Director, Commonwealth Policy Center

An increasing number of legal cases are being filed against casinos and lotteries in efforts to make them responsible for the damage they cause,  A recent very interesting case has arisen in Portland, OR involving the dishonest presentation of a lottery game.

Justin Curzi is a wealthy former software company owner who loves games.  He was playing  poker when the machine dealt him a 2,4,5,6,7 hand in different suits.  The machine had an “auto-hold” feature which recommended he discard the seven in an attempt to get a straight.  He realized that his chances were doubled if he discarded the 2, because then either a 3 or an 8 would give him the straight and a $5 win on a $1 bet.  In other words the Oregon Lottery was using a program that turned out to be $134 million dollar scam.

People used the “auto-hold” feature because it speeds up play, without having to think about what cards to discard.  Curzi went back and played more, found more cases of bad advice, and wrote a letter to the Lottery asking why the games did not give the best advice.  The Lottery Director replied that all their games were devised to make money for the state.  A spokesperson also told Curzi that the machine gave him a chance to win, just not the only chance.

The next step was a public records request for documents and memos related to the game.  The Lottery eventually charged him $3,581.49 for the records they released.  By September 2014 Curzi had hundreds of pages of e-mails memos and spreadsheets from the Lottery, in a strategy that is usually called the “bury the opposition in an avalanche of paper.”  Curzi found that the game he was playing, ”Jacks or Better,” was actually paying out $1.3 million per year less than optimal recommendations would pay.  As early as 2009 Lottery officials debated whether they should reveal the actual odds if they used Auto-Hold.  The Lottery decided to put accurate data on its website, but such information is not there, and Curzi could not find out if it was ever done.

Curzi has filed suit, the outcome of which is still pending.  The Lottery has withdrawn the game.  Curzi has to prove that the Lottery deliberately withheld key information.  Most experts say that will be very difficult and say Curzi is unlikely to win.  The Lottery claims the recommendations give the player the best chance to win the maximum prize, not just a particular win.  This is extremely difficult to establish.

On just this one game over its ten year lifespan the Lottery gained an inappropriate $134 ar million.  Other games may have similar problems.  As much as 3% of Lottery revenue may be inappropriate.  A win here would clean up the Oregon Lottery, and deep pockets in other states could take up the challenge.  A loss just means that more suits will be required.