INCREASE the odds - make the game harder to win - add more balls. Mega Millions sales are declining - the MM group wants bigger jackpots so they need more rolls to achieve this. I think it's important to note that the majority of MM sales comes from the same players draw after draw and I can assure you, these players are not rich folks. They are gambling in hopes of winning big so they can get out of debt but are instead increasing their debts.

If the legislature approves using credit cards to purchase lottery products, this will not only put players in harms way, but it will also hurt the retailers. This is because retailers have to pay a fee for every Master Card, Visa, Discover transaction meaning they will earn less than the .05 commission for every dollar sold. They will be less inclined to sell or push lottery products. Several have already told me that if this is approved, they will only accept the gas credit card where there is no fee to the retailer. This would equate to 3 to 4 months of increased lottery sales then a sharp decline due to credit being cut off. At that point, I surmise we'll see an increase in crime and higher fees to all citizens for using credit cards. The credit card companies WILL make up for their losses.

If they approve internet lottery purchases, this will hurt the retailers too. Fewer sales for them means less income, less incentive to sale. Not to mention the number of folks who may run web sites that take money in but won't go buy the tickets. This is opening a can of worms that is really risky for the lotteries, the People and the states.

As it is, the lotteries nor the AG's have done anything about the sites that are currently selling lotto tickets for $2 apiece via the web which is against the law. If you won and told the lottery that you bought your ticket via the net and paid $2 for it, they wouldn't validate [pay] the ticket. The Texas Lottery sends out press releases all the time about the Latin Scams, but I haven't seen any press releases about falling prey to buying lottery tickets via the net. Why is that? Could it be that it's unconstitutional for a lottery to dictate one's profit? Could it be that they are looking the other way just because they want those sales? Or maybe the lotteries are secretly endorsing internet sales? Who knows ....

If the state approves VLT's - i.e. slot machines - this will hurt lottery sales and more importantly, scratch ticket sales. Horse tracks can't compete with lotteries - this is why they're having "purse" problems. There's less revenue for the horse and dog racing industry because people don't have to go but around the corner to play the lottery but one has to drive many miles, walk a long ways, stand in lines, etc. to play the horses. Why bother ... especially since you can't win "millions."

Regarding increasing taxes for soft drinks, adult entertainment, cigarettes, the so called "sin" taxes. What I wonder is why the state doesn't tax its own "sin" products. Like why don't they charge tax for lottery tickets? Seems like this would increase their revenues tremendously. Are they afraid they might hurt their own business? I also wonder why they aren't increasing taxes on beer. There hasn't been a tax increase on beer for a great many years. Could it be because the beer industry makes huge political contributions each year? Is this why they're leaving beer taxes alone?

Governor Perry has stated that he's opposed to expanding gambling. His word is not very good. For those of you who may not know this, he intends to increase the states revenues by expanding gambling even though it's been proven that this avenue does more harm than good and ultimately costs the state more than what it makes. Is this why some long time, very experienced legislators have resigned?

Folks our government is suppose to be "For the People and By the People." But it looks to me like it's "For the Government and By the Government." It appears that our elected officials are only listening to those who provide for them at the expense of us common folks and those with addictions. Election day is coming and that's when our voices can be heard. Remember this and start paying attention to what your state reps and senators are doing NOW - OK?

I have questions that I'd like answered. Such as ... Why won't the TLC tell the me what estimated draw sales are for an upcoming draw when asked on draw day? The TLC estimates draw sales for Lotto Texas, Texas 2 Step and Mega Millions before they can agree on the amount to "roll" the game to if its not won. This is determined by noon on draw days for Mega Millions and late afternoon for 2 Step and Lotto Texas. I asked for this information this past Tuesday and I asked again today, but Communications did not get the information for me. They've just given me the roll amounts, but didn't know sales estimates and told me that they doubt they will obtain the sales estimates. (5:30PM)

Why did the TLC, on their satellite feed, have an announcement telling people to go vote? Who was behind this? State agencies are not suppose to be involved in this manner.

Why are college buddies being hired when applicants with greater qualifications applied for the job? Why are job titles being changed without job descriptions to accompany titles?

Why are AG opinions being sought to keep attorney's advise to the TLC private regarding domain names? It's taxpayer money, and a lot of it, that's being spent to pay these attorney's. Don't we have a right to know if the TLC is pursuing issues that may not or should not be pursued per their attorney's advise?

Why would the TLC refuse to email a letter claiming it was a "draft document" when they had just faxed and mailed [US mail] the letter out? I called a couple of other state agencies and they said this was "a nit-pickin lame excuse" because electronic signatures are accepted by state agencies and since the letter had already been sent out, it was no longer considered a "draft document." In fact, the other agencies said that the letter should have been emailed in the first place because faxing is an expense to the state and all agencies have been told to cut expenses. Both agencies suggested that I contact my state rep due to the nature of this issue. The reason the TLC wouldn't email it to me is because they didn't want to see it posted on my web site. Imagine that!

Why is the TLC buying new equipment [phones] when there's nothing wrong with what they have, they are already paid for [$1.2 million] and they are not very old? Why does the TLC need to pay outside finance consultants high dollars when they have sufficient staff to handle these issues? Why pay so much money for inaccurate projections? How can the TLC have a Finance Director who is NOT a CPA? Is the consultant a CPA?

These finance projections are used to support rule changes, why haven't our elected officials questioned the end result of the rule changes especially since the plans haven't worked and so many of their constituents wrote them to oppose the changes. I predict players will speak with their votes come November over this issue.

Why is the employee turnover so great at the TLC? Training new hires is costly for any company. Why have our legislators not investigated these things? Seems to me like there is an awful lot of money being wasted and lost by the TLC. Doesn't the state need more money? Wasn't that the SOLE purpose of the matrix changes?

The TLC can terminate any employee "at will." They don't have to give a reason or anything. Recently one was terminated and as they was escourted out of the building or right before they were escourted out, they asked "WHY." I heard they were told to make an open records request! (I would like to talk with this person so if you are reading this, please call me.)

About two years ago, 10 to 12 TLC employees were caught with "adult stuff" on their computers. The TLC terminated some but not others. WHY weren't ALL fired? How did the TLC Executive Staff manage to define porn when even the Supreme Court can't define porn?

It appears the TLC seems to be satisfied with just the bottom line regarding "overall sales" - never mind that they've implemented game strategies that has actually cost the state potential revenues. Director Greer said during this months commissioners meeting that he's satisfied with the 5% sales increase and he's satisfied with how Lotto Texas is currently performing. There was no discussion as to what was projected and if those figures were on target for both Lotto Texas and Mega Millions - I'd really like to know how anyone could be satisfied with a 5% increase in sales when they added two new games - one offering huge jackpots - yet 100% of the sales increase has come from scatch ticket and Pick3 sales. Personally, I'd be embarrassed.

I guess it's a good thing that he's friends with the Governor. Rumor has it that Director Greer is planning to run for public office again and is in this position to help establish his name. This is probably why you see his signature on the back of all the scratch tickets. Remember how the TLC didn't have room to print the odds on the tickets - but they found room for the Directors signature. And Director Greer is spending a great deal of time traveling and giving speeches while Gary Grief runs the lottery on a day to day basis. I guess one could say that Director Greer is the PR person!

Since Grief and/or Greer have been in charge, we've seen a new Communications Director, a new Finance Director/Managers, a new Marketing Director/Managers, a new sratch ticket manager plus many, many other major changes. Too many to name them all. But I will tell you that one ex-employee wrote some rather tacky things in his resignation letter that was directed totally at Gary Grief. Some were let go because they weren't "team players." They either objected to something, questioned something that crossed the wrong path or refused to do some requested job that they felt or worried might be an illegal act. Ex-employees don't like to come forward because they wish to work for other state agencies and are afraid they won't find work if they "tattle" on the TLC. I understand their situation - some have gone so far as to express fear for their own safety if the information is released.

Remember the story about Daniel Benjamin? He's the one who confessed that he lied to the LAR claiming that he was instructed to lie by then Finance Director Bart Sanchez. Well, effective this month, Daniel is no longer with the TLC. He's gone to work at the Comptrollers office and Bart resigned at the time. I find it interesting that they are both gone now.

Just so that you know it, I DO verify things that I hear. Nothing gets posted on my web site until I've checked into whatever it is that I've been told. Some things I tell and some things I don't.

Next month is when the Governors ex-staff is suppose to go to court with Linda Cloud. Remember the Linda Cloud lawsuit - she says they told her to lie but they denied telling her to lie. This lawsuit will be interesting to say the least. I'll check the status of this and keep you posted. More later.

April 7, 2004 - (Edited 11 pm - Inserted original Lotto Texas projections as they appeared in the Texas Register) About the TLC's sales projections that are way off target and the proposed addition of VLT's (Video Lottery Terminals ... i.e. slots, eight liners) ...

The TLC forecasted per capita weekly sales for Mega Millions at .34 a week.

The Comptroller's population forecast for fiscal year 2004 is 22,193,711.

To meet the forecast, Mega millions must average $7,545,861 per week (per capita weekly sales times population) to meet their forecasts.

The TLC's original sales forecast was $324,472,054 with sales beginning in November 03. However, sales did begin until 12/3/03, so Mega Millions will have 39 full weeks of sales in fiscal year 2004. Based on the TLC's weekly per capita forecast, Mega Millions would bring in $294,288,579 in sales for fiscal year 2004.

As of week ending 3/27/04, Mega Millions sales have averaged $5,147,803 a week. At this sales rate, Mega Millions fiscal year 2004 sales are trending to a total of $200,764,317 which is $93,524,262 less than projected.

If they try to say that Megaplier sales should be included ... As of week ending 3/27/04, Mega Millions and Megaplier sales have averaged $6,489,102
a week. At this sales rate, Mega Millions and Megaplier fiscal year 2004 sales are trending to a total of $253,074,978 which is $41,213,603 less than projected.

Read the story in La Fleur's Magazine showing the TLC's anticipated sales - pages 4 and 6 -

We are approaching a one year anniversary since the matrix change to Lotto Texas. Prior to even starting Mega Millions, Lotto Texas sales were down by <$70 million> and in comparing the first 96 97 draws under 5/44 to the last 96 97 draws under 6/54, sales were down by <$154.2 million> <$157 million> yet the TLC projected a $50 million then a $153 million increase in Lotto Texas sales. As of this writing, Mega Millions sales are $93.9 million. A loss in revenue no matter how you look at it!

This was the TLC's projections when they changed Lotto Texas to 5/44 - none of which has come to pass ... "For each year of the first five years the section will be in effect, the fiscal impact is the following: FY 03, $59,510,000; FY 04, $153,892,860; FY 05, $132,655,646; FY 06, $132,655,646; and FY 07, $132,655,646. The negative fiscal impact as a result of the proposed repeal will be offset by the positive fiscal impact anticipated as a result of the concurrent proposal of new rule 401.305. There will be no adverse effect on small businesses, micro businesses or local or state employment as a result of implementing this repeal because of the concurrent anticipated implementation of new rule 401.305."

Both Texas 2 Step and Cash 5 have suffered since starting Mega Millions so when you take all these factors into consideration, one has to wonder what the bottom line will actually be regarding online sales.

Currently Pick3 and Scratch Tickets sales are increasing and probably the dollars in the Unclaimed Prize Fund is increasing.

It is becoming quite obvious that the state is desperate to increase revenues by enhancing gambling. Yesterday there was a hearing at the capitol regarding VLT's. (Video Lottery Terminals) It seems as though those who testified in favor - all stood to profit personally - but those who testified against VLT's - some experts with very specific data - were only interested in the well being of the People and had absolutely nothing to gain either way. I think every one of you should watch this video. It's lenghty but interesting and very educational.

Fortunately we, The People, will get to vote on VLT's as the addition of VLT's will require a constitutional amendment according to the Attorney General's ruling.

March 29, 2004 - I've received calls and e-mails from several retailers today regarding my 3/28 posting so I feel I need to just answer your questions online ... YES, there seems to be quite a few people selling lottery tickets via the net for $2 apiece - and their profit IS $1 - Not only that, but they require players to buy a minimum of 5 tickets making the total sale $10. It appears to me that the state lotteries are just letting these folks get away with it. And YES, I do agree with you, it's not fair that your profit is limited to 5 cents per $1 sale. The lotteries just want the MONEY - why would they purposely go after anyone who sells their products? Sorry to be so blunt - but this is the way that it is. Ya'll are definitely being taken advantage of. here to read more

Just point and click

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