Topic:
LOTTERIES; CONNECTICUT LOTTERY CORPORATION; LEGISLATIVE INTENT;
Location:
GAMBLING - LOTTERY;

OLR Research Report


December 19, 2007

 

2007-R-0669

LOTTERY CLAIM DEADLINES AND CLARENCE JACKSON

By: Veronica Rose, Principal Analyst

You asked for (1) background information on Clarence Jackson's $5.8 million Lotto jackpot claim and (2) a list and legislative history of bills and amendments proposed since 1997 to extend the deadline for submitting lottery claims. You also want to know if the Connecticut Lottery Corporation (CLC) or the Division of Special Revenue (DSR) has ever honored any late claims.

SUMMARY

Clarence Jackson lost a $5.8 million Lotto jackpot because he submitted his claim three days after the agency's one-year deadline for claiming lottery prizes. He sued CLC to honor the claim but the court ruled that Jackson's failure to submit his claim within the deadline relieved CLC, as a matter of law, of any obligation to pay him the prize money.

Since 1997, legislators have proposed at least eight bills and seven amendments to extend the one-year deadline for claiming lottery prizes. All the bills originated in the Public Safety Committee (now Public Safety and Security Committee), which held a public hearing on a 1997 bill (Raised SB 1086) and took no action on the others (see Table 1, Attachment 1). All the amendments originated in the House. On three occasions, the House adopted amendments that would have extended the deadline. But the Senate has never taken up the measure (see Table 2, Attachment 2).

The arguments for and against the extension proposals have been consistent over time. Generally, those lawmakers supporting the proposals say Jackson deserves the money as a matter of justice and because of the extenuating circumstances surrounding the case. Lawmakers opposing the proposals are concerned about the cost (an estimated $3.2 million from the General Fund, according to the Office of Fiscal Analysis (OFA) for the most common proposal) and setting a bad precedent.

According to CLC and DSR officials, neither agency has ever honored a late lottery claim.

BACKGROUND

Clarence Jackson bought a “Quick Pick” Lotto ticket for the October 13, 1995 drawing and won the $5.8 million jackpot. Agency regulations require that prize claims be submitted within one year of the drawing date printed on the ticket (in this case, by October 13, 1996). This information is printed on the back of the Lotto ticket along with information that the prize may be claimed by presenting the ticket “to any on-line agent” or “Lottery Claims” office in Newington.

The deadline for Jackson to submit his claim fell on Sunday, October 13, 1996, when the CLC office in Newington was closed, but lottery terminals were on-line at sales agent locations throughout Connecticut and the ticket could be validated at any one of them. The CLC office was also closed on the following day, October 14, which was Columbus Day. Jackson spent Tuesday, October 15, in bed depressed because he had missed the deadline and unsure about what to do, according to his attorney, David Skolnick. On Wednesday, October 16, Jackson and his attorney presented the ticket at the CLC claims center in Newington, citing extenuating circumstances. CLC denied the claim on the grounds that the deadline had expired.

JACKSON V. CONNECTICUT LOTTERY CORPORATION

When CLC denied Jackson's claim, Jackson sued the corporation, alleging that it had breached its obligations by refusing to honor the ticket (Jackson v. Connecticut Lottery Corporation, 23 Conn. L. Rptr., 80 Dec. 7, 1998). The defendant (CLC) countered that Jackson's claim should fail, as a matter of law, because he missed the one-year deadline for submitting claims under agency regulations (Conn. Agency Reg. 12-568-5(c)(2)(B)). CLC argued that the existing law becomes a part of a contract when made; thus, the one-year limitation in its regulations

becomes a part of the contract between CLC and a lottery ticket buyer. Because Jackson missed the deadline, CLC argued that it had no duty to pay the prize money.

The plaintiff (Jackson) (1) questioned whether the one-year deadline and validation procedure was “part of the contract” because it was not “known, understood and agreed upon by the parties before the execution of the contract” and (2) argued that even if the procedure is incorporated into the contract, it is not material to the contract.

The court determined that the parties entered into a valid contract. The defendant made an offer and a promise to the plaintiff to pay the prize upon fulfillment of the conditions of the offer. The defendant accepted and assented through his purchase of the Lotto ticket (p. 82). The court reasoned that the “determinative” question was not whether the plaintiff knew of the one-year provision for submitting a prize claim when the contract was executed but whether the provision was incorporated into the contract as a matter of law when the contract was executed. If the regulation was incorporated into the contract, the plaintiff's knowledge of it is presumed. The court found, based on its examination of case law and logic, that the regulations were incorporated into, and became a part of, the contract when the Lotto ticket was sold, regardless of whether the plaintiff was explicitly aware of it.

The court also found that Jackson did not present his claim until after the prize money had reverted to the pool of money for paying subsequent prizes. It held that Jackson could not “cure his default nor adequately compensate CLC for a double payment and violation of the regulatory scheme.” It found that:

Jackson's failure to present the ticket for validation within one year of the drawing date is a material breach, rendering the contract unenforceable against the CLC. The one-year presentment limit is directly related to the payment of the lotto prize, the essence of every lotto contract. The one-year limit impacts the ability of a purchaser to claim a prize, the need for the CLC to pay a prize for the specific drawing, the length of time for which the CLC must reserve the funds to pay the prize, and the time at which the prize will be made available for other purchasers to win at a subsequent drawing (p. 84).

The court ruled that Jackson's failure to present his ticket for validation within the deadline relieved CLC, as a matter of law, of any obligation to pay Jackson the money (see Attachment 3).

BILLS TO EXTEND LOTTERY CLAIM DEADLINES

Since 1997, legislators have proposed eight bills and seven amendments to extend the deadlines for submitting lottery prize claims. All the bills originated and died in the Public Safety Committee. The committee held a public hearing on only one bill (SB 1086). SB 1086 would have required CLC to extend the deadline for submitting lottery claims by 24 hours when the deadline falls on a Sunday or legal holiday.

Jackson told the committee that he missed the deadline for submitting the claim because of extenuating circumstances. He was overwhelmed with the responsibility of supporting a family of 10, including disabled parents, by running a business and cleaning supermarkets at night. His father had been hospitalized three days after the drawing date and for almost the entire year afterwards. He was so focused on caring for his father that he forgot to check if he had a winning ticket. He discovered he had the winning ticket on a weekend, when the CLC office was closed, and he was unaware of an alternative procedure to validate tickets in such a situation.

Committee members appeared sympathetic to Jackson's plight but they expressed concern that modifying the law to accommodate Jackson would set a bad precedent. The following comment by Senator Alvin Penn typifies the views expressed by lawmakers:

[R]ealistically, I don't know how we could segregate his case out and reprieve him, and give him relief that he would so desire, without opening up a can of worms that would bring out every single Lottery ticket that was not cashed. . . (Public Safety Committee hearing transcript, March 11, 1997, p. 593).

AMENDMENTS TO EXTEND LOTTERY CLAIM DEADLINES

The House passed three of the seven amendments proposed to extend the deadlines: LCO 9363 in 1997, LCO 3117 in 2004; and LCO 5748 in 2006.

LCO 9363 (House Amendment “C” to House Bill 7067) extended, by 72 hours, the deadline for submitting a claim for any lottery game expiring on or after July 1, 1996. The House passed the amendment on May 30, 1997 by a vote of 82 to 63 and the amended bill by a vote of 96 to 49 (see Attachment 4). The Senate did not take up the bill.

LCO 3117 (House Amendment “A” to House Bill 5068) extended, by 72 hours, the deadline for claiming prizes for games expiring on or after July 1, 1996 and required late claimants to pay CLC a $150 late claim fee. The House passed the amendment by a vote of 81 to 64 on April 15, 2004 and referred the amended bill to the Appropriations Committee, which reported it back to the House unchanged. The bill died on the House Calendar (see Attachment 5).

LCO 5748 (House Amendment “C” to bill 5486) extended, by 72 hours, the deadline for submitting claims for games expiring on or after July 1, 1996. It required such claimants to file by August 1, 2006. It required CLC to award such claimants 90% of the prize money and the balance to DSR for specified purposes. The House passed the amendment by a vote of 97 to 50 on May 3, 2006 and the amended bill by a vote of 125 to 23 (see Attachment 6). The Senate did not take up the bill.

Arguments For and Against Extending the Deadlines

The most extensive debate on the extension proposals took place on the 1997 proposal, LCO 9363. The arguments raised during this debate have remained constant over time. Generally those favoring an extension cite equity, fairness, and extenuating circumstances. Opponents cite concerns about the cost and setting a bad precedent.

Representative Reginald Beamon, who cosponsored and introduced LCO 9363, is among several legislators who have argued for extending the deadlines on the grounds of “equity and justice”, citing occasions on which the legislature had changed laws to accommodate businesses and people who had missed other types of deadlines, failed to file necessary paperwork, or failed to meet a legal standard. According to Beamon, “this is about equity and justice. . . .when manufacturers come here and say please we are having a little trouble, would you help us a bit? We break our necks to help individuals. And we should do it here as well” (LCO 9363, House session transcript, May 30, 1997, p. 4863). According to Representative James O'Rourke:

We will change the [rules] for businesses. We will change them for towns. We will change them for everybody else who hires a lobbyist and comes to the State Capitol. But today, we are not going to change them for this one individual. We won't help him out. Tough luck kid. You were a day late and a dollar short. Ladies and gentlemen,

I want to appeal to your sense of fairness. To me, this is an issue of fairness (LCO 9363 House session transcript, May 30, 1997, pp. 4870-4871).

Representative Angelo Fusco, in supporting LCO 9363, cited a case in which the legislature changed the law to allow a minor to collect on a lottery claim (Special Act 76-31, An Act Directing the Commission on Special Revenue to Pay Ten Thousand Dollars to Barry Brunelle).

Supporters of the proposals have also cited extenuating circumstances. According to Representative Peter Villano:

. . .compelling reasons apply to this case and we should approve the amendment and allow Mr. Jackson to get the prize that he deserves. It was, again, not fully his fault. He was very busy running a business himself, taking care of nine siblings, and taking care of an ailing father (House session transcript, LCO 9363, May 30 1997, p. 4898).

Lawmakers opposed to extending the deadlines argued that fairness, rather than requiring them to extend the deadline to accommodate Jackson, required them to maintain it. According to Representative Ronald San Angelo:

. . . a question of fairness has been brought up many times. When people play this game, they expect a certain system. They expect the rules and policies of the game to be established, to be fair, and to be equal to everyone. What we are doing now is changing the name of the game after we set the policy. It's wrong for all of those other people who have not been able to claim money after the time period [has expired]. We shouldn't be making special exceptions backward. If we disagree with what has happened, then the future policy should be to get rid of the time frame (House session transcript, LCO 9363, May 30 1997, p. 4891).

In a similar vein, Representative Kevin Delgobbo told the House

that:

We are not here to, in all fairness, to bring joy and happiness to this one individual, as unfortunate a circumstance this is, by awarding him this grant. I believe that our responsibility lies with the contract that this individual entered when [he] bought the ticket. I have a great deal of sympathy but I really believe that this Assembly would be doing an injustice to all the citizens of this state, not just in regards to the Lottery Corporation and that contract but in terms of the fairness and justice of all of our laws. . . . (House session transcript, LCO 9363, May 30 1997, pp. 4896-4897).

Lawmakers also argued that the bill would set a bad precedent. According to Representative Ernest Newton:

Now if this bill is passed, you can bet one thing. Somebody else will come in here and ask this General Assembly, will you forgive me for whatever reason? I will make up a reason. My dog hid my ticket. And so we can have excuses. All I want you all to know if you say yes today, you better be ready to say yes tomorrow because somebody else will lose a Lotto ticket, forget to read it like I do, and come up with whatever excuse there is to come up on Lotto winnings (House session transcript, LCO 9363, May 30 1997, p. 4884).

Finally, lawmakers cited the cost of the proposals. OFA estimated that it would cost approximately $3.2 million to implement any of the three amendments adopted by the House.

ATTACHMENT 1

Table 1: Bills Proposed Since 1997 to Extend the Deadline for Submitting Lottery Claims

Year

Bill Number

Bill Title

Extension Period

Action

1997

Proposed SB 592

An Act Extending the Time Period for the Presentation of Claims for Lottery Prize Winnings

10 days after CLC's deadline to claim prize for games ending on, or having a drawing date, of January 1, 1995 or later

No action taken

1997

Raised Bill 1086

An Act Concerning the Expiration of the Time Period for the Presentation OF Claims for The Payment of Lottery Prizes

24 hours if deadline is on a day CLC offices are closed, including Sundays and legal holidays

Public hearing (March 11)

1999

Proposed HB 5112

An Act Concerning the Official Time Period for Acceptance of a Winning Lottery Ticket

72 hours for games expiring on or after July 1, 1996

No action taken

2000

Proposed HB 5647

An Act Extending the Time Period for Presenting A Valid Prize Claim in a Lottery Game

72 hours for games expiring on or after July 1, 1996

No action taken

2001

Proposed HB 5887

An Act Extending the Time Period for Presenting A Valid Prize Claim in a Lottery Game

72 hours for games expiring on or after July 1, 1996; such claims incur 10% penalty

No action taken

2003

Proposed HB 5646

An Act Extending the Time Period for Presenting A Valid Prize Claim in a Lottery Game

72 hours for games expiring on or after July 1, 1996; such claims incur 10% penalty

No action taken

2007

Proposed HB 6092

An Act Concerning the Deadline for Presentation of Winning Lottery Tickets

72 hours for games expiring on or after July 1, 1999, if claim submitted by October 1, 2007

No action taken

2007

Proposed SB 712

An Act Concerning Late Submission of Claims for Lottery Prizes

Up to three years for tickets drawn on or after January 1, 1992, partial payments made in such cases

No action taken

ATTACHMENT 2

Table: 2: Amendments Proposed Since 1997 to Extend the Deadline
for Submitting Lottery Claims

Year

LCO No./ Bill No

Bill Title

Sponsors

Purpose

Fiscal Impact

Action

1997

8547/7067

An Act Concerning Assignment of Lottery Prizes

Fusco

Eliminates deadlines for games with drawing date of July 1, 1995 or later

(OFA fiscal note not available on website)

House rejected

1997

9503/7067

An Act Concerning Assignment of Lottery Prizes

Caron, Dargan

Extends deadlines by 72 hours for games expiring after the act's effective date

(OFA fiscal note not available on website)

House rejected

1997

9363/7067

An Act Concerning Assignment of Lottery Prizes

Beamon, Depino, Fusco, Lawlor, Orange, Panaroni, Santa-Maria

Extends deadlines by 72 hours for games expiring on or after July 1, 1996

(OFA fiscal note not available on website)

House passed amendment; Senate did not take up the bill

2002

4749/5297

An Act Concerning the Licensing of Lottery Vendors

Beamon, Conway, Dargan, Newton, Orange, Panaroni, Villano

Extends deadlines; claimant pays $150 administrative fee if submitted within three years after the deadline and $500 fee if submitted later; in both cases prize money must be reduced by 10%

Between $9 and $18 million per fiscal year

House rejected amendment

2004

3117/5068

An Act Concerning Lottery Vendor, Affiliate and Occupational Licenses

Beamon

Extends deadlines by 72 hours for games expiring on or after July 1, 1996; claimant must pay CLC $150 fee

$3.2 million

House adopted amendment and referred bill to Appropriations Committee, which reported it back to the House; bill died on House Calendar

2006

4284/5486

An Act Concerning Gaming Products and Raffle Prizes

Beamon

Extends deadlines by 72 hours for games expiring on or after July 1, 1996 if file by August 1, 2006; 90% of prize money payable to claimant and 10% to DSR for specified purposes

$3.2 million

Amendment withdrawn

2006

5748/5486

An Act Concerning Gaming Products and Raffle Prizes

Beamon, Dargan, Dyson, Villano

Extends deadlines by 72 hours for games expiring on or after July 1, 1996 if claimant filed by August 1, 2006; 90% of prize money payable to claimant and 10% to DSR for specified purposes

$3.2 million

House adopted amendment; Senate did not take up bill

VR:dw