The Honest Lottery Act (HB 156) passed House Judiciary B Committee unanimously last Wednesday marking the first step toward introducing truth in lottery advertising. The bill has 57 co-sponsors and widespread, bipartisan support in the House.
In August 2005, the General Assembly narrowly passed the North Carolina State Lottery Act establishing the North Carolina Education Lottery (NCEL). Advertising began on March 27, 2006. NCEL offers 5 major games (Carolina Pick 3, Carolina Pick 4, Carolina Cash 5, NC Mega Millions, NC Powerball) and 69 different types of scratch off tickets at over 6,600 retailers throughout the state.
The 2005 bill did little to regulate the tactics used to advertise the lottery. It did not ensure completely honest advertisements. Although advertisements were required to include the overall odds of winning something, there was no requirement that advertisements include the odds of winning the prize with the largest value—the value that most people play to win. So while the overall probability of winning any amount of money, from $5 to $500,000, may be 1 in 3.90, the probably of winning the top prize may only be 1 in 800,000.
The Honest Lottery Act includes the following requirements for advertisements:
- Advertising that states a total of payments to be paid over a period of time must also state the present value of the prize.
- Advertising that states the probability of winning a prize must not omit the value of the lowest prize to be won.
- When stating the odds of winning a prize the advertisement, at a minimum, must include the odds of winning the prize with the largest value.
- Advertising or sponsorship of the NCEL in connection with any high school or collegiate sport or sporting event is prohibited.
- Advertisements must not refer to the role of accountants or auditors.
The University of North Carolina must develop materials explaining the probabilities and other mathematical features of a lottery game. This information will be included in high school civics and math courses.
Critics argue that people are smart enough to make their own decisions and can recognize that their actual chances of winning are minimal. Yet many studies and articles show that not including true probabilities affects consumer behavior. Other studies and articles recognize the manipulation techniques that lottery advertisements employ to entice people to place. The 1999 National Gambling Impact Study Commission’s Final Report even recognizes the criticism that “in pursuit of revenues, some lotteries have employed overly aggressive—and even deceptive—advertising and marketing methods.”
Because the state of North Carolina runs the lottery it is not subject to federal “Truth-in-Advertising” standards. In any other circumstance, the government would not tolerate such blatant misrepresentations of the facts. The Honest Lottery Act holds the North Carolina Education Lottery to higher standards.