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Monday, November 24, 1997

Audit by fired official says players will be 'ripped off'

HOUSTON (AP) - The Texas Lottery is hiding a report showing that scratch-off game players will be cheated during the upcoming year and warning about a budget shortfall, the agency's recently fired director says.

Lawrence Littwin's report says the average payout for instant games, now at 62 percent of sales, might have to be cut to as low as 42 percent of sales to meet legislative mandates, the Houston Chronicle reported Sunday.

Last spring, lawmakers ordered lottery commissioners to squeeze the prize pool to pay for other state programs.

Littwin's report says that will result in lottery players being "ripped off." He tried to release the report himself before the commission fired him Oct. 29.

But agency officials threatened to sue him if he made any documents public, and lottery staffers followed him with a video camera during an informal meeting with reporters.

Several news organizations then sought the report under the Texas Public Information Act, but the lottery has turned down those requests and now wants Texas Attorney General Dan Morales to rule on the open records question.

"They're going to stonewall you as much as they can," Littwin told the Chronicle last week. "Anything that is in there is perfectly legitimate. There is no confidential information whatsoever."

Littwin says his report also outlines how a drop in instant ticket sales result in a revenue shortfall of up to $700 million in the current two-year fiscal budget.

In the first two months of this budget cycle, the lottery has actually generated $5.2 million more income for the state than it did for the same period of 1996, according to public lottery documents. But that is $35 million short of meeting state income projections for the lottery.

Interim lottery director Linda Cloud said Littwin's report is incomplete and filled with inaccuracies, and that's why the agency doesn't want to release it.

"Larry Littwin, when he came here, knew nothing about instant tickets. He had been in the on-line side of this industry," Ms. Cloud said. "When he left here, he didn't know any more than when he got here."

The on-line games in Texas, where players pick sets of numbers and receive computer-generated tickets, include Lotto, Pick 3 and Cash 5. The lottery also handles scratch-off ticket games.

Ms. Cloud said she believes she can meet legislative mandates to lower prizes while keeping payouts above 50 percent of sales, but she concedes it depends somewhat on ticket sales.

The lottery's operating company, Gtech Corp, filed a lawsuit after Littwin's firing in an effort to halt the rebidding of its contract. The company claims Littwin was prejudiced against it.

In rejecting the release of Littwin's report, the lottery cited Gtech's lawsuit.

In addition to saying game players would be cheated in the upcoming year, Littwin recommended a special session of the Legislature to restore prize payouts and solve other problems.

"The commission refused to accept it because it showed that we were going to miss easily by $2 billion in revenue and $700 million in income to the state," Littwin said.

Lottery Commission Chairwoman Harriet Miers of Dallas said she knows nothing about the report.

"I'm not aware of any report that Mr. Littwin supposedly generated that we were prevented from seeing," Ms. Miers said.

Commissioner John Hill of Houston said he remembered it and believed almost all the information in it had come out publicly anyway.

Hill and Commissioner Anthony Sadberry of Cypress said lottery general counsel Kim Kipling had recommended Littwin's report not be made public because material in it related directly to Gtech's lawsuit filed Nov. 7 against the state.Send a Letter to the Editor about This Story | Start or Join A Discussion about This Story
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