Commonsense & Wonder

Illinois Commits "Fraud On Taxpayers", Lowers Maximum Lottery Payout To Just $600

Submitted by Tyler Durden on 10/15/2015 10:40 -0400

Susan Rick’s boyfriend won $250,000 from the Illinois Lottery in July. 

As the Chicago Tribune reported in August, Rick thought the winnings would allow her to “stop working seven days a week, maybe fix up the house and take a trip to Minnesota to visit her daughter.”

No such luck. 

Instead of real money, Rick’s boyfriend - one Danny Chasteen - got an IOU from the state.

The problem: the state’s inability to pass a budget even after hiring (and subsequently firing) budget “guru” and Laffer disciple Donna Arduin for $30,000 a month meant that any Illinoisan who won more than $25,000 couldn’t immediately be paid. 

More specifically, without a budget the comptroller's office doesn’t have the legal authority to make the payments. 

Fast forward to Wednesday and the state comptroller’s office made national news when Comptroller Leslie Geissler Munger said Illinois would skip a $560 million November pension payment. By way of recap (via Bloomberg): 

The spending standoff between Republican Governor Bruce Rauner and Democratic legislative leaders has extended into its fourth month with no signs of ending. Munger said her office will postpone a $560 million retirement-fund payment next month, and may make the December contribution late.

“This decision is choosing the least of a number of bad options,” Munger told reporters in Chicago on Wednesday. “For all intents and purposes, we are out of money now.”

Munger said the pension systems will be paid in full by the end of the fiscal year in June. The state still is making bond payments, she said.

“We prioritize the bond payments above everything else,” Munger told reporters.

We have of course been covering the Illinois budget story closely over the past six or so months and in response to Wednesday’s pension bombshell, we said the following:

One wonders what these means for Chicago's bankrupt school system, which, as we reported early last month, was depending upon nearly a half billion in funding from Springfield to plug a gaping budget hole. Further, this would seem to suggest that anyone who wins more than a few thousand in the Illinois lottery can go ahead and figure on getting a pieces of paper with Bruce Rauner's picture rather than Ben Franklin's for the foreseeable future. 

As it turns out, our assessment was too optimistic. 

Whereas we suggested the limit for payouts would be a “few thousand”, it was cut yesterday to just $600.

Here’s USA Today:

The cash-strapped state of Illinois announced Wednesday they’ll be handing out IOUs for the time-being to any state lottery winner who wins more than $600.

“Payment delays will occur because there currently is no legal authority for the Illinois Comptroller or the Illinois 

Lottery to issue checks,” the Illinois Lottery said in a statement. “Please note that the funding to pay winners exists, but the legal authority to issue checks does not.”

The lottery said the payments will be made once a state budget is passed.

The lottery has been delaying payments to big winners since the current fiscal year started on July 1. Initially, only winners who were set to get $25,000 or more were receiving IOUs.

On Wednesday, the Illinois Lottery lowered the threshold to $600.

Needless to say, some folks are upset, as winners are now incredulous at the idea that the state is essentially just selling bogus raffle tickets:

“How the heck can they do this, and they're still selling tickets?" said Homer Glen resident Rhonda Rasche, 48, according to the Chicago Tribune. "If I was the one selling raffle tickets and I didn't pay, I would be sued or in jail or both."

Yes, Rhonda, you probably would, but you’re not the one selling the tickets, the state is and while you can sue the state (and some people apparently are), you can’t really put it in jail. Furthermore, you can certainly count on people still playing the lottery even as they’re told they won’t be paid if they win, which means free (not to mention badly needed) revenue for Springfield. 

We’ll close with the same quote we left you with when we first told Susan Rick’s story in August. This is from State Rep. Jack Franks: 

"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. 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.