Plaintiff Attorneys in Mega Millions Lawsuit Applaud Legislative Solution to Reform the California Lottery Act

16 July 2005

Senate Bill 1011, introduced by Senator Florez yesterday, is a positive measure in holding the Lottery Commission accountable to the people of California and boosting funding for California schools, according to the attorneys who filed a lawsuit against the Mega Millions Lottery as unconstitutional last week.

"We are pleased our lawsuit has brought to the forefront the important public debate that should have occurred before the Lottery Commission unilaterally decided to enter in the Mega Millions agreement," says Nick Roxborough, one of the attorneys who filed the suit on behalf of plaintiffs concerned that citizens and their elected representatives were not being consulted before allowing interstate expansion of California's lottery. "One of the goals of our lawsuit and this recent legislative activity is also to place more controls and accountability on the Lottery Commission as well as secure more funding for California schools."

Roxborough and Sacramento based attorney Fred Jones, filed a Petition for Writ of Mandate last week in the Sacramento Superior Court, seeking an injunction to shut down the state's Mega Millions multi-state lottery game until the state Legislature can vote on the issue. The Petition challenges the California Lottery Commission's authority under Proposition 37, passed by the voters in 1984, and its unilateral decision to join the multi-state lottery game without obtaining the required legislative approval.

Furthermore, the lawsuit states that proponents of the California State Lottery Act of 1984 assured voters the lottery would be strictly limited to and administrated only by California. However, the contract signed by the Commission Director relinquishes key operational authority over California ticket revenues to out-of-state administrators in direct violation of the California Lottery Act.

Senate Bill 1011 would give the Commission statutory authority to participate in the multi-state Mega Millions Lottery, but with strict conditions. First, the bill would prohibit any multi-state agreement to include international lotteries or internet-based lotteries without expressed vote of the public. Secondly, it would increase the education share for multi-state games to 45 percent, up from 34 percent for in-state games like Super Lotto, since the shared administrative costs of an existing multi-state game would be lower. The bill would also make clear that any future consideration of joining an international or internet-based lottery must be put up for a vote of the people for final approval.

"While we are encouraged by this recent legislative activity, the lawsuit against Mega Millions will continue until SB 1011 is passed," adds Roxborough. "We hope the legislature will aggressively pursue this issue and vote for these important reforms to the California Lottery Act."

In addition, the plaintiffs' attorneys expect that new commissioners will be appointed to the California Lottery after the Commission's recent admission to wrongdoing. This admission of unethical conduct came after accusations from the attorneys that the Commission sent a special advisor representing herself to be a freelance reporter to their press conference at the Capitol last week.

"The Lottery Commission's unethical conduct last week is just one more indication of the Commission's out-of-control and underhanded nature," adds Fred Jones. "In light of the Commission's admission to this misrepresentation, we expect the Rules Committee will highly scrutinize the confirmation of two of the four Commission appointees at a hearing scheduled next month."

Roxborough states that the Commission's action is "at best" unethical and potentially illegal since the Commission's special advisor taped answers to many legal questions asked of their clients outside the presence and representation of their attorneys.

"The Commission's failure to take any administrative action regarding their special advisor will be construed as, at a minimum, a tacit approval of her conduct," adds Roxborough. "Anyone in my office who acted unethically would be terminated on the spot. Considering the Lottery Commission is an appointed position of trust, it's unimaginable that these are the people we have entrusted with billions of dollars each year."

Roxborough, Pomerance & Nye LLP (RPN) is a Los Angeles-based law firm providing expert legal counsel and representation to the California business community. Established in 1995, the firm offers a broad range of legal services in all facets of civil litigation, with its primary focus on litigation, legislation and policymaking issues involving insurance and business related concerns.

The law offices of Fred Jones, located in the Sacramento region, have provided legal and public policy services since 1998. The firm primarily focuses on civil litigation, estate planning and state legislative lobbying.