Prof who calls what's advertised 'bait-and-switch' gets invited to agency's hearing

Houston Chronicle
By LISA SANDBERG
October 17, 2006

AUSTIN — Lottery players, take out your tickets for a lesson in advertising.

On Monday, the Lotto Texas jackpot stood at $10 million.

Ticket-holders might assume they'd collect $10 million if they struck the big prize. It says so on the face of the ticket.

And if they looked again at the ticket, they might assume they'd have a 1 in 71 chance of hitting the $10 million jackpot.

In fact, regardless of what the front of the ticket says, the odds someone would win the big jackpot was 1 in 25.8 million. Not 1 in 71.

And the lucky winner who went to Austin to collect his jackpot in a lump sum would probably walk away, before taxes, with only $5.9 million, about 40 percent less than the advertised amount. A winner who opts to collect over 25 years would get the full $10 million, minus annual taxes. And it doesn't take a mathematics teacher to tell you that $10 million in today's money would be worth a lot less stretched out over a quarter century.

So what gives? How does the Texas Lottery Commission advertise jackpot amounts that most winners won't see and odds that have nothing to do with the big prize?

"No one's forced them to do differently. Unless someone pushes them, I don't think they (will) go out and do things better on their own," said Gerald Busald, a math professor at San Antonio College who urged the agency four months ago to be more truthful in its advertising.

As it turns out, Busald might have become enough of a gadfly to prompt change.

Last week, he received an e-mail from an agency employee informing him that staff members are evaluating the recommendations and could implement some of them.

He was invited to attend Wednesday's commissioners meeting, where, according to spokesman Bobby Heith, the issue is on the agenda.

Busald said the commission's practices amounts to "bait-and-switch advertising." He's urged a number of changes. Among them:

•To clearly state the prize amounts, in both the lump sum and over 25 years, on the front of each Lotto Texas ticket and on the commission's Web site. For MegaMillions, it would be cash amount and the annuitized amount paid over 29 years.

•To clearly state on the front of the tickets, on the Web site and on billboards the odds of winning the jackpot, not the overall odds of winning anything. For example, a player betting $1 on the Texas Lotto has a 1 in 75 chance of winning $3; 1 in 1,500 chance of winning $50; and 1 in 89,600 odds of winning $2,000. The odds that a $1 ticket will result in any prize is one in 71. The odds of winning the jackpot: Let's just say they're quite a bit longer than that.

The North American Association of State and Provincial Lotteries, of which Texas is a member, advises members against "directly or indirectly misrepresenting a person's chance of winning a prize." It further states that the "odds of winning must be readily available to the public and be clearly stated."

Advertising should state alternative cash and annuity values where reasonable and appropriate," the association says on its Web site.

Jim Leigh, a professor at Texas A&M's Mays Business School, called it "misleading" for the state to include overall odds above the jackpot total.

"It's puffery," he said. "They're making things a little bit rosier than they are."