Raqqa Inc., owners of the Fairview Lounge in Fairview Heights, Illinois, and three Illinois Lottery players recently filed suit in St. Clair County against Northstar, the Illinois Lottery’s private manager. The suit accuses Northstar of defrauding scratch-off players and retailers. A Chicago Tribune investigation last December found the lottery did not award many of the biggest prizes in its largest instant games.
Beyond the Tribune investigation results, the lawsuit claims Northstar’s actions affected players’ odds. Northstar has said even if all the grand prizes were not awarded in games, the odds of winning were the same for each individual ticket. However, the lawsuit cited Tribune findings that for five years before Northstar was hired, the state awarded 87.5 percent of the grand prizes that the instant games were designed to pay out, but the rate was 59.6 percent for the 17 instant games with the largest prizes run by Northstar. “An award rate decrease of this magnitude is not explainable by happenstance or attributable to a lack of interest in the lottery; indeed, ticket sales were up under Northstar,” the lawsuit said.
Plaintiffs allege Northstar implemented “a practice of discontinuing games early when the profitability of the game was statistically maximized.” That deceived players and deprived retailers of receiving bonuses for selling grand-prize winning tickets. Therefore the lawsuit seeks class-action status to cover all players who bought tickets and retailers who sold them, and also seeks an unspecified amount of money Northstar gained from “unjust enrichment.”
Northstar has faced calls for investigation by lawmakers since the article was published and also is in the process of being replaced by the state as lottery manager.
Tribune reporters studied the 17 biggest-prize instant games that started and ended in the five years since Northstar took over in mid-2011. They found under Northstar the number of tickets printed for games increased significantly, so the lottery could offer bigger prizes for games. That attracted more instant-ticket players than ever. But for many games, when sales began to drop off, Northstar ended ticket sales for those games before all, or sometimes any, of the grand prizes were awarded.
The Tribune investigation found those 17 games awarded less than 60 percent of their grand prizes. That rate was lower than other states the investigation studied and also lower than when Illinois ran the lottery itself. In addition, the lottery frequently paid a lower percentage of revenue than the games were designed to pay. Plaintiffs’ attorneys said, “Northstar materially misrepresented the actual odds of winning for the games in question. This was fraudulent.”
Northstar is owned by International Game Technology and Scientific Games. Their representatives previously claimed they acted only in the best interests of players and the state when they replaced under-performing games with more popular ones to boost sales. Due to increased sales, IGT and Scientific Games were paid more; Northstar received a portion of the profits the state made.
The legislature has called for hearings regarding the results of the Tribune report. Also, prior to the newspaper investigation, the state had begun the process of replacing Northstar after the company failed to reach profit levels it had promised in its 2010 winning bid.
