Source: http://lottoreport.com/PROPC5.htm
Timestamp: 2014-03-07 14:59:46
Document Index: 524165278

Matched Legal Cases: ['§401', '§401', '§466', '§466', '§466', '§467', '§401', '§401', '§401', '§466']

Proposed Rule for Cash 5 - Will appear in the Texas Register on March 22, 2002.
Cash 5 Proposed Rule 16 TAC 401.308 Compliments of The Lotto Report
Originally Posted: March 27, 2002
Revised: April 25, 2002
4-25-02 - The Commissioners voted today to adopt the rule as discussed. Once again, the TLC went against the players. Cash 5 will be played 6 days per week, the matrix will be 5 of 37, and the prizes will be smaller. This will begin July 29th.
A Few Tidbits First
Below is the rule that was published in the Texas Register on March 22, 2002. The TLC has this rule published on their web site EXCEPT they do not show you what they are changing.
But I do. The language underlined is new language and the language with strike-thru's is what they want to delete from the rule. I think it's important for you to know that the day the Commissioners approved this for publication is the same day they voted to approve the twice daily draws for Pick3. The TLC issued a press release the same day ... the headline was, "Texas Lottery Commissioners Approve The First Ever Day Drawing In Texas." The first 3 paragraphs of that release talked about the Pick3. Then the release said, "In other developments, the Texas Lottery also proposed changes to the lottery's Cash 5 game" (they list better odds, reducing the balls to 37, the guaranteed $2 prize and
the 6 draws per week). Then it read, "Currently, Cash 5 players choose five numbers from 39. Tickets cost $1 per play. Players win cash prizes by matching 3, 4, or 5 numbers. Prize amounts are approximately $25, $500, and $57,000 respectively. All prizes are pari-mutuel." By quoting what Cash 5 "currently" pays in the press release, it is my opinion, the TLC was using a "play of words" to avoid telling you how much prizes for each prize level would decline under the new proposed rule. They were with holding vital information. What I want you to know is what they failed to say. If this rule is adopted, prizes will be:
$10 instead of $20 to $30 for matching 3 numbers; $137 instead of $400 to $600 for matching 4 numbers; $67,000 for matching 5 numbers.
These amounts are lower so they can allow for the $2 prize.
Is it worth it? Since the Commissioners and the TLC claim that they want to receive players comments and care what players say, I would like to know why the TLC doesn't use their resources - their web site and their retailers - to get this information out to players themselves. How can players comment intelligently the way the TLC portrays these changes? The TLC owes it to the people to spell out exactly what they are achieving and/or the true impact these rule changes bring to the people of Texas before the rules are adopted. Telling "part" of the story is far from fair.
After you've read this page, please comment. Links for commenting are at the bottom of this page. The proposed rule ... my comments are in blue italics. 16 TAC
§401.308
The Texas Lottery Commission proposes amendments to 16 TAC
§401.308, relating to the "Cash 5" on-line game. The proposed
amendments provide for a matrix change from 5/39 to 5/37. The proposed
amendments also add a guaranteed prize amount of $2 for a match on the new
2-of-5 prize category. The purpose of these changes is to make the game easier
to win overall and to provide players with more chances to win. Currently, the
overall odds of winning are 1:100 and the proposed new overall odds of winning
will be 1:8. The current game statistically generates approximately 5,000 to
6,000 winners per draw. The proposed changes will statistically generate
approximately 54,000 winners per draw. The proposed changes also increase the
number of draws a week from four to six. The purpose of the draws per week
increase is to increase sales and also revenue to the State of Texas. The
proposed amendments also eliminate language that indicates unclaimed prizes go
to the prize reserve fund. Pursuant to Government Code, §466.4075, unclaimed
prize money shall be deposited to the credit of the Texas Department of Health
state-owned multicategorical teaching hospital account or the tertiary care
facility account as prescribed in §466.4075. Another proposed change is to
correct a typographical error. The preamble makes the proposed changes sound very attractive and some of them are, however, the TLC fails to mention the new prize allocations. I explain in depth the new "(2) Prize Pool" below. Bart Sanchez, Financial Administration Director, has
determined for each year of the first five years the section is in effect there
will be the following foreseeable additional fiscal implications for state or
local government as a result of enforcing or administering the rule. FY02,
$(956,708); FY03, $4,593,005; FY04, $4,603,151; FY05, $4,603,151; and, FY06,
$4,603,151. The negative impact on revenue for FY02 is due to the game being
launched six weeks before the end of the fiscal year. There is no anticipated
impact on small businesses, micro businesses or local or state employment as a
result of implementing the section. Robert Tirloni, On-line Products Manager, Marketing
Division, has determined that each of the first five years the section as
proposed is in effect, the public benefit anticipated as a result of the
proposed amendments is to offer additional draws to lottery players. An
additional public benefit anticipated is additional sales and revenue.
Retailers will benefit because they will be receiving additional monies from
the additional Cash 5 sales. The State of Texas will receive additional revenue
from the additional Cash 5 sales. The players will benefit from the new matrix
and the new 2-of-5 prize category because the new overall odds will be 1:8
instead of 1:100 and the new prize category has a guaranteed $2 prize amount. Written comments on the proposed amendment may be submitted
to Kimberly L. Kiplin, General Counsel, Texas Lottery Commission, P.O. Box
16630, Austin, Texas 78761-6630. The Texas Lottery Commission will also conduct
a hearing to receive comment on the proposed amendments on April 4, 2002 at
9:00 a.m. at the Texas Department of Housing and Community Affairs, 507 Sabine
Street, 4th Floor, Board Room, Austin, Texas. The amendments are proposed under Government Code, §466.015
which authorizes the Commission to adopt all rules necessary to administer the
State Lottery Act and to adopt rules governing the establishment and operation
of the lottery, and under Government Code, §467.102 which authorizes the
Commission to adopt rules for the enforcement and administration of the laws
under the Commission's jurisdiction. The amendments implement Government Code, Chapter 466. (a) Cash 5. A Texas Lottery on-line game to be known as
"Cash 5" is authorized to be conducted by the executive director
under the following rules and under such further instructions and directives as
the executive director may issue in furtherance thereof. If a conflict arises
between this rule and §401.304 of this title (relating to On-Line Game Rules
(General)), this section shall have precedence. (b) Definitions. In addition to the definitions provided in
§401.301 of this title (relating to General Definitions), and unless the
context in this rule otherwise requires, the following definitions apply. (1) Advance Play--A player may
purchase a Cash 5 ticket for any of the five [three] Cash 5
drawings immediately following the current drawing. Example: On Monday, before
the drawing, a Cash 5 ticket can be purchased for Tuesday, Wednesday,
Thursday, [ or] Friday, or Saturday drawings. 6 draws per week will result in smaller jackpots and smaller prizes as many players will simply spread the same dollars over the 6 draws. Some players who play special numbers may quit altogether because they can't afford to play all draws. I oppose this change.
(2) Multi draw--A player may purchase a Cash 5 ticket for up
to 12 [20] consecutive drawings beginning with the current draw. (3) Number--Any play integer from one through 37 [39]
inclusive. (4) Play--The five numbers selected on each play board and
printed on the ticket. (5) Play board--A field of the 37 [39] numbers
found on the playslip.
Great! Lower the number of balls and improve our odds! I'm for this change.
(6) Playslip--An optically readable card issued by the Texas
Lottery used by players of Cash 5 to select plays. There shall be five play
boards on each playslip identified as [at] A, B, C, D, and E. A
playslip has no pecuniary value and shall not constitute evidence of ticket
purchase or of numbers selected. (c) Price of ticket. The price of each Cash 5 play shall be
$1.00. A player may purchase up to five plays on one ticket. Multiple draws are
available for up to 12 [20] consecutive draws beginning with the
current draw. A player may purchase a Cash 5 ticket for advance play. (d) Play for Cash 5. (1) Type of play. A Cash 5 player must select five numbers
in each play or allow number selection by a random number generator operated by
the computer, referred to as Quick Pick. A winning play is achieved only when two,
three, four, or five of the numbers selected by the player match, in any order,
the five winning numbers drawn by the lottery. (2) Method of play. The player may use playslips to make
number selections. The on-line terminal will read the playslip and issue
ticket(s) with corresponding plays. If a playslip is not available, the on-line
retailer may enter the selected numbers via the keyboard. However, the retailer
shall not accept telephone or mail-in requests to manually enter selected
numbers. A [If offered by the lottery, a] player may leave all
play selections to a random number generator operated by the computer, commonly
referred to as Quick Pick. (3) One prize per play. The holder of a winning ticket may
win only one prize per play in connection with the winning number drawn and
shall be entitled only to the highest prize category won by those numbers. (e) Prizes for Cash 5. (1) Prize amounts. The first, second, and third prize
amounts, for each drawing, paid to each Cash 5 player who selects a matching
combination of numbers will vary due to a pari-mutuel calculation. The
calculation of a prize shall be rounded down so that prizes can be paid in
multiples of whole dollars. Each prize category breakage will carry forward to
the next drawing for each respective prize category. The prize amounts are
based on the total amount in the prize category for that Cash 5 drawing
distributed equally over the number of matching combinations in each prize
category. The fourth prize is a guaranteed $2 prize. Figure:
16 TAC §401.308(e)(1)
Amounts - (Why does this say "prize amounts?" These are the odds.) Matching
five matching numbers in one play
1 in every 435,897 tickets Any
four, but not five matching numbers in one play
1 in every 2,724 tickets
three, but not four or five matching numbers in one play
1 in every 88 tickets
two, but not three, four or five, matching numbers in one play.
1 in every 9 tickets
(2) Prize pool. The prize pool for Cash 5 prizes shall be a
minimum of 50% of Cash 5 sales. This pool will be allocated into two
components. The first component consists of the funds necessary to pay all the
fourth prize category $2 prize winners. The first component is obtained by an
allocation from the Cash 5 prize pool to the fourth prize category so that all
of the fourth prize category shares will each receive the guaranteed $2 prize.
The second component contains the remaining prize pool funds after subtraction
of the first component allocation and will be referred to as the "residual
prize pool". The residual prize pool will be allocated to the first,
second, and third prize categories according to the percentages applicable for
each prize category. Notice that most of the language under "(2) Prize Pool" is all new. So that you will understand the true impact of the $2 prize and how it effects the other "pari-mutuel" prizes, here is an easy example using an actual drawing to show you what this means.
On March 14, 2002, Cash 5 sales were $605,801. The TLC gets 50% right off the top leaving the balance in the prize pool (the players share) - $302,900.50. Based on the odds that 1 (one) in every 9 tickets should match 2 of 5 numbers and will be a $2 winner (605,801 tickets divided by 9 equals 67,311 winning $2 tickets.) 67,311 winning tickets times $2 = $134,622 that is needed for the $2 winners. The prize pool was $302,900.50 so now we subtract $134,622 from the prize pool so we can pay the "guaranteed" prizes. This leaves $168,278.50 in the "residual prize pool." This is the amount of money that will be left to divide among the 3 of 5, 4 of 5 and 5 of 5 winners. Based on the odds again, one (1) in every 88 tickets should be a 3 of 5 winner. 605,801 tickets divided by 88 equals 6884 winning tickets. In this case, the 3 of 5 winners split 41.77% of the "residual prize pool" which is $168,278.50. So we take 41.77% of $168,278.50 = $70,290. This is the amount the 6884 winners split. $70,290 divided by 6884 = $10 each. (FYI - For the actual drawing on March 14, 6637 players matched 3 of 5 numbers and won $23) Still based on the odds, one (1) in every 2724 tickets should be a 4 of 5 winner. 605,801 tickets divided by 2724 equals 222 winning tickets. In this case, the 4 of 5 winners split 18.08% of the "residual prize pool" which is still $168,278.50. So we take 18.08% of $168,278.50 = $30,424 and the 222 winners split this amount. $30,424 divided by 222 = $137 each. (FYI - For the actual drawing on March 14, 195 players matched 4 of 5 numbers and won $466) Finally, we have the 5 of 5 winners who split 40.15% of the "residual prize pool." The "residual prize" pool is still $168,278.50. So we take 40.15% of $168,278.50 = $67,563 and the 5 of 5 winners split the $67,563. (For the actual drawing on March 14, the player who matched 5 of 5 numbers won $60,580) Notice that 40.15% + 18.08% + 41.77% equals 100%. This is "pari-mutuel" meaning each prize category splits a set percentage of sales. In this case, the amount they split is determined after the TLC takes what they need to pay the $2 prizes. Now tell me, why hasn't the TLC made prize amounts clear to the players so players can comment intelligently? Will these prizes entice you to play more or less? I oppose the new allocations. Further, I am extremely angry to see that the TLC "butters up" a rule change and does not disclose all the facts about the rule change. And I'd call this change a MAJOR change. (3) Prize categories. (A) First [Top] prize--The prize amount shall
be calculated by dividing the prize category contributions by the number of
shares for the prize category. A share is the matching combination, in one
play, of all five numbers of the five numbers drawn (in any order). [ The
total prize category contribution will include the following.] Each first
[top] prize will be paid in one lump sum payment. The five of five first
[top] prize of $600 to $999,999 must be claimed at a Lottery claim
center. Five of five prizes of $1,000,000 or larger must be claimed at the
Lottery Commission headquarters in Austin. The total prize category
contribution for a drawing will include the following. (i) The direct prize category contribution shall be 40.15%
[20%] of the residual prize pool for the drawing. Notice all of the prize contributions say "shall."
(ii) If the first [top] prize is not won by a
Cash 5 player from the [a] drawing, the direct prize category
contribution will roll into the second prize category. (B) Second prize--The prize amount shall be calculated by
dividing the prize category contributions by the number of shares for the prize
category. A share is the matching combination, in one play, of any four of the
five numbers drawn (in any order). The total prize category contribution will
include the following. (i) The direct prize category contribution shall be 18.08%
[30%] of the residual prize pool for the drawing. (ii) If the second prize is not won by a Cash 5 player from the
[a] drawing, the direct prize category contribution will
roll into the third prize category. (C) Third prize--The prize amount shall be calculated by
category. A share is the matching combination, in one play, of any three of the
include the following. [The direct prize category contribution shall be 50%
of the prize pool for the drawing.] (i) The direct prize category contribution shall be
41.77% of the residual prize pool for the drawing. (ii) If the third prize is not won by a Cash 5 player
from the drawing, the direct prize category contribution will carry forward to
the prize pool for the next drawing. (D) Fourth prize--The prize amount is a guaranteed $2. Offering this $2 prize results in much smaller prizes for those who match 3, 4 and 5 numbers. No one plays Cash 5 to win $2 - this will do more harm than good in the long run. I oppose this change for that reason. (4) Unclaimed Prize Fund. In the event any player who has a
valid winning ticket does not claim the prize within 180 days after the drawing
in which the prize was won, the prize amount shall be deposited to the
credit of the Texas Department of Health state-owned multicategorical teaching
hospital account or the tertiary care facility account as prescribed in
Government Code, §466.4075 [added to the prize reserve and all rights to
the prize shall terminate]. (f) Ticket purchases. (1) Cash 5 tickets may be purchased only at a licensed
location from a lottery retailer authorized by the lottery director to sell
on-line tickets. (2) Cash 5 tickets shall show the player's selection of
numbers, or Quick Pick (QP) numbers, boards played, drawing date, and serial
[validation and reference] numbers. (3) It shall be the exclusive responsibility of the player
to verify the accuracy of the player's selection(s) and other data printed on
the ticket. A ticket is a bearer instrument until signed. (4) Except as provided in subsection (d)(2) of this section,
Cash 5 tickets must be purchased using official Cash 5 playslips. Playslips
which have been mechanically completed are not valid. Cash 5 tickets must be
printed on official Texas lottery paper stock and purchased at a licensed
location through an authorized Texas lottery retailer's on-line terminal. (g) Drawings. (1)The Cash 5 drawings shall be held each week on Monday,
Tuesday, Wednesday, Thursday, [and] Friday, and Saturday
evenings at 9:59 p.m. Central Time except that the drawing schedule may be
changed by the executive director, if necessary. (2) Cash 5 tickets will not be sold during the draw break
for the Cash 5 game on Monday, Tuesday, Wednesday, Thursday, [ and]
Friday, and Saturday nights. (3) The drawings will be conducted by lottery officials. (4) Each drawing shall determine, at random, five winning
numbers in accordance with Cash 5 drawing procedures. Any numbers drawn are not
declared winning numbers until the drawing is certified by the lottery in
accordance with the drawing procedures. The winning numbers shall be used in
determining all Cash 5 winners for that drawing. (5) Each drawing shall be witnessed by an independent
certified public accountant. All drawing equipment used shall be examined by at
least one lottery security representative, the drawing supervisor, and the
independent certified public accountant immediately prior to a drawing and
immediately after the drawing. (6) A drawing will not be invalidated based on the financial
liability of the lottery. (h) Announcement of incentive or bonus program. The
executive director shall announce each incentive or bonus program prior to its
commencement. The announcement shall specify the beginning and ending time, if
applicable, of the incentive or bonus program and the value for the award. This agency hereby certifies that the proposal has been
reviewed by legal counsel and found to be within the agency's legal authority
to adopt. Filed with the Office of the Secretary of State on March 7,
2002 (But will not appear in the Texas Register until March 22, 2002)
TRD-200201417
Earliest possible date of adoption: April 21, 2002
For further information, please call: (512) 344-5113
Comments - They Work! Easy Ways to Comment.
A PDF - Print it and fill it out, then fax or mail it to me. There's room for additional comments on this page. Click here.
An online questionnaire, just complete it and press send. This covers the issues at hand which is VIP - but you can't write additional comments on it. Click here. OR
E-Mail your comments to me. Click here. Also ...
Read the transcript from the March 6, 2002 Commissioners meeting. See what the staff tells the Commissioners about the changes and notice
the TLC never mentioned to the Commissioners how the prize allocations would be affected by adding the $2 prize. What's worse, the Commissioners never inquired either. Click here. Compliments of