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Texas Lottery Players Win Big Victory in Supreme Court

The more than 7 million Texas citizens who play the Texas Lottery have reason to celebrate today. The Texas Supreme Court ruled today that the contract operator of the Texas Lottery can be sued for fraud if it uses misleading language on lottery tickets.

The lottery operator, GTECH (now known as IGT), designed and printed a scratch-off ticket game called the Fun 5’s. Wording printed on the tickets by GTECH misrepresented that the purchaser of the ticket would win a prize if the ticket revealed a Money Bag symbol. In fact, only a small number of the tickets with Money Bag symbols were designated as winners.

Over 1,000 lottery players who believed they had won prizes were devastated to learn that the Texas Lottery would not honor their tickets as winners. They sued GTECH in state district court in Austin in a case styled James Steele, et al v. GTECH Corporation. GTECH argued that it is immune from suit because it is a government contractor. The Austin trial court and Austin court of appeals rejected GTECH’s argument that it should be immune from suit.

Dawn Nettles, a consumer advocate who operates LottoReport.com, sued GTECH in state district court in Dallas. The Dallas trial court and Dallas court of appeals ruled that GTECH could not be sued because it had “derivative immunity” as a government contractor.The Texas Supreme Court decided to review the rulings by both the Austin Court of Appeals and the Dallas Court of Appeals.

In a majority opinion written by Justice Busby, joined by Justice Lehrmann, Justice Devine, and Justice Bland, the Court ruled that GTECH does not have immunity from suit and can be sued for fraud. In a concurring opinion, Justice Boyd agreed that GTECH does not have immunity but went one step farther and argued that sovereign immunity protects the state and should never be given to private contractors. In a dissenting opinion, Justice Hecht, joined by Justice Green and Justice Blacklock, stated that the Court should have given immunity to GTECH.

What happens now? GTECH has 15 days in which to ask the court to reconsider its opinion. GTECH is likely to do so. However, in the vast majority of cases, the Supreme Court denies such a request. If GTECH’s request is denied, the cases will be remanded to the Austin and Dallas trial courts where juries will be asked to consider whether GTECH committed fraud.