tx lottery lawsuit

Tx lottery lawsuit

Guarantees and indemnifications

Penalties under Minimum Profit Contracts

The Company has three contracts where it has provided customers with minimum profit level guarantees (the Illinois Contract, Indiana Contract and New Jersey Contract). In relation to the Illinois Contract, the Company guaranteed a minimum profit level to the State of Illinois for each fiscal year of the agreement, commencing with the State of Illinois’s fiscal year ended June 30, 2012. The amounts guaranteed and therefore amounts owed by the Company as shortfall payments under the Illinois Contract were under dispute. In December 2014 the Company and the State of Illinois entered into a termination agreement which settled the amounts of shortfall payments for fiscal years 2012, 2013 and 2014, in the amounts of $21.8 million, $38.6 million and $37.1 million, respectively. In 2015, the Attorney General of the State of Illinois questioned the validity of the termination agreement between the Company and the State of Illinois which resulted in the Company and the State of Illinois entering into a new termination agreement and the Company paid the State of Illinois an additional $10 million representing the shortfall payment for the State of Illinois’s fiscal year ending June 30, 2015. The Company will neither be responsible for the payment of any other shortfall payment, nor will it be entitled to receive any incentive compensation, for all or any portion of fiscal year 2015, or any subsequent fiscal year. The Company recorded reductions of service revenue of $10.0 million, $55.5 million and $42.0 million in 2015, 2014 and 2013, respectively, for the shortfall payments.

In relation to the Indiana Contract, the Company guaranteed a minimum profit level to the State of Indiana commencing with the contract year starting July 1, 2013. The Company recorded reductions of service revenue of $8.0 million, $8.8 million and $0.8 million in 2015, 2014 and 2013, respectively related to this guarantee. In 2015, the Company and the State of Indiana renegotiated the Indiana Contract which resulted in future reduced guarantee levels and in consideration the Company paid the State of Indiana $18.3 million which the Company capitalized to Other Assets in its consolidated balance sheet and which the Company is amortizing to service revenue over the remaining contract term.

In relation to the New Jersey Contract, the Company guaranteed a minimum profit level to the State of New Jersey commencing with the contract year starting July 1, 2014. In 2015, the Company and the State of New Jersey renegotiated the New Jersey Contract which resulted in future reduced guarantee levels and in consideration the Company paid the State of New Jersey $15.4 million which the Company capitalized to Other Assets in its consolidated balance sheet and which the Company is amortizing to service revenue over the remaining contract term.

Loxley GTECH Technology Co., LTD guarantee

The Company has a 49% interest in Loxley GTECH Technology Co., LTD (“LGT”), which is accounted for as an asset held for sale with a de minimis value. LGT is a joint venture that was formed to provide an online lottery system in Thailand.

The Company has guaranteed, along with the 51% shareholder in LGT, performance bonds provided to LGT by an unrelated commercial lender. The performance bonds relate to LGT’s performance under the July 2005 contract between the Government Lottery Office of Thailand and LGT should such contract become operational. The Company is jointly and severally liable with the other shareholder in LGT for this guarantee. There is no scheduled termination date for the Company’s guarantee obligation. The maximum liability under the guarantee is Baht 375 million ($10.4 million). At December 31, 2015, the Company does not have any obligation related to this guarantee because the July 2005 contract to provide the online lottery system is not in operation due to continuing political instability in Thailand.

Commonwealth of Pennsylvania indemnification

The Company will indemnify the Commonwealth of Pennsylvania and any related state agencies for claims made relating to the state’s approval of IGT Global Solutions Corporation’s manufacturer’s license in the Commonwealth of Pennsylvania.

From time to time, the Company is a party to legal, regulatory, and arbitration proceedings regarding, among other matters, claims by and against us, injunctions by third parties arising out of the ordinary course of business, and investigations and compliance inquiries related to the Company’s ongoing operations. Legal proceedings can be expensive and disruptive to normal business operations. Moreover, the results of legal proceedings are often difficult to predict and the Company’s view of these matters may change in the future as the proceedings and events related thereto unfold. The Company expenses legal fees as incurred. The Company records a provision for contingent losses when it is both probable that a liability will be incurred and the amount or range of the loss can be reasonably estimated. At December 31, 2015, provisions for litigation matters amounted to $17.7 million. With respect to litigation and other legal proceedings where the Company has determined that a loss is reasonably possible and the Company is unable to estimate the amount or range of reasonably possible loss in excess of amounts already accrued, due to the inherent difficulty of predicting the outcome of and uncertainties regarding such litigation and legal proceedings, no additional amounts have been accrued. An unfavorable outcome to any legal matter, if material, could have an adverse effect on the Company’s operations or its financial position, liquidity or results of operations.

Italian Tax Matters

In December 2013, further to a tax audit received in 2012, settled by IGT PLC’s predecessor entity GTECH S.p.A (“GTECH”), the Italian Tax Agency, as required by Italian law, referred the matter to the Rome Public Prosecutor’s office, which had the obligation to start an investigation.

Within the context of this investigation, on April 28, 2015, representatives of the Rome Public Prosecutor came to IGT PLC’s offices in Rome to collect documents and files. The CEO, a board member and a senior executive of IGT PLC were served with a notice that each is subject to a criminal investigation in Italy relating to the Italian tax returns filed by GTECH for the tax years 2006-2013. Under the relevant Italian statutes, the Company’s legal representative and the signatories of the corporate tax returns, and not the corporation itself, are subject to investigation. The individuals are Lorenzo Pellicioli, then chairman of GTECH’s Board of Directors and currently Vice-Chairman of IGT PLC’s Board of Directors, who was GTECH’s legal representative who signed the Italian corporate tax return for the 2013 tax year; Marco Sala, then GTECH’s CEO and the current CEO, director and the legal representative of IGT PLC, who signed the Italian corporate tax returns for the 2006, 2007 and 2008 tax years and Renato Ascoli, then the general manager of GTECH’s Italian operations, who signed the Italian corporate tax returns for the 2009, 2010, 2011 and 2012 tax years.

The investigation involves the structuring of the original leveraged buyout of GTECH Holdings Corporation by Lottomatica S.p.A. and the subsequent conversion of a portion of the original debt incurred by GTECH Holdings Corporation into an equity increase from the parent company, Lottomatica S.p.A.. The Public Prosecutor is focused on determining whether GTECH’s income was under-reported in Italy for any of the tax years 2006-2013. If the Public Prosecutor determines that income was under-reported in one or more tax years, the Public Prosecutor may choose to bring criminal charges in Italy against any or all of the above referenced individuals.

As a consequence of the investigation, a further Tax Audit started on June 22, 2015, focusing on the 2006 merger leveraged buyout acquisition of GTECH Holdings Corporation and the subsequent acquisition debt re-financing. On July 7, 2015 the Tax Police notified a Tax Audit Report (so called Processo Verbale di Constatazione) to IGT PLC, alleging that GTECH breached the Italian transfer pricing rule (article 110, par. 7, of the Income Tax Act) because it did not recharge to its U.S. wholly-owned subsidiary GTECH Holdings Corporation all the interest expenses and other costs incurred in connection with the 2006 acquisition and its subsequent re-financing. The Tax Police Audit Report covers the tax years 2006 to 2010. As provided by Italian law, the Tax Police Audit Report was delivered to the Public Prosecutor and the Italian Tax Agency for their independent evaluation. Under Italian law, the Italian Tax Agency is the only authority empowered to issue a tax assessment, based on the Tax Police Audit Report’s allegations. On December 30, 2015 IGT PLC received a number of tax assessment notices (so called Avvisi di Accertamento) covering the years 2006-2010 and alleging that additional taxes, penalties and interest totaling €200 million are due. Under Italian law, the Company had 60 days in which to appeal the tax assessment notice. On February 26, 2016 the Company submitted a Voluntary Settlement Request, which entitles the Company to an automatic 90 day extension. The extension will allow the Tax Agency to re-examine the preliminary conclusions of the Tax Police. At the end of the 90 day extension period, if the parties do not reach a settlement the Company retains its right to appeal the tax assessment before the first degree Tax Court. On April 12, 2016, IGT PLC received a Tax Audit Report from the Tax Police, covering years 2011 to 2014. Based on this report, the additional taxes, penalties and interest associated with the transfer price challenge could be estimated to be approximately totaling €275.0 million for those years. Furthermore, this report contains two additional claims regarding (i) the alleged improper deduction of €140.0 million in Value Added Tax and (ii) under-reported taxable income pursuant to Italy’s controlled foreign corporation regime with specific reference to the Company’s fully controlled subsidiary incorporated in Cyprus. Such Tax Audit Report was delivered to the Public Prosecutor and the Italian Tax Agency for their independent evaluation. The process outlined above will also be followed for this Tax Audit Report.

IGT PLC believes that the actions of the Company and the relevant managers were appropriate and complied with all applicable tax and other laws and that the allegations underlying the investigation are without merit.

In the Matter of International Game Technology

As previously disclosed in International Game Technology’s Quarterly Report on Form 10-Q for the quarterly period ended January 3, 2015, the Company received a request from the SEC to supply certain information relating to its internal pricing practices for internally refurbished spare parts from electronic gaming machines. The SEC has since communicated to the Company that it is not further pursuing its inquiry into these internal pricing practices. However, the SEC continues to investigate an alleged whistleblower retaliation claim under the Securities Exchange Act of 1934, as amended, that was made by the same former employee of the Company who reported the alleged improper internal pricing practices to the SEC. On February 3, 2016, the Company received a Wells Notice from the staff of the SEC solely relating to its investigation of this alleged whistleblower retaliation claim, and not to the Company’s internal pricing practices. The Company has responded to the Wells Notice and continues to cooperate with the SEC to seek resolution of this matter.

Brazil ICMS Tax

As previously reported, in July 2005, the State of São Paulo challenged the Company’s subsidiary, GTECH Brazil, for classifying the remittances of printing ribbons, rolls of paper and wagering slips (“Consumables”) to lottery outlets in Brazil as subject to ISS tax (service tax) and not ICMS tax (Brazilian VAT). The tax authorities argue that Consumable shipments should have been subject to the higher ICMS tax as opposed to the lower rate ISS tax that GTECH Brazil paid. The tax authorities argue that in order for printed matter to be considered non-taxable it has to be “personalized.” To be considered personalized, the Consumables must be intended for the exclusive use of the party ordering such Consumables. The São Paulo tax authorities also argue that had Consumables been exempt from the ICMS tax, they would have been sold separately to CAIXA and not supplied by GTECH Brazil as necessary to enable the services rendered at the time. GTECH Brazil filed its defense against the Tax Assessment Notice, which defense was dismissed. GTECH Brazil filed an Ordinary Appeal and a Special Appeal to the Court of Taxes and Fees, both of which were not granted. The State Treasury of São Paulo has filed a tax foreclosure to collect the tax obligation amounting to 22,910,722 Brazilian Reals (approximately $5.8 million at exchange rates in effect as of December 31, 2015) plus statutory interest, penalties and fees of approximately 108.7 million Brazilian Reals for a total obligation of approximately 131.6 million Brazilian Reals (approximately $33.2 million at exchange rates in effect as of December 31, 2015). GTECH presented a draft bank letter guarantee in the tax foreclosure to cover tax debt under charge in full but the court did not rule whether it was sufficient. GTECH Brazil is now discussing the legality of this tax levy in another lawsuit, arguing that no ICMS is due in this case because there were no separate sales of Consumables, but instead, the Consumables merely enabled services to be rendered. Therefore, only services were remunerated by GTECH Brazil’s customer and the Consumables were supplied by GTECH Brazil for no separate or additional consideration. Accordingly, only the ISS tax on service revenue was due. Currently, the tax authorities and GTECH Brazil are presenting evidence to the court. GTECH Brazil has been advised by Brazilian counsel that these proceedings are likely to take several years. We dispute the tax authority’s position and will continue to defend this assessment vigorously.

High 5 Games, LLC (“H5G”) filed suit against the Company in March 2015 alleging breaches of a 2012 Confidential Game Development and License Agreement (the “2012 Agreement”) and related trademark infringement and state law claims. H5G’s primary allegations were that the Company’s subsidiary, IGT, had made impermissible use of intellectual property created by H5G and had failed to pay royalties owed H5G. On March 11, 2015, IGT filed suit against H5G in a separate action alleging breaches of the 2012 Agreement by H5G and related trademark and state law claims. Among other allegations, IGT claimed that H5G had misused IGT’s intellectual property and failed to pay appropriate royalties to IGT. On June 8, 2015 the Court dismissed IGT’s separate action with leave to refile IGT’s claims as counterclaims in the case brought by H5G, which IGT ultimately did on October 22, 2015. Shortly thereafter the parties engaged in renewed settlement negotiations which led to the settlement of all outstanding issues between IGT and H5G.

Texas Fun 5’s Instant Ticket Game

Three lawsuits have been filed in Texas against the Company’s subsidiary IGT Global Solutions Corporation (f/k/a GTECH Corporation) (“IGT Global”) arising out the Fun 5’s instant ticket game sold by the Texas Lottery Commission (“TLC”) from September 1, 2014 until October 21, 2014. Plaintiffs in each case allege the instruction on each ticket for Game 5 provided a 5x win (five times the prize box amount) any time the “Money Bag” symbol was revealed in the “5X BOX”. However, the TLC and the system interpreted a 5x win only when (1) the “Money Bag” symbol was revealed and (2) three symbols in a pattern were revealed. The three actions include: (a) Steele, et al. v. GTECH Corporation . On December 9, 2014, 518 individuals sued IGT Global in Travis County District Court, TX (No. D-1-GN-14-005114). Through intervenor actions, this group currently comprises nearly 1,000 individuals claiming damages in excess of $500M. On January 27, 2015, IGT Global filed its plea to the jurisdiction, special exceptions, motion to dismiss, and answer. On April 7, 2015, plaintiffs substantially amended their petition to include the following causes of action: common law fraud, fraud by non-disclosure, aiding and abetting fraud, tortious interference with existing contract, and tortious interference with expectancy. IGT Global filed an amended plea to the jurisdiction, answer, and a motion to dismiss. IGT Global’s amended plea to the jurisdiction was denied. Trial is scheduled for February 2017. (b) Nettles v. GTECH Corporation . On January 7, 2015, plaintiff Dawn Nettles sued IGT Global in Dallas Country District Court, TX (No. DC-14-14838), claiming damages in excess of $4M. On February 2, 2015, IGT Global filed its plea to the jurisdiction, special exceptions, motion to dismiss, and answer. On April 17, 2015, plaintiff substantially amended her petition to include the following causes of action: common law fraud, fraud by non-disclosure, aiding and abetting fraud, tortious interference with existing contract, and tortious interference with expectancy. Plaintiff again amended her pleading on August 14, 2015 and added the TLC as a defendant, as well as a request for declaratory judgment. The TLC filed its answer on October 2, 2015. IGT Global filed an amended plea to the jurisdiction, amended answer, and a motion to dismiss. IGT Global and the TLC won pleas to the jurisdiction. However, plaintiff appealed both court orders on December 30, 2015. (c) McDonald v. GTECH Corporation . On January 16, 2015, plaintiff Vanessa McDonald sued IGT Global in El Paso County District Court, TX (No. 2014-DCV-4113), claiming damages in excess of $500,000. Plaintiff’s causes of action include negligence, breach of fiduciary duty, and Deceptive Trade Practices Act. On February 2, 2015, IGT Global filed its plea to the jurisdiction, special exceptions, motion to dismiss, and answer. Discovery is ongoing and trial is scheduled for January 2017. We dispute the claims made in each of these cases and intend to continue to defend these lawsuits vigorously.

Disposition of Previously Disclosed Matters

Set forth below are legal proceedings that were previously disclosed and for which a disposition occurred during 2015 or in 2016 through April 21, 2016.

Oregon State Lottery

On December 31, 2014 a representative (the “Representative”) of a purported class of persons alleged to have been financially harmed by relying on the auto hold feature of various manufacturers’ video poker machines played in Oregon, filed suit against the Oregon State Lottery and various manufacturers, including IGT. The matter was filed in the Circuit Court for the State of Oregon, County of Multnomah and is captioned Justin Curzi, On Behalf of Himself and All Other Similarly Situated Individuals v. Oregon State Lottery, IGT (Inc.), GTECH USA, LLC, and WMS Gaming Inc. (case number 14CV20598). The suit alleged the auto hold feature of video poker games is perceived by players as providing the best possible playing strategy that will maximize the odds of the player winning, when such auto hold feature does not maximize the players’ odds of winning. In May 2015, the court granted the Company’s motion to dismiss the case. In March 2016, the Representative filed its appeal with the Court of Appeals for the State of Oregon.

Bally Gaming, Inc.

On December 19, 2014, IGT was sued by Bally Gaming, Inc. in the District Court of Clark County, Nevada, captioned Bally Gaming, Inc. v. International Game Technology and IGT, Case No. A-14-711384-B. The suit related to a contract between the parties under which IGT granted a license to Bally for TITO technology. Bally alleged that the contract granted a license to entities that became related to Bally after the contract was executed. The parties entered into a settlement agreement in March 2016 settling all outstanding issues related to this matter.

Shareholder Class Actions Relating to Mergers

Subsequent to the announcement of the Company’s entry into a merger agreement with International Game Technology, various putative shareholder class action complaints were filed by purported shareholders of International Game Technology. The complaints purported to be brought on behalf of all similarly situated shareholders of International Game Technology and generally allege that the members of the board of directors breached their fiduciary duties to International Game Technology shareholders by approving the proposed merger transaction for inadequate consideration, entering into a merger agreement containing preclusive deal protection devices and failing to take steps to maximize the value to be paid to International Game Technology shareholders. The complaints also alleged claims against the Company and International Game Technology for aiding and abetting these alleged breaches of fiduciary duties. In July 2015, the court approved the settlement of all outstanding issues among the parties.

On September 17, 2013, Global Draw Limited commenced proceedings in London against one of the Company’s subsidiaries, IGT-UK Group Limited, captioned 2013 High Court of Justice (Commercial Court) in London, England, Case No. 2013, Folio 1246. Global Draw’s claims arise out of a Sale and Purchase Agreement dated April 26, 2011 (SPA) pursuant to which Global Draw purchased from IGT-UK all of the outstanding shares of Barcrest Limited. Global Draw seeks claims against IGT-UK under the terms of indemnities and warranties contained in the SPA and against IGT under the terms of a guarantee given by IGT in respect of the liabilities of IGT-UK under the SPA. The parties entered into a settlement agreement in May 2015 settling all outstanding issues related to this matter.

Tx lottery lawsuit Guarantees and indemnifications Penalties under Minimum Profit Contracts The Company has three contracts where it has provided customers with minimum profit level

Tx lottery lawsuit

YEAH — Texas Supreme Court Says Lottey Players Have Rights Too! Our Cases Are Going To Court To Be Heard By Juries .

Texas Lottery
. Updates On The Fun 5’s Lawsuit .
A Texas Lottery Scratch Off
Watch this page for the latest news

A $508 Million Lawsuit Against G-Tech

brought to you by
The Lotto Report

Originally Posted: Oct 3, 2014 – PM
Revised: June 12, 2020

Email Me

Richard L. LaGarde
LaGarde Law Firm, P.C.
Houston Office:
3000 Weslayan Ste. 380
Houston, TX 77027
(713) 993-0660 Phone
(713) 993-9007 Fax
Twitter: @lagardelaw
Complete form on their website

Mark Lanier (Steele Appeal)
6810 FM 1960 West
Houston, Texas 77069
(713) 659-5200

Peter Kelley (Nettles Appeal)
1005 Heights Blvd.
Houston, Texas 77008
(713) 529-0048

A Personal Look At Mary LaGarde – One of the Fun 5’s Lawyers
A Woman With An Amazing Talent – read Dec 7, 2015 entry

Check Lotto Report’s Fun 5’s Site Map
for links to all postings, news stories & explanations.
Link below

The Lawyers Blog
Updated June 23, 2020 – Mark Lanier, the lead
appellate attorney for the lottery players in the
Fun 5’s case, won a $2.1 BILLION dollar
appeal in the Johnson & Johnson case. WOW!
No Sovereign Immunity for G-Tech/IGT.
Texas Supreme Court says, they can’t lie
to us and get away with it. Our cases will be
heard in the courts. Click here

See The Fun 5’s Scratch Ticket
Click here

– Previous Update Pages –
Fun 5’s Update #3 Jan 26, 2016 – Dec 11, 2016 . Click here
Fun 5’s Update #2 Jan 29, 2015 – Dec 7, 2015 . Click here
Fun 5’s Update #1 Oct 3, 2014 – Dec 9, 2014 . Click here

Editorial & Opinions by Dawn Nettles

June 12, 2020 – This is a GREAT day for lottery players all over the world. And especially for those who hold
Fun 5’s scratch tickets here in Texas! Lottery players buy scratch tickets in good faith and those who sell these
tickets should sell them in good faith. But that’s not always been the case and maybe it’ll change in the near future.

This is because today, the Texas Supreme Court is sending our lawsuits BACK to the courts to be heard
and decided by Juries. They said – No Sovereign Immunity for G-Tech. They will be held accountable in a
Court of Law.

As a reporter here in Texas, I can tell you countless stories from scratch tickets players who have been
wronged. Many of these stories are posted on this website. For years, I’ve devoted my life to reporting
lottery news in hopes of making a difference in the way lottery players are treated by those in Power. Today
I feel there is hope. Maybe – we will have a lottery – but one that is FAIR – and not just a rip off to unsuspecting

The lawyers have posted all the documents and a story . Go read it for complete details. Click here

One more thing . my phone is still ringing . Congratulations to YOU too for standing up for your rights!

Dec 4, 2019 – Yesterday the attorneys for both the Nettles vs G-Tech and Steele vs G-Tech Fun 5’s cases gave
oral arguments to the Texas Supreme Court in Austin. This was truly an historic event – one that you should all take
your valuable time to sit down and watch. (Dec 3, 2019 -Watch both Nettles and Steele cases)

I want you all to know that the lawyers representing all of you and even me did a FANTASTIC job. Win or
lose, they did us right. There are good people who are willing to help those who can’t help themselves and
God blessed us with them. There’s no way we could ever find the words good enough to thank them. But I’ll try .

Thank you from the bottom of our hearts Thad Spaulding, Kevin Parker, Manfred Sternberg and
Richard LaGarde including your staffs who have worked so diligently for all of us. We are grateful.

It is my opinion that both G-Tech’s attorneys and the attorney from the TX AG’s office misrepresented facts to the
Justices . I concluded that obviously ethics and honesty means absolutely nothing to them. They’ll say or do anything to
keep from being held accountable so they can continue to sell deceptive and/or unfair games of chance to consumers.
I only pray that the Justices will read what’s in the record.

The Texas Supreme Court holds the rights of lottery players all over the United States in their hands right now.
Will they give G-Tech, a private entity, immunity from lawsuits? Will they give G-Tech and any lottery a free pass
to sell deceptive tickets to consumers with no accountability? Or will they allow the People an opportunity to seek
justice when it’s warranted? I chose to believe the latter will come to pass.

I’ve been fighting for consumer protection for lottery players since at least 2002 to no avail. The reason
that Texas will NOT give consumer protection to lottery players is because our elected officials fear that
the games offered by the Texas Lottery are unfair, unreasonable and inequitable games of chance and a court
would force changes or would shut the games down.

What do I mean by “unfair, unreasonable, inequitable?”

1) Selling a game that has 26 million combinations but they only sell 1 million tickets and many of those tickets
are duplicates. In Lotto language, this is known as “coverage.” One can easily conclude there most likely will be
NO winner, that is until, there’s been at least 35 to 45 consecutive draws when the lottery finally runs of out “luck”
and a combination of numbers is finally drawn that a player actually holds in his hands.

2) Scratch tickets with a “second chance to win” are deceiving as hell. I would advise all players to QUIT buying these
games. For years you’ve been complaining to me about these games not ever paying much in cash. Well the reason is
that the money to pay for the 2nd chance “prizes” comes from the prize pool. Bottom line – there’s fewer cash prizes.
Your complaints are justified.

As one player pointed out to me a while back – the Texas Lottery lies to every player who scans one of these tickets
because the lottery terminal says, “NOT A WINNER.” The terminal should say something like . ” Eligible for a second
chance to win.” Do you have any idea how long the TLC has gotten away with this deception? But this would require
programming on their part but heck, they say, ” Why bother when we can get away with not reminding the players to
enter their losing ticket for a chance to win something else! “

What’s really bad about the games with a 2nd chance to win is that the FEW worthwhile prizes – the values they place on
those prizes are grossly inflated causing players to pay more in federal taxes. And the amount paid for a jersey or a hat is
absurd – and is paid directly from the prize pool.

I’m currently working on a story on this very issue and it is forthcoming – it’s requiring a great deal of research.

This is why I believe our elected officials will not give lottery players consumer protection – very sad but true.
The closest lottery players will ever get to having consumer protection is IF the Supreme Court tells G-Tech
that they are and will be accountable to the citizens of Texas.

Ironically, the man who was elected and sworn in – Ken Paxton – to protect the citizens of TX from fraudulent activities,
shady claims, deceitful business tactics submitted a brief to the Supreme Court asking it to give G-Tech immunity from
lawsuits from the People of TX. He sent an attorney to appear before the Justices to fight the case for G-Tech. This
man lied to the Justices when he told them in essence that G-Tech had “no control” and “a lawsuit against G-Tech was
the same as a lawsuit against the State” which is so far from the truth that it sent chills down my back. I guess somebody
forgot the tell these lawyers who say G-Tech has “no control” and “no discretion” should ask just how much G-Tech has
been sanctioned over the years for their errors or bad advice! Or maybe they should simply read the transcripts. Of
course, the monies paid went to the TLC, not Texas Lottery players.

One has to wonder, the State IS immune and would NOT suffer any financial losses no matter how this case ends,
so why would or did the AG get involved?

Folks you need to know that AG Ken Paxton was a Senator at the time this ticket hit the streets and he told his
constituents that they didn’t know how to read and sided with the TLC when complaints started coming in.
This was what the TLC told him to say. Now he knows what “really happened” yet he’s still trying to protect
G-Tech when the state has nothing to lose. Hmmm.

For those of you who may not know, Paxton was indicted in 2015 by a grand jury in Collin County. The charges
stem from claims that he persuaded friends and colleagues to invest in a North Texas tech company without disclosing
he would make a commission . He is charged with two counts of first-degree felony securities fraud and a third-degree
felony for failing to register with the state as an investment adviser.

A year before Paxton was indicted, he admitted to illegally soliciting potential clients without registering with the State
when he signed a reprimand and paid a $1,000 fine to the Texas State Securities Board. Whether signing that reprimand
amounts to an admission of guilt will be up to a jury to decide.

I wonder, how much did Paxton receive for sending a brief to the Supreme Court to fight for a private sector business?
Apparently he’s still for sale to the highest bidder.

In spite of all that I’ve just said, I chose to believe the Justices will render their decision based on the merits of
the law and let our cases go to trial to be heard and decided by a jury of 12 citizens. I pray that they will
recognize the lies and innuendos they were told yesterday – A couple of examples include .

1) “T here was nothing wrong with the directions ” – this is a lie – the directions were never changed and were
the same exact directions used on “winning” tickets in other states. Plus G-Tech employees admitted that it was
their job to make certain the directions would be applicable to any changes TX made to the ticket. The language
on this ticket was NOT “multiplier” language and they KNOW it and they know it should have been changed.

2) “The lottery designed the ticket” – No, the TX lottery did not design the ticket. They simply picked it out of a
catalog full of tickets and made changes to it like they do all tickets – added TX logo’s, addresses, symbol changes –
things ALL states do when bringing in new scratch ticket.

3) ” G-Tech determined no changes were needed ” – this is where G-Tech erred and failed to do their job. They
used “winning ticket” language for a “multiplier” win. A real NO-NO and TX Lottery staff knows it.

4) They tried confusing the Justices by mentioning ” micro scratching ” as a legitimate reason for a placing a
winning symbol on non winning tickets. How the lawyers could ever think that the directions didn’t need changing
I’ll never know. In fact, I to think the lawyers actually told the Justices that the language was changed but I’m not sure.
Either way – the language (directions) remained EXACTLY the same except they changed the symbol to a money
bag and used the word “money bag.”

Maybe – if G-Tech is held accountable – our elected officials will do the job they were elected to do and will
finally acknowledge how deceptive the Texas Lottery has been and will force much needed changes or do away
with the lottery once and for all. Consumers should be protected from wrongdoings and not sold deceptive products.

Watch the oral arguments. You should find them or great interest. Link in 1st paragraph.

Oct 20, 2019 – Friday, the Attorney General for the State of Texas filed an Amicus Brief in the Supreme Court.
In its brief, the State of Texas sides with GTECH against its own lottery players. The State argues, in essence, that
the courts should stay in their lane and not allow lottery players to sue GTECH for fraud. The attorneys have explained
this on their website. You should all go read it.

Also, a really good editorial was written and posted in 2018 at Lottery Players Association of TX regarding renewal of
G-Tech’s contract way before it was due. This tidbit got past me and I never reported it to you. I tell you this because
this was a “heads up” to motive regarding our lawsuits. Go read it.

And finally, I’ve been working on a story since May 2019 . It was requested of me to meet some folks in Austin
who had thing they wanted to report. At our lottery, things have gotten really out of hand. The employees
recognize what’s taking place and that it’s not good for Texas. It would be better described by me to say
that they have a conscience and couldn’t take it anymore. There’s a chosen few that are partaking in these
things so I’ve been investigating without co-operation from the TLC.

So far, I’ve only posted 3 stories but another one is coming tomorrow, Monday, Oct 21, 2019. I hope
when you read what I’ve uncovered, you will contact your elected officials by phone to call for a full scale
investigation. The abuse of lottery money is completely out of hand and this story is ONLY the beginning of
what I will be showing you in upcoming stories.

The Perks Of Running A Lottery
Part 1 – Aug 11, 2019 – Texas Lottery Lacks Transparency
Part 2 – Aug 11, 2019 – An Open Records Nightmare
Part 3 – Aug 21, 2019 – Running A Red Light To Travel
Part 4 – Oct 21, 2019 – Investigative Reporting – Director Grief’s Favorite Pastime, Traveling

June 29, 2019 – Yesterday I received notice that the Texas Supreme Court issued an order to hear oral arguments
in Steele et al. v. GTECH and in my case. The Court set oral arguments for December 3, 2019 at 9:00 a.m.

The purpose is to determine if G-Tech can be sued – G-Tech claims they have sovereign immunity. After
the Justices hear both sides, they will move forward to make the final decision. Hopefully they will issue
a decision before the end of their term which is June of 2020. Basically between Jan 2020 and June 2020.

If they say no sovereign immunity for G-Tech, then our cases go back to the courts and moves forward.
If they deem G-Tech is immune from lawsuits, then it’s all over.

After the hearing, you will be able to see a video of the arguments given by the attorneys and you will be
able to see what questions are asked by the Justices.

Sept 29, 2018 – I received word late yesterday that the Texas Supreme Court has asked for briefs to be filed on
the merits of our case. This is true for my case (Nettles vs G-Tech) as well as the Austin Case (Steele vs G-Tech).
The good news is that they want more information – they didn’t throw it out which is something G-Tech was hoping
would happen.

The attorney’s predict it is possible that the Supreme Court will also call for oral testimony in January 2019.

As you all know, I’ve not been posting much because the Lawyers Blog has been keeping everyone up to date
with all that has transpired. So far, it’s been all filings so there’s not really much for me to say so I don’t!

It’s Election Time . NOW Fun 5 Players Can Speak Up .
Since I am writing, I do want to remind everyone that it is now ELECTION time and this is what we’ve been waiting for
to let our elected officials know how we feel regarding the action they took when we all contacted them to help us in 2014.
If you will recall, they told us that we didn’t know how to read. For a quick, partial refresher on our communications to them,
read May and June entries on this page.

I was on the line with many of you when you spoke to either your rep and/or his/her representative.
In mailings and/or emails, I was copied by many of you then you shared the response you received in return.

In this posting I will only name those where I know first hand that they allowed our state run lottery to
NOT honor the face value of a scratch ticket. They turned their backs and hoped this issue would simply
go away. As you know, statewide candidates are the only ones we can ALL vote for so you will
have to check your own district to see if your State Rep and State Senator is still the same person you spoke
to and you will know if they helped you or not.

Two Senators in 2014, Dan Patrick and Ken Paxton are now on the statewide ballot. Both turned their backs
on us and their staffs were very rude. Ted Cruz, Pete Sessions and John Cornyn were contacted and all three
refused to get involved. Governor Greg Abbot also refused to help, rather he instructed Gary Grief to respond for him.

Do I need to remind you that these people are elected to work for and to protect the PEOPLE?

If you want to be heard, then speak with your VOTE in November. They hear votes! Don’t let them get away with
allowing the Texas Lottery and G-Tech to sell deceptive tickets.

Jan 23, 2018 – Just thought I’d let you all know there’s a big story in the Caller Times about the cases going to the
Supreme Court and how the Austin and Dallas Courts have ruled in our cases. Click here to read it.

Also I’ve made a “site map” for all the different Fun 5’s posting on my site so you can easily find what you may be
looking for. This “Update page” and the new “Site Map” page will be the pages to watch in the future. I’m trying to fix
my main pages to reflect this one change. Click here to see the Fun 5’s Site Map.

Jan 11, 2018 – We received fantastic news this morning – news that could affect lottery players world wide. The Austin Court
ruled today that G-Tech does NOT have Sovereign Immunity meaning they can be sued for wrong doing. Now it goes without
saying that G-Tech will most likely appeal this decision. But it just so happens I have faith and I firmly believe the Supreme Court
will uphold the lower courts decision. In the meantime, we have cause for believing our courts will not allow players to be lied
to and taken advantage of any longer.

The lawyers (Richard) have some details posted but are still reviewing the decision. Click here to see what’s been posted thus far.

Read the Court of Appeals Opinion, click here (pdf)

Also, I just learned that there’s a Texas Lottery Players Association who is fighting for a fair and honest lottery. My hats off to them.
You should all read their site. On the lawyers site, there a link to the South Carolina story which is what I just read that I found
very interesting. Anyway, click here to see for yourself. Everyone should join the Players Association – it’s a great idea. Here’s a
direct link to the Associations site with the SC story, click here)

August 6, 2017 – It goes without saying that I was extremely disappointed in the decision handed down by the Dallas Court.
Just the words, “the court affirm the trial court’s order granting G-Tech plea” was an attention getter. As you all know,
this is my lawsuit against G-Tech. The Dallas ruling has absolutely no bearing on the Austin case.

I, like all of you, have been instructed by the attorneys to NOT comment about our lawsuits. So, unlike Trump, I will do
exactly as I’ve been told!

Instead, I’m just going to let the documents speak for themselves.

The Opinion and what’s happened since .
Here is the official ruling of the Dallas Appeals Court .
Dallas Court of Appeals Opinion, click here

Then G-Tech attorney’s immediately sent the following letter to the Austin Court advising them of the Dallas decision .
G-Tech’s Letter to Austin Court, click here

Finally, Mark Lanier, the attorney representing the 1500 Fun 5’s lottery players, sent this letter to the Austin Courts explaining
how the 5th Circuit erred in their decision
Letter to Austin Appeals Court on behalf of the Fun 5’s players, click here

On Friday, August 4, the following was filed with the Dallas Court by my attorneys.
Click here.

In concluding my comments –
IF G-Tech is given immunity from lawsuits, then lottery players world wide need to come together to outlaw all state lotteries. It
is not right that consumers have no recourse when they have been cheated. And there are MANY examples of players who were
cheated – here in TEXAS and across the US. The lotteries are out of control on giving players games that are not winnable – the
odds are to the extreme – not consumer friendly. Scratch tickets are out of control – all for the love of money .

April 22, 2017 – A couple of thing to say or share with you today. But first, NO, there is no ruling from
the Appeals Court. They have no deadlines or time frames – that’s the rule of the law. But when there is
a ruling, I will post it immediately for ya’ll.

The other day I read a very interesting bio on Manfred Sternberg. As I read it, it occurred to me that I don’t think
I ever gave ya’ll any personal information about Manfred. For that, I’m truly sorry. I should have told ya’ll more about
our attorney’s in the beginning. Anyway, I wanted to share his “life history” with ya’ll so you can see the “human”
side of him – not just the “attorney” side. As you read it, you’ll see how much he cares about what’s in the
best interest of the People and I think you’ll understand why he came to our rescue several years ago.
Click here to read Manfred’s bio.

One last comment about Manfred . anyone who spends their valuable time taking a service dog to a hospital to help
comfort others, speaks volumes about character. How fortunate can Texas Lottery players be in having such a human
being speaking for us?

Regarding Richard LaGarde – I think you’ve all come to know Richard quite well as he’s given us all an insight through his
journey with leukemia. It takes courage to share his most intimate details – I can only imagine the thousands of
people he has helped with his writings.

I feel compelled to comment on one of Richard’s latest postings – he titled it “Chemo Brain.” He’s describing
side effects which has to do with memory. Well, I’ve not had chemo but I can assure you that what he
described happens to me EVERY day without fail.

I realize there’s nothing funny about side effects of chemo, but sometimes you just have to have a sense of humor.
He says that he gets up to go do something but forgets what he was going to do and why he got up. That’s
not really funny but it happens to me at least 10 times per day and he described me very well!

Richard is strong – very strong – and he has a tremendous sense of humor. I hope that by sharing my
lack of memory will help him feel better. In his case, his memory will improve . but mine . well, I’m
just not sure my memory will ever get better!

Maybe Richard or Manfred will send me some personal info about Mark Lanier so I can share his
human side with ya’ll too. And hopefully, the next time I write something, it’ll be that the Appeals Court
issued an opinion.

Jan 24, 2017 – I know it feels like we’ve been forgotten, but that’s far from the truth. In the Austin case,
oral testimony was given to the Appeals Court on October 26, 2016 so we’re just waiting for the court to
issue their opinion. Everything stands still until that decision is given.

In my case, the 5th Court of Appeals heard oral testimony on Jan 11, 2017. So again, we can’t move
forward until they issue their opinion.

I know many of you would like to know more about what goes on or what’s said during oral arguments.
In Dallas, the Court posts a recording online of the actual hearing. If you would like to hear the arguments,
click here. Scroll down to ” Case Events, ” then click on the January 11, 2017 link that’s described
” Submitted .” with an extension of “mp3/7158.” You should find listening to the attorneys first hand
of great interest. The hearing was about 55 minutes long so that’s how long the recording is.

As I write this message, the link is second on the list.

After you hear each argument presented, then you should read the “Post Submission” made to the
court. You can either click my link or the one on the courts page right above the “Submitted.”

I am of the belief that the courts will do the right thing and hold G-Tech accountable. Clearly G-Tech
should not be entitled to sovereign immunity. – in my humble opinion – of course.

Ya’ll be patient, that’s the only thing you can do. We are at the mercy of the courts and so are
our attorneys. Have faith – Justice WILL Prevail!

Dec 11, 2016 – On Oct 26, 2016, oral arguments were heard by the Appeals Court in Austin
with regard to G-Tech claiming they have Sovereign Immunity and can NOT be sued. I firmly
believe the courts will NOT give G-Tech immunity. Consumers have rights but G-Tech thinks
otherwise. We are currently awaiting the courts decision.

In my case in Dallas, oral arguments will be heard in January 2017.

Neither case will move forward until the immunity issued is settled once and for all. We have the
finest attorneys representing us and I do believe we will prevail in the end. G-Tech has deep pockets
and will continue to drag this out as long as they can. Let’s just hope that the courts do the
same thing to G-Tech as they did to Donald Trump. In November, the courts refused to
allow Trump to stall (postpone) his case again. This was the case where folks sued over
Trump’s University.

Interestingly, as we all know, Mr. Trump settled quickly rather than to go to trial at that time.
To me, this is a sign of guilt!

Previous Update Pages
Fun 5’s Update #3 Jan 26, 2016 – Dec 11, 2016 . Click here
Fun 5’s Update #2 Jan 29, 2015 – Dec 7, 2015 . Click here
Fun 5’s Update #1 Oct 3, 2014 – Dec 9, 2014 . Click here

(The Fun 5’s Update page was originally posted: Oct 3, 2014 – PM)

Related Fun 5’s Links

The Lawyers Blog
Updated June 23, 2020 – Mark Lanier, the lead
appellate attorney for the lottery players in the
Fun 5’s case, won a $2.1 BILLION dollar
appeal in the Johnson & Johnson case. WOW!
No Sovereign Immunity for G-Tech/IGT.
Texas Supreme Court says, they can’t lie
to us and get away with it. Our cases will be
heard in the courts. Click here

What To Do If You Have A Money Bag
on Your Fun 5’s Ticket
Read then DO IT . Click here

Rule 202 Petition Filed In Travis County
This is NOT a lawsuit – We’re asking for the
Courts to allow us to take depositions. Petition
is easy to read and understand. A great read!
Click here, pdf. Filing Receipt, click here to see.
Posted 10/16/14. Do keep making those calls .

My Letter To The District Attorney
RE: Fun 5’s Scratch Ticket
Click here, a pdf

Official Fun 5’s Rule
If you want to know that much about it.
click here

Houston Attorney Shares A
Sample Demand Letter
that he sent to the Texas Lottery on behalf of his clients.
An interesting read. I do appreciate his sharing this letter
to help you understand your case from a legal standpoint.
Click here (pdf).

Texas Lotto Report
(All About the Texas Lottery)
Dawn Nettles
P. O. Box 495033
Garland, Texas 75049-5033
(972) 686-0660
(972) 681-1048 (Fax)

Dec 3, 2019 – Texas Fun 5’s – Suprememe Court hears Oral Arguments Dec 3, 2019.

Fun 5’s Scratch Ticket
The Attorney’s Representing Texas Lottery Players Are
($508 Million TX Fun 5’s Mass Action Lawsuit)

Manfred Sternberg
& Associates, P.C.
Attorneys at Law
4550 Post Oak Place, Suite 119
Houston, Texas 77027
Ph: 713-622-4300
Fax: 713-622-9899
Twitter: @sternberglaw
Email: [email protected]