Bankrupt Illinois stops paying lottery winners

August 31, 2015 in News by RBN


After years of struggling financially, Susan Rick thought things were looking up when her boyfriend won $250,000 from the Illinois Lottery last month. She could stop working seven days a week, maybe fix up the house and take a trip to Minnesota to visit her daughter.

But because Illinois lawmakers have not passed a budget, she and her boyfriend, Danny Chasteen, got an IOU from the lottery instead.

“For the first time, we were finally gonna get a break,” said Rick, who lives in Oglesby. “And now the Illinois Lottery has kind of messed everything up.”

Under state law, the state comptroller must cut the checks for lottery winnings of more than $25,000. And lottery officials said that because lawmakers have yet to pass a budget, the comptroller’s office does not have legal authority to release the funds.

Prizes of $25,000 or less will still be paid at lottery claim centers across the state, and people who win $600 or less can cash in their ticket at the place where they bought it.

But the bigger winners? Out of luck, for now.

While lottery officials could not immediately say how many winners’ payments were delayed or provide the total amount of those payoffs, the agency’s website lists multiple press releases for winners since the current fiscal year began July 1. Including Chasteen, those winners represent millions of dollars in prizes.

“The lottery is a state agency like many others, and we’re obviously affected by the budget situation,” Illinois Lottery spokesman Steve Rossi said. “Since the legal authority is not there for the comptroller to disburse payments, those payments are delayed.”

While Rossi said winners will eventually receive their money once a budget is in place, the promise is cold comfort for Rick.

“You know what’s funny? If we owed the state money, they’d come take it and they don’t care whether we have a roof over our head,” Rick said. “Our budget wouldn’t be a factor. You can’t say (to the state), ‘Can you wait until I get my budget under control?’ ”

Rick, 48, and Chasteen, 56, were expecting the money to come this week after he turned in his winning ticket July 20 to the lottery claim center in Rockford. Instead, they got a phone call this week from lottery officials saying the payment would be delayed because of the budget impasse.

“I was kind of in shock,” Chasteen said. “I called them back the next day (and) said, ‘Why am I not getting my money?’ … I think it’s all wrong they’re doing it this way. They should pay the money we’re owed.”

Rick said she also spoke with another lottery official, who tried to reassure her that the couple would get their money as soon as lawmakers pass a budget.

“And he tries to tell me it could be any day now,” she said. “So I went online, and every article I read says they’re not even close (to passing a budget). So don’t give me that line. It could be months. You’re collecting interest on our money that we should be collecting.”

Rossi would not speculate on what effect the delays might have on the lottery’s revenues if people choose to stop playing until the state resolves the budget crisis, and he was not aware of any effort to pass a special measure to allow the comptroller to pay out winnings while lawmakers and the governor haggle over the budget.

State Rep. Jack Franks, D-Marengo, has been a frequent critic of the state’s handling of the lottery and said this is just another example.

“I sort of like the business model, because if we take the money in and never have to pay, how do we lose?” Franks said sarcastically.

“Our government is committing a fraud on the taxpayers, because we’re holding ourselves out as selling a good, and we’re not — we’re not selling anything,” Franks said. “The lottery is a contract: I pay my money, and if I win, you’re obligated to pay me and you have to pay me timely. It doesn’t say if you have money or when you have money.”

Longtime lottery and gaming consultant Matthew Smith said Illinois lawmakers and lottery officials should have found a way to ensure winners were promptly paid regardless of whether there was a budget in place because failing to do so risks destroying consumer trust in the lottery.

“Any other brand that would come back and say, ‘Well, we promised we would have this product, this service, and you will get it but we just can’t tell you when’ — any other brand that would do that to you, you would never use again,” said Smith, vice chairman of Shapiro+Raj. “Is it going to affect their play? I think in the short term, if the state is able to find a way to get (winners) paid and paid quickly, and kind of puts this aside as a glitch, they can probably save things.”

But if the delays stretch on indefinitely, Smith said, word will spread — especially if it affects people who play regularly.

“If that news just continues to go viral, and it goes back to their neighborhoods and people are talking about it, I think it could have an impact,” Smith said. “And even if it affects sales by a percent or two, that’s bad for the lottery.”

Rick said she and Chasteen had to cancel their trip to see her daughter, which they planned to pay for out of Chasteen’s lottery winnings. She said delays in payment will only discourage people from playing because it will seem like false hope that they will win.

“Who do you think buys lottery tickets most of the time?” Rick said. “Not millionaires. People who don’t have a lot of money. You’re messing with all those dreams.”