Friday, November 21, 2008

Lottery says illegal pull-tabs cost Wis. millions

By RYAN J. FOLEY , 11.20.08, 01:45 PM EST

Illegal pull-tab games are costing the Wisconsin Lottery millions in revenue, but prosecutors rarely go after their operators, according to an audit released Thursday.

The Lottery's sales of such tickets fell 22 percent to a low of $3.2 million in the budget year that ended June 30, according to the Legislative Audit Bureau report. Twenty years ago, pull-tab games brought in $25 million a year.

The Lottery offers 10 such games ranging in cost from 50 cents to $2 per ticket. Players pull back tabs and win money if their tickets reveal certain symbols, such as three cherries in a row.

Taverns, gas stations and other retailers are choosing to sell games offered by private vendors because they get commissions of up to 30 percent compared to no more than 6.25 percent under the state-run program.

Lottery officials say the private games are being sold illegally or under a loophole in Wisconsin law.

State law specifically bans private vendors from operating lotteries but exempts "promotional games of chance" that are sold with products. The Lottery says that's a loophole that vendors are exploiting to sell tickets, commonly with coupons or collectible "milk caps." A court decision in 2001 found such tickets qualified for the exemption.

In a letter to auditors, Revenue Secretary Roger Ervin said a staff analysis has concluded the Lottery could generate up to $23 million more per year if state law were changed to put shady competitors out of business.
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