In Illinois, a group of vendors has reportedly filed a class-action lawsuit against Northstar Lottery Group alleging that the Chicago-based firm had defrauded businesses and individuals purchasing its range of scratch-off lottery tickets.
Northstar Lottery Group, which is a joint venture of International Game Technology and Scientific Games Corporation, became the first private firm in the United States to run a state lottery when it was awarded the contract to operate the Illinois State Lottery in July of 2011. However, it was axed by Republican governor Bruce Rauner a little over four years later after failing to meet promised profit margins but remains in charge until a suitable replacement is found.
According to a report from the Belleville News-Democrat newspaper, the lawsuit filed by four named plaintiffs on Monday alleges that Northstar Lottery Group had manipulated the number of winning tickets made available for purchase while discontinuing scratch-off games before large payouts in order to deprive customers from winning jackpots.
The action from plaintiffs Raqqa Incorporated and John Bean of St Clair County and Jason Van Lente and Michael Cairo of Cook County reportedly charges that Northstar Lottery Group misrepresented the actual chances of winning a jackpot and violated contracts with ticket vendors who would have earned sales commissions and bonuses.
“We allege that when Northstar [Lottery Group] realized that it was ahead of the consumer in a particular game, meaning it had sold a number of tickets that did not include the winner, it would stop the game and lock in its profits,” Derek Brandt from law firm Brandt Law told the Belleville News-Democrat. “The winning ticket never got sold.”
Brandt Law is representing the four plaintiffs in partnership with Sprague And Urban and TorHoerman Law and the newspaper reported that the action alleges that Northstar Lottery Group “knew that some grand prizes would never be awarded and/or that the stated odds of winning were false or materially misleading”. The suit, which is seeking unspecified compensatory damages, moreover contends that the operator’s compensation had been “tied to the [Illinois State] Lottery’s net income, thus giving Northstar [Lottery Group] an incentive to generate as much revenue as possible while paying out as little as possible in prizes and commissions”.
“In short, Northstar [Lottery Group] had a profit motive in the [Illinois State] Lottery,” reads the complaint.
The Belleville News-Democrat explained that Illinois State Lottery retailers buy their own tickets before earning back the cash through commissions on a small percentage of sales. They are also commonly credited if scratch-offs go unsold but have the same incentive as players purchasing the games as they may receive bonuses from selling a winning ticket.
A December investigation by the Chicago Tribune reportedly found that Northstar Lottery Group had not awarded 40% of the cash prizes for 17 of the Illinois State Lottery’s biggest scratch-off games. One of these, The Good Life, saw a return-to-players of approximately 60% when the newspaper alleged that the figure should have been closer to 78% despite the fact that only about 15% of the tickets had been sold before the scratch-off was pulled from circulation.