The TLC Is At It Again
The Dec. 21, 2001 Proposed Lotto Texas,
Texas 2 Step & Pick3 Rule Changes

by Dawn Nettles
The Lotto Report

Posted: Jan. 9, 2002
Revised: Jan. 21, 2002
Update: February 13, 2002 -
Rule Revised and Adopted on Feb. 12, 2002

Update - February 13, 2002 - A bittersweet victory. On
Feb. 12, 2002, the Texas Lottery Commission adopted a new Lotto Texas
rule but only after the proposed rule had been revised for a 4th time.
The 4th revision was that they changed the language from "may" back to "shall"
(pertaining to the amount a 6 of 6 winner receive) which is exactly what
players wanted
. However, the bad news, they deleted the sentence that
says "no prize will be less than $5." I have a problem with this because
this is what they promised us when they added the 4 balls and the very
idea that any 4 of 6 winner could ever receive less than a 3 of 6 winner
seems terribly unfair. However, the chances of this happening are slim,
so, we'll wait and see what happens before making any plans to object.

Pertaining to the 6 of 6 prize: The verbage in the new Lotto Texas
rule now reads: "The direct prize category contribution shall be
no less than 68.24% of the prize pool for the drawing.

This is the way it should have been all along - so calling this a "victory"
is questionable. It was a hard fought, 8 month long battle/victory.
In essence, the new rule guarantees that 6 of 6 winners will receive
"at least" the amount advertised but if there is more money in the
prize pool than what's necessary to get a return of the amount
advertised, then the player will receive the excess funds too. If
on the other hand, there is not enough money to make good on the
amount advertised, the TLC will pull the funds from the reserve fund
to make good on the win.

This is not necessarily good because the money in reserve is part of the
55% that players "shall" receive. It's conceivable that the reserve fund
may never be needed - after all, it was never needed to pay the 3 of 6 winners
which was the original intent of having a reserve fund in the first place. I'll track the
money and keep you posted. Also I'll obtain the necessary information to see
where players stand as far as actually receiving 55% of sales as the rule states.

In closing, let me say that this particular battle is over and we won. Because
of your comments and support, the TLC cannot pay just the "amount advertised"
like they wanted - they have to pay all that is in the 6 of 6 prize pool too.
I could not be reporting this news to you had you not supported me
so here's a pat on the back for you and your efforts. They paid off. Also,
because of this battle, the TLC has undergone a great deal of scrunity lately
with much more to come. But I won't go there now, let's just move on and deal with
the proposed Pick3 rule change which is to start having two drawing per day.
If you oppose this plan, you must comment and all comments are due in by Feb. 23.

Send your comments to me. The TLC will not accept comment by email.
I plan to post a form that you can fill out for ease of commenting and
I'll try to have it up by tomorrow - 2-14-02 - by the way, Happy Valentines!

Above is how the story ended - now, if you want to see what came before the end, read on!
FYI - this story actually began on May 11, 2001 and offically ended on Feb. 12, 2002.

After the Sept 11 terrorist attack, I'm sure most of you read how the Red Cross collected more money than they ever dreamed possible for the victims. Since the Red Cross collected soooo much money, they made the decision to keep part of the money and use it in the future. The Executive Director thought it was entirely too much money for "just" the Sept. 11th victims.

Well, needless to say, when the people found out about this there were objections and many folks demanded refunds because they gave the money specifically to help the victims of Sept 11th.

That's how I view playing Lotto Texas, Cash 5, Pick3 and Texas 2 Step. Each drawing is an independent event and we play for whatever is in the pot when we purchase a lotto ticket. If we only play Lotto Texas when it's $50 million, well, we expect to collect everything that came in from all drawings leading up to the $50 million jackpot - after all, the TLC hadn't paid out the 6 of 6 winners share of sales during that entire "roll." But the TLC, by adopting this rule, can keep part of the 6 of 6 winners share of sales in the event they advertise less than what sales would have truly generated. This is why it is so very important that players be guaranteed that they will receive AT LEAST the amount in the prize pool as a minimum.

Players have common sense - we understand there is no way to know exactly how much is in the pot until the sales are tallied, therefore, we understand that what we see on the billboards must be an estimated figure. Also, you should know, the amount on the billboards is the estimated amount one could expect to collect ONLY if they chose the 25 annual payment option. You see, they take the 6 of 6 winners share of sales and invest it. The billboard figure includes the interest earned on the money invested on behalf of a 6 of 6 winner.

The TLC is attempting to do exactly what the Red Cross tried to do. They plan to advertise and promote that they "will pay what they say," - sounds great, huh - but it's not great. They can use an $85 million jackpot to entice sales (like Sept. 11) but keep some of the proceeds if sales surpass the amount needed for a return of $85 million over a 25 year period. I feel this is WRONG and I already know that you agree with me because you've already commented twice before on this very subject. But I need you to comment again and we don't have much time.

I have posted the proposed rule in its entirety for those of you who want to read it and I've explained each objection I think players would have to the proposed rule. Click here to read the rule. I have also written a comment for you that you can easily print, sign and mail. All the Commissioners addresses are included on this page too. Click here.

The Proposed Changes In A Nutshell

1. The proposed rule was published in the December 21st edition of The Texas Registry. The 30 day comment period began then.
2. The proposed rule states: “While the 3 of 6 prize pays $5.00, it is possible, albeit a remote possibility, that the 4 of 6 prize category could pay less than $5.00 because of the pari-mutuel nature of that prize category.” WHAT? Those who match 4 of 6 numbers playing Lotto Texas could receive how much? NO!
3. It was my understanding when I was in Austin last November that the TLC was going to pay either the amount they advertise OR the amount allocated from sales and it would be whichever figure was the greatest. However, the new “proposed rule” does not say this and it should be stated in the rule.
4. The new rule states that the TLC will actually pay "the greater of the advertised jackpot amount or the jackpot amount based on sales determined in part by the applicable interest rate factor." The interest rate factor has absolutely NO bearing on the amount allocated from sales. The rule should say, "or the jackpot amount shall be based on a minimum of 68.24% of the prize pool." (The prize pool is 55% of sales)
5. The proposed rule states, “The direct prize category contribution "may" be 68.24% of the prize pool for the drawing.Absolutely NOT acceptable. This statement should emphatically say, “The direct prize category contribution "shall" be a minimum of 68.24% of the prize pool for the drawing.
6. The proposed rule states: “The pari-mutuel prize amounts, except the jackpot prize amountNO! This statement clearly shows they plan to pay the amount they advertise and not even guarantee a minimum for the 6 of 6 winner. In the proposed rule, all prizes except the 6 of 6 prize has a set standard for figuring the prize amounts that players will receive when they match 3, 4 or 5 numbers. The 6 of 6 winners should receive at least a "minimum" share of sales too.
7. The rule clearly states that players “shall receive a minimum of 55% of Lotto Texas sales” yet the prize allocations in the rule are:

"May be" 68.24% (6 of 6 winners share)
"Shall be" 5.07% (5 of 6 winners share)
"Shall be" 12.51% (4 of 6 winners share)
"Guaranteed - will include" 12.18% (3 of 6 winners share).
98% (Allocated for players)

Did you know that since the inception of Lotto Texas through Jan. 7, 2002, the TLC has allocated $445,690,672 to pay 3 of 6 winners but players only held $409,778,715 in 3 of 6 winning tickets. This means they kept an additional $35,911,957 from the 3 of 6 prize pool. Plus, they withheld an additional 2% from the players 55% share of sales, $79,876,741, that was “suppose” to be used to offset shortages for the 3 of 6 winners guaranteed prizes. But as you can see, entirely too much money is allocated for the 3 of 6 prizes.

These two figures total $115,788,698 and this money is part of the players prize pool - that 55% of sales that "shall" be returned to the players. Yet players have never seen this money. Then, let’s not forget how many people fail to cash in their winning tickets - especially the 3 of 6 prizes - all money is transferred into the "unclaimed prize fund" after 6 months. It is NOT given back to players either.

We expect to collect 55% of sales like the rule says.

8. They are deleting this from the rule under "Reserve Fund:" [ The Lotto Texas prize reserve fund may be increased or decreased, for example, by rounding down, paying Lotto Texas prizes, and roll-over amounts from the fourth prize ]. NO! As you can see, the original intent of the "reserve fund" was that the money be used to pay the 3 of 6 winners {fourth prize}. By deleting this sentence, they can place excess funds that they plan to have from the 6 of 6 prize monies in the reserve fund too.
9. Texas Two Step - The proposed rule says, "(i) The direct prize category contribution may [ shall ] be 45.56% of the prize pool for the drawing." NO! They are deleting the word "shall" and inserting the word "may." Lotteries are suppose to give players back a SET percentage of sales - in this case 50% of sales is suppose to be returned to the players. Yet, the percentages allocated don't equal 100% of the prize pool for this game either. They make changes like this so they can have a free-hand and pay whatever they want.
10. Pick3 - The TLC is proposing a rule change for Pick3 too. They want to start having two draws per day which I strongly oppose. The Pick3 game is the ONLY game where sales have increased each and every year. The thinking at the TLC is that it is such a successful game that we will play it twice per day and we'll spend twice as much money. In turn, this will help the retailers and the state increase their revenues. Well, I don't know about you, but I can assure you I don't want the expense of another game and should they pass this rule, I will cease playing the Pick3 and will also cease posting Don's Pick3 predictions. Now, if anyone out there disagrees with me and is for a twice daily Pick3 game, please share your thoughts and I'll reconsider. I have included this objection on our comments too. If they won't accept them now, I'll send them in after the proposed rule is posted. I hope you'll comment about this NOW as well as the Lotto comments.


Cash 5 is a straight pari-mutuel game. All monies are divided and paid out after each drawing. There is no reserve fund and there are no "guaranteed" prize amounts. To be fair to players, this is how Lotto Texas & Texas 2 Step should be played.

This is a summary of how I interpret the new language in the Lotto Texas and Texas 2 Step proposed rules. I have enlarged the type in the rule itself to support my findings and will be easy for you to spot. Just click below to review the rule itself. Please comment. I know you are tired of this and I am too. But quitters never win.

Thanks for your consideration.


Please comment - commenting really does work.

Read the players comments. Click here.

For the names and addresses of who to send
your comments to or for a comment already
written that you can print or copy and paste ....
Click here.

To read the proposed rule in its entirety. Click here.

Read the Press Release sent to all medias.
Html PR Version, Click here.
PDF PR Version, Click here.

Or, if you want, you can e-mail your comments to me -
Just click here