'Integrity' of Illinois Lottery Scratch-Off Games Questioned

Win $20,000. Win $50,000. Win $250,000! Maybe, if you're lucky, you could win millions. More likely, however, you'll win nothing at all. The lure of an immediate payday from a winning instant lottery ticket in compels millions of people to buy and scratch.

But the overseers of the Illinois Lottery may have played games with the prizes — and not the kind of games that put cash into winners' pockets. The biggest prizes in the biggest games often were never paid out, according to an investigation by Chicago Tribune reporters. Now lawmakers are calling for a government probe and legislative hearings in the privately managed lottery.

The lottery "seems to have swindled its players," suggested Rep. Lou Lang (D-Skokie) after the first report.

This week, Lang was joined by Rep. David McSweeney (R-Barrington Hills), Rep. Terry Link (D-Waukegan), and Rep. Scott Drury (D-Highwood) in calling for hearings into how games like the colorfully dubbed "The Good Life" and "Freezing Your Bucks Off" were managed.

"If we say we have a game that's going to pay X and it doesn't pay X, then we've lied to the people who bought the tickets," Lang told the Tribune.

Out of all the grand prizes offered in 17 games, 23 grand prizes were not awarded (40 percent). Games offer more than one grand prize, the investigation found.

The state lottery, operated by the privately owned Northstar Lottery Group, is a big-money business. In 2015, the state treasury took in $1.589 billion from lottery sales and put $788 million into prizes. Operating expenses for the lottery totaled $153 million, of which $132 million was spent to develop and promote the games. About $678 million was put toward school funding, while $8 million was transferred into the state's capital projects fund, according to data from the Illinois comptroller.

And yet Northstar, which took over management of the state lottery in 2011, promised even bigger revenue to the state of Illinois — and failed to meet its projections.

5 Things You Should Know

Here are five things you should know about the scratch-off games and the lottery investigation by Joe Mahr, Matthew Walberg, and Angie Leventis Lourgos:

1) The Tribune reviewed 138 instant games between 2011 and 2016, honing in on 17 games with the biggest prizes, and discovered most did not award all of their big prizes. Some of the games failed to pay out ANY prizes.

2) Northstar produced a lot more tickets for the games than the state did when it managed the lottery. With the extra promotions and multitude of games, more tickets were sold than ever before, which pushed the grand prizes higher, too.

3) The games often were pulled off the market early.

One $30-a-ticket game, for example, pitched the biggest instant grand prize in Illinois history: $46 million in periodic payments. But it was pulled from store shelves before it awarded either of its two grand prizes. Its designed payout rate — nearly 78 percent of sales — ended at 61 percent of sales. Had it paid out at its designed rate, players would have won an additional $10 million, the Tribune found.

4) Northstar Lottery Group, hired by Gov. Patch Quinn in 2010, describes itself as "a fully integrated consortium of best-in-class companies that have come together to serve the State of Illinois as its Private Lottery Manager." Northstar is backed by International Game Technology and Scientific Games. IGT is into slot machines, lotteries and other gaming technology, and brought in $4.6 billion in revenue last year. IGT is the world's largest slot machine maker. Scientific Games, headquartered in Nevada, created the first secure instant lottery ticket in 1974. This company earned $2.8 billion in revenue last year and owns a 20 percent stake in Northstar. Both companies dismissed the Tribune's findings as inconsequential and irrelevant.

Last year, Gov. Bruce Rauner gave Northstar the boot, terminating its contract as of Dec. 31, 2016, for failing to meet revenue promises. A replacement has yet to be identified.

5) The largest instant game prize actually won and paid out was in 2013, when Anel Bajtarevic bought a "20X20 $20,000 A Week for 20 Years" ticket at his grocery store in Chicago. The small trucking company owner gets a million bucks a year before taxes.

Learn more about the lottery problems in the Tribune's exclusive report

Check unclaimed Instant Game prizes

At public hearings, lottery company officials would be called on to offer explanations for why games were cut short, why payouts weren't made, and why so many more tickets were produced, explanations the companies never offered to the Tribune. The companies said they welcome a state review.

The state needs "a full explanation of what happened," McSweeney told the Tribune. "The bottom line: It's for the integrity of the games."

Correction: An earlier version of this post misstated the number of games failing to pay a grand prize.