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For Immediate Release: January 12, 2004

PRESS RELEASE REP. OTTO WARNS AGAINST POTENTIAL LOTTERY SCAM

State Representative Rebecca Otto was interviewed on several television news programs today, warning Minnesota residents not to fall for the pitches of for-profit lottery pools and lotto clubs that have recently begun advertising in the Twin Cities area, saying that individuals would be better off pooling with friends, co-workers and family.

Otto’s comments were in response to an recent advertisement in the Pioneer Press which promoted the PowerPick Players Club of Minnesota, an organization that promises lottery players the chance to pool their lottery picks with others in the hopes of improving their chances of winning.

However, Rep. Otto said the company overcharges for the service and encourages people to go into debt by allowing them to pay their membership fees with a credit card.

"A Powerball ticket costs $1 in Minnesota," Otto said, "yet PowerPick charges club members over $3.62 a ticket. That’s ridiculous."

Otto says she also has concerns with the company’s history, pointing to the revocation of its lottery retailer license in the state of Arizona.

According to Arizona lottery officials, PowerPick Players Club of Arizona had its license revoked after Arizona courts found PowerPick guilty of selling tickets to themselves, paying prizes to themselves, guaranteeing cash awards, conducting sales via telephone off-premises and keeping unclaimed prizes for themselves.

Here is how the company’s pitch works. Under the package listed in its recent ad, the club pools groups of 50 members together and purchases Powerball and/or Hot Lotto tickets. For $29 per person, PowerPick purchases a total of 400 tickets over a four-week period, which breaks down to 50 tickets for each of the 8 drawings during that time period. If one of the 400 tickets is a winning prize, then each of the 50 members share 1/50 of the winnings.

The actual cost of the tickets would be $400, yet PowerPick would be paid $1,450 by the 50 "members." The ad also encouraged buyers to charge their membership on their credit card.

While PowerPick’s practices technically may not violate the letter of the law, Otto said she believes the plan violates the spirit of the law because lottery tickets may be sold by lottery retailers only for cash, PowerPick does not have a lottery retailer license contract with the Minnesota State Lottery and, most importantly, a lottery retailer may not sell a ticket for a price other than the price set by the Minnesota State Lottery director.

Otto said she has referred the matter to the Minnesota Attorney General and that the company is being investigated by the Department of Public Safety.

"In the meantime, I am having legislation drafted which will require companies like PowerPick to state up front that their service is significantly more expensive than if the customer joined an office pool. It would also prevent customers from using credit cards so they don’t go into debt to buy lottery tickets," Otto said.

"I don’t want to do away with office pools," she added. "If people want to pool their lottery tickets in the hopes of bettering their chances of winning, I would tell them that their chances would be a lot better if they join an office pool instead of joining the PowerPick Player’s Club of Minnesota."