From The Texas Register ...
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Page 4 of 4 Comment: One commenter indicated that Lotto allows a chance at the big jackpot with the opportunity to win smaller ones at the same time. Response: The proposed amendments are intended, in part, to result in higher jackpots. Comment: A few commenters indicated that funding for education will increase. Response: The proposed amendments are intended to result in higher jackpots as well as an increase in Lotto Texas sales. An increase in sales should result in an increase in revenues to the State for the Foundation School Fund. Comment: One commenter suggested the Commission picking 6 balls when the jackpot is under $15 million and 7 or 8 balls when the jackpot is over $15 million. Response: The Commission proposed amendments to the Lotto Texas game in the past that contemplated picking more than 6 balls. The comments received in connection with the past rulemaking were opposed to this type of concept. Comment: One commenter wants the scanning ink darkened. Response: The Commission will bring this comment to its vendor's attention. Comment: One commenter suggested that after the jackpot reached $20 million, it should be distributed between 2 or 3 people. Response: The Commission is uncertain as to how the "2 or 3 people" would be selected if they did not have tickets with numbers that matched the 6 numbers drawn. The 6 of 6 is already parimutual and players with matching 6 of 6 already must split the jackpot. Comment: Some commenters suggested that payouts should be higher. Response: The proposed amendments are intended to result in higher payouts at all prize levels. Comment: One commenter indicated that people from all over will play with bigger jackpots. Response: The proposed amendments are intended to result in higher jackpots and increased Lotto Texas sales. Comment: One commenter wants live television drawings. Response: The Commission places its drawings on satellite for television stations to be able to broadcast the drawings live. However, the Commission can not compel a television station to broadcast the drawings. Comment: One commenter wants the public perception of the Lottery improved. Response: The Commission conducts research routinely to ascertain the public's perception of the Lottery and makes adjustments in response to such feedback. Comment: A few commenters indicated that more money will come into Texas instead of going to Powerball. Response: The proposed amendments are intended, in part, to respond to player requests for higher jackpots. One result of higher jackpots is that players may opt to play Lotto Texas rather than travel to a border state that participates in Powerball. Comment: One commenter suggested having a bonus ball. Response: The Commission disagrees with the comment. The Commission proposed amendments in the past in connection with Lotto Texas that involved a similar concept. Public comment was opposed to the idea. Comment: One commenter suggested eliminating the 3 of 6 prize. Response: The Commission disagrees with the comment because player research indicates that not only do players want higher jackpots but they also want to win at the lower levels. Comment: One commenter indicated that the changes will benefit everyone and more people will play. Response: The Commission believes the proposed amendments will result in what the commenter suggests. Comment: One commenter wants the Commission to notify players as soon as possible where the winning ticket was sold. Response: The Commission makes the information available as to where the 6 of 6 ticket was sold as soon as possible after the drawing. Comment: One commenter suggested decreasing the number of scratch games. Response: The proposed amendments relate only to Lotto Texas. However, the Commission offers the number of scratch games it does because players have requested variety. Comment: A few commenters indicated that the changes will create more excitement. Response: In the past, high jackpot amounts created excitement. The proposed amendments are intended, in part, to result in higher jackpots which may also result in creating more excitement. Comment: One commenter indicated that sales will increase with the changes. Response: The proposed amendments are intended, in part, to result in increased sales. Comment: One commenter indicated that the changes will improve Lotto Texas. Response: The proposed amendments are intended to improve Lotto Texas. Comment: One commenter indicated that he/she will play anyway. Response: The Commission wants the game to be played by all who want to play but still want people to play responsibly. Comment: One commenter indicated that the decline in Lotto sales is the current matrix. The commenter stated: "Review of the sales data shows that peer capita participation ranges from $.25 to $.50 for jackpots from $3 million to $25 million. It is not until the jackpots get larger than the $25 million that per capita spending increase to levels that build sales." The commenter indicated that the matrix needs to be adjusted to increase the likelihood of the jackpot rolling to levels above $25 million. The commenter referenced the Florida Lotto changes and indicated Florida has realized a 30% increase in sales year-to-year since the change was implemented last fall. Response: The Commission agrees. The Commission conducted a hearing on April 19, 2000 to receive public comment on the proposed amendments. The following is a summary of the comments received at the hearing: Comment: A few commenters indicated that the proposed changes will increase enthusiasm for Lotto Texas and be more fun for the players as it generates more revenue for the State. Response: The proposed amendments are intended to result in higher jackpots and increased sales. Increased sales will result in increased revenue to the State. Higher jackpots should create increased enthusiasm. Comment: A few commenters indicated more money will be brought into the State and that their customers are for the changes because of the bigger jackpots. Response: The proposed amendments are intended, in part, to result in higher jackpots. Comment: One commenter indicated that the changes will bring more people to the game. Response: The proposed amendments are intended, in part, to result in higher jackpots. Higher jackpots should bring more people into the game. Comment: One commenter suggested that the Commission be more honest in its responses when math errors are pointed out to the Commission. In making this suggestion, the commenter referred to a past rulemaking and does not refer to the current rulemaking. The commenter also suggested increasing the jackpot to 55% while keeping the game at 6 of 50 balls and eliminating the $3.00 prize. The commenter indicates that this suggestion will increase the projected jackpot by 36% without decreasing dramatically the probability of anyone winning it. The commenter also indicated that the proposed changes will change the probability of winning a prize greater than the minimum prize which the commenter feels at $3.00 and $5.00 is insignificant. The commenter suggest that nobody buys a Lotto ticket to win $3.00 or $5.00. The commenter also indicated that his students are surveying players and asking them if they would be willing to give up a $3.00 prize to have a 36% increase in the jackpot. The commenter indicates that according to his students' survey, many players did think that they preferred the commenter's suggestion of giving up $3.00 to have a 36% increase in the jackpot. Response: The Commission disagrees with the suggestion of eliminating the 3 of 6 level. Player research indicates that while players want higher jackpots, players also want the opportunity to win at the 3 of 6 level. Comment: One commenter indicated that sales are down and when sales are down, the Commission should look to see why sales are down. The commenter indicated that retailers are not making enough money and do not want to "push lotto". The commenter also indicated that the retailers "absolutely have got problems with their money, their five percent". The commenter indicated that the retailers are unhappy when eight-liners were discontinued because "everybody who played the eight-liners also spent their winnings on the Lotto." The commenter also suggested that the retailers are unhappy with the Commission's theft policy for their scratch off tickets. The commenter indicated that she wants sales to go up. The commenter suggested that the Commission abandoned its past Lotto Texas rulemaking in order to come back with a better plan and a better way to present it to convince the Commissioners to do it. The commenter indicated that her first thought is to add the four balls because the Commission would fail and the commenter could tell the Commission "I told you so". The commenter indicated that she believed Commission staff had already been working on getting retailers to approve the plan so when presented to the Commissioners, Commission staff could have the power to convince the Commissioners that staff has support for adding the four balls. In addition, the commenter offered comments regarding a survey to retailers. The commenter indicated that the problem she has with the retailer survey is information in the retailer survey that states that "similar changes in New York and Florida brought marked increases in sales and dramatically boosted player interest in those states." The commenter stated that this information "is a lie". The commenter indicated that she received information from New York regarding every change that New York has made and stated that New York dropped the number of balls from six in 54 to six in 51 and that New York is happy now. The commenter also discussed California's experience and indicated that "California did the same thing": The commenter stated that "California came back and lowered their balls and it only took them a year or two." The commenter suggested that making it harder for people to win will make people quit playing. The commenter indicated the retailer survey left out that the changes in New York and California failed. The commenter suggested that the Texas Association of Lottery Retailers (TALR), GTECH, and the Commission, in a group effort, did the retailer survey. The commenter believes this because the TALR only has 200 or 300 members but 4,000 surveys were sent. The commenter also indicated that she disagreed with the statement in the proposed rulemaking that there will be no adverse effect on small businesses because if the Commission put them out of business that would be an adverse effect. The commenter also indicated that the Commission knows and has known that the retailers are unhappy and have been begging for some way to increase sales. The commenter also criticized the Commission for having a statistician from A&M come to the March 14, 2000 Commission meeting and explain why there were six winners in a row because the Lotto game is to be won. The commenter also criticized GTECH telling the Commissioners that "Texas only had a cold" and that part of the sales pitch was Texas losing a lot of money to border states. The commenter disagrees with the statements based on information she obtained from North American Association of State and Provincial Lotteries (NASPL). The commenter suggested looking at Delaware, and, in particular, Delaware's per capita spending. The commenter does not believe Texas is losing money to other states and Texas should not begrudge competition. The commenter criticized Texas using Florida's Lotto change experience to support the proposed changes. The commenter indicated Florida increased their draws from once a week to twice a week which should automatically double their sales. The commenter also indicated that Florida sales were up and now they are down. The commenter brought to the hearing comments divided into two piles. One pile represented comments from people against the proposed amendments and indicated that pile had 2,500 to 3,000 names. The other pile represented people in favor of the proposed amendments and it had 8 names. The commenter also criticized the Commission for not issuing a press release and asking people to come to the public hearing while through the previously mentioned retailer survey Commission staff was "getting retailers to come forward." The commenter read excerpts from correspondence she received into the record at the hearing. The comments she read were all opposed to the proposed amendments. The commenter also stated that she was upset because she learned that the Commission already purchased the 54 balls. Response: The Commission agrees with the commenter that the Commission should look to see why sales are down when sales are down. Based on its research, the Commission believes that sales are down because people are not playing as much as they used to play. Player research indicates that players want higher jackpots. The proposed amendments are intended to result in higher sales and higher jackpots. The Commission disagrees with the comment to the extent the comments suggest that Lotto Texas sales are down because of a relationship to eight-liners. If this statement was a true statement, the Commission would experience a decline in sales of all products. Other Lottery products are not experiencing a decline in sales like Lotto Texas. The Commission disagrees with the comment that retailers are unhappy with the Commission's theft policy for instant game tickets. The proposed amendments relate solely to Lotto Texas and are intended, in part, to address the decline in Lotto Texas. In fact, instant ticket sales appear to be increasing. The Commission disagrees with the comment that the Commission abandoned its past Lotto Texas rulemaking simply to "come back with a better plan and a better way to convince the Commissioners" to adopt changes to Lotto Texas at a later date. The Commission indicated at the time the past rulemaking was withdrawn that it may have to consider changes to Lotto Texas in the future if sales did not improve. Sales have not improved since the withdrawal of the past rulemaking. Insofar as the commenter has suggested that Commission staff was making efforts during the interim time between the past rulemaking and the present rulemaking to convince retailers to approve the changes, the Commission is unaware of such efforts by Commission staff. Regarding the comments made about the retailer survey issued by TALR, Commission staff reviewed a draft of the survey prior to its issuance. TALR notified Commission staff of its intention to issue the retailer survey to TALR members and offered to allow Commission staff to review it. After the Commission staff's review, TALR issued the survey to its members. The Commission is aware that after the survey was issued; GTECH contacted TALR to suggest making the survey available to all retailers. GTECH delivered the same survey to lottery retail locations and picked up the surveys once they were completed. GTECH provided TALR with the completed surveys. TALR provided the surveys to the Commission at its April 13, 2000 meeting. With regard to the commenter's claim that the survey's reference to other states Lotto game change experience is inaccurate, the information provided to the Commission in connection with Florida's experience indicates that Florida's Lotto change has increased Lotto sales. The Commission is aware that Florida increased the number of drawings per week from one to two. However, the Commission does not believe the change accounts for the marked increase in Lotto sales. The Commission believes the primary reason for the increase in sales is attributed to the matrix change. Lotto's sales are jackpot driven. As the jackpot grows, sales grow. Additionally, as the odds of winning the jackpot remain the same regardless of the number of drawings per week. As to the reference in the survey regarding New York, the Commission agrees that the indication in the survey that New York experienced similar changes and the changes boosted sales dramatically is inaccurate. Based on the information the Commission has regarding New York's Lotto game changes, the changes were not similar. The Commission, in proposing the amendments, did not rely on New York's experience as a basis for its decision to propose the amendments. Further, the Commission is not now relying on information regarding New York. As to the commenter's information regarding California, the Commission is aware that very recently, California made a matrix change to its Lotto game. While it is premature to know whether the change is successful, the act alone by California to change its Lotto matrix is instructional, especially given California's past experience with changing its Lotto matrix. As to the comment regarding the reference that there will be an adverse effect on small businesses, the Commission disagrees. The proposed amendments are intended to result in increased sales. As sales increase, the retailers' income based on the 5% commission will increase. Therefore, the effect on small businesses (retailers) will be positive. Regarding the comment that GTECH provided inaccurate information to the Commission in connection with Texas losing a lot of money to border states and that the Commission should not begrudge competition, the Commission believes Texans play border states' games, particularly multi-state games, when the jackpots are higher than Lotto Texas jackpots. Further, the Commission does not "begrudge" competition. However, the Commission must stay competitive and make appropriate changes to its products when such changes are warranted. The commenter suggested the Commission look to Delaware's per capita spending. The Commission disagrees with the comment because the Commission believes it is more helpful to look at states with comparable population. However, the Commission reviews other states' experience for insight when appropriate. As to the comment's criticism regarding what the commenter perceives as a failure to notify the public about the Commission meeting and public comment hearing but notifying retailers, the Commission notified all persons through its website as well as the required notice in the Texas Register. The Commission is interested in hearing comment from all interested persons. The Commission is aware of action by GTECH to notify retailers of the meeting. However, the Commission is not aware of any action by GTECH to tell retailers what to comment. As to the comments by other people the commenter read into the record, such comments have been summarized herein and responses have been provided herein. As to the comment that she was upset because the Commission had already purchased the 54 balls, the Commission has purchased the additional balls prior to the adoption of these amendments. However to the extent the comment suggests that adoption of the proposed amendments was a "fait accompli", the Commission disagrees. Commission staff ordered 5 ball sets, numbers 1 through 54, in the Fall. When the proposed rulemaking was withdrawn the order of balls numbers 51 through 54 was canceled. However, two sets had already been manufactured and were sent to the Commission. In addition to these two sets, the Commission took possession of 3 sets of balls numbers 1 through 50. Notwithstanding the issue of ball numbers 51 through 54, the Commission needed new ball sets because the old sets were the originals and were due to be replaced. Commission staff purchased the 3 sets of ball numbers 51 through 54, in order to be ready, from a time perspective, to use the balls in the event the Commission adopted the proposed amendments. Commission staff was aware that it would take 30 days from the time of placing the order to receiving the balls. After receiving the balls, considerable testing of the balls must occur and the Commission's statistician must complete his analysis to ensure that the balls will function randomly before the statistician can certify to the Commission that the balls may be put in rotation for the draw. Each ball costs approximately $200. The approximate total cost is $4,000. On balance, Commission staff spent $4,000 versus not being prepared to implement these proposed amendments as soon as possible and lose a far greater revenue to the State. Therefore, the purchase of the balls should not be indicative that the adoption of the proposed amendments was a "fait accompli" but instead should be considered a reasonable business decision by Commission staff. Finally, in summary, with regard to the issues surrounding the survey, the Commission recognizes the import of such issues and has considered such issues when making its decision. At the April 13, 2000 and May 12, 2000 Commission meetings, the Commission received public comment on the proposed amendments. The following is a summary of the comments received at the meetings which is not redundant, repetitive, or duplicative to comment already received, summarized, and considered by the Commission: Comment: One commenter indicated that his association sent out a survey to retailers. The response out of 3,973 returned surveys was 3,505 in favor of the proposed amendments and 468 opposed to the proposed amendments. The commenter indicated the percentage breakdown to be: 88% in favor and 12% opposed. The commenter also indicated that the changes will breathe new life into the Lottery and maybe the changes will generate interest and sales will increase. Response: The Commission proposed the amendments to result in higher jackpots and increase sales. Comment: One commenter indicated that he had opposed the proposed changes in connection with the past Lotto Texas rulemaking; however, the commenter indicated that he had done some research and polled customers and is in favor of the proposed amendments. The commenter indicated that the Florida Lottery had sent him information on sales figures since Florida made the matrix change and sales have increased. The commenter indicated that if the jackpot is higher, sales are higher. Response: The Commission proposed the amendments to result in higher jackpots and increase sales. Comment: One commenter indicated that bigger jackpots increase the "traffic in the stores". Response: The Commission anticipates that higher jackpots will increase sales and the retailers will experience an increase in "traffic in their stores". Comment: One commenter set out the activities surrounding the retailer survey and the process implemented by TALR in conducting the surveys and input TALR received from Commission staff regarding the surveys. Response: The Commission appreciates the commenter's clarification of the process. Comment: One commenter indicated that she had obtained copies of the retailer surveys and had reviewed the surveys herself and had obtained private analysis of the surveys for purposes of determine their authenticity. The commenter read portions of the reports prepared for her by two different reviewers, which essentially suggested that it was "highly probable" certain specific surveys were not written by different people. The commenter stated that she had delivered about 566 surveys for analysis and had received one report of 64 pages, mostly copies of the suspect one-page surveys and the other report of 26 pages, mostly copies of the suspect surveys. Response: The Commission understands the commenter to be suggesting that some of the surveys are not authentic, insofar as she is relying upon the reports that suggest that some signatures were not written by different people. The concerns raised by the commenter appear to go to some 90 surveys; a total of 4,600 surveys were submitted. The Commission will consider the commenter's concern and give the retailer surveys the appropriate weight in the Commission's reliance on those surveys. Comment: One commenter discussed GTECH's role in disseminating the retailer surveys and addressed the other commenter's contention that the surveys were not accurate or authentic. The commenter stated that he knew of no concern regarding the authenticity of the retailer surveys. He stated that GTECH had identified one representative that did not following certain procedures in gathering the surveys; however, that act still did not cause him to question the underlying survey results. Comment: One commenter discussed GTECH's role in disseminating the retailer surveys and addressed the other commenter's contention that the surveys were not accurate or authentic. The commenter stated that he knew of no concern regarding the authenticity of the retailer surveys. He stated that GTECH had identified one representative that did not following certain procedures in gathering the surveys; however, that act still did not cause him to question the underlying survey results. Response: The Commission appreciates the clarification given regarding the retailer surveys. The amendments are adopted under Texas Government Code §466.015, which gives the Texas Lottery Commission the authority to adopt all rules necessary to administer the State Lottery Act and rules governing the establishment and operation of the lottery; and, under Texas Government Code §467.102 which gives the Commission the authority to adopt rules for the enforcement and administration of the laws under the Commission's jurisdiction. Texas Government Code, Chapter 466 is affected by the amendments. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Filed with the Office of the Secretary of State on May 12, 2000. |
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The Lotto Report |
