If a Scratch-Off Is a Rip-Off, Litigation May Be the Prize
The National Law Journal
September 5, 2008
Disgruntled lottery and sweepstakes consumers are filing a host of lawsuits claiming that instant tickets promise a lot, but can't deliver.
In Virginia, a business professor is suing the Virginia Lottery for allegedly selling roughly $85 million in defective scratch-offs, claiming the tickets had no chance of winning the top prizes because they had already been claimed. Hoover v. Virginia Commonwealth, No. CL08-3140 (Richmond City, Va., Cir. Ct.).
Similar challenges have been filed in Arizona, California, Colorado and Washington state.
And in New York, scratch-off tickets also turned into a liability for an auto dealer accused of using bogus sweepstakes promotions to lure consumers into its dealerships.
The New York attorney general last month ordered Five Towns Mitsubishi to pay $150,000 in restitution and fines over a scratch-off called Dash for Cash, which featured a cash prize, free car, vacation, gas or a $1,000 shopping spree.
As it turned out, nearly all tickets were winners, but the vacation and shopping spree prizes were nearly impossible to attain because of restrictions such as blackout periods, according to the attorney general's office.
Officials, as well as legal counsel, for Five Towns could not be reached for comment.
Private attorneys, meanwhile, are warning companies that want to use lottery tickets as a way to boost sales to beware of botched-up games.
"I think sweepstakes and lotteries and [those] sort of million-dollar offers are an increasing company advertising feature. And smaller companies are getting into the act. It is a way to generate buzz," said David Bloch, an intellectual property partner in the San Francisco office of Winston & Strawn.
Bloch said smaller businesses, however, are especially vulnerable to scratch-off liability because they don't realize that "there are all kinds of unfair competition laws constraining what you can and cannot offer."
Bloch's advice to companies that want to use instant sweepstakes for marketing promotions: Get a lawyer first. Ensure that all prizes are fairly available with no blackout dates and no use-within-three-weeks rules.
"Those are all great excuses to go ahead and sue," Bloch warned.