Hard times have fallen on Alaska's half-million-dollar lottery.
With ticket sales faltering, Lucky Times Pull Tabs has repeatedly postponed the drawing on its $500,000 statewide game, which was originally scheduled to pick a winner on New Year's Eve.
If the drawing takes place as planned May 31, ticket holders will have been waiting through half a year of delays. And organizers don't know whether they'll be able to meet that target.
Now the lottery's owner, blaming the slumped economy and increased competition for lackluster ticket sales, says he's considering cutting the prize.
None of what has happened so far has pushed the lottery afoul of state law, according to state officials. And even if Lucky Times chooses to trim the prize, that too could be permitted under the law.
"We're in talks with the state right now to see exactly what we can do," said Lucky Times owner, Abe Spicola. "In the next month, if it doesn't look like we're going to raise $500,000 plus the $50,000 for (charity), then, you know what? We might have to lower it. We might have to lower it to like $400,000 or $450,000 and just get this one done with and give it away."
Spicola says he's seeking input from customers on whether they would be willing to accept the smaller prize and a definite drawing or if they want to wait.
State law mandates that an operator who changes a prize after ticket sales have begun must either end the raffle and refund the money or "notify each ticket holder before the raffle is held and offer the ticket holder a refund."
Whether that means Spicola would have to individually contact ticket holders, a huge undertaking, or simply put out public notices isn't clear, said Jeff Prather, gaming group supervisor for the state Revenue Department.
"It's up in the air how he has to go about that right now," he said, noting that a raffle of such a magnitude is unprecedented in Alaska.
Spicola, a former state gaming investigator, said this week that Lucky Times has been selling tickets for a year -- since last April -- and that sales were pushing $400,000. The raffle intends to benefit the nonprofit Standing Together Against Rape and needs to generate at least $500,000 to pay the prize. But organizers need more than that to cover expenses and to pay STAR what they hope will be $50,000, Spicola said.
The lottery is the third put on by Lucky Times. All have been marked by delays.
The first drawing, in January 2009, was held up because of delays getting tickets in from rural Alaska, Spicola said. In the end, the winner of that $500,000 lottery, which was also held on behalf of STAR, was a registered sex offender.
Slumping ticket sales later last year delayed a September drawing for a $250,000 prize until November. That raffle stood to benefit Vietnam Veterans of America No. 903.
Delays are legal as long as the drawing is held by the end of the calendar year after the first ticket was sold, according to state gaming officials. That's not to say the customers are satisfied.
"I have received multiple complaints from people demanding that we do something to get them their money back, and unfortunately for them there's really not a whole lot we can do," said Scott Stair, chief investigator of the Department of Revenue's Tax Division. "He's within his legal rights to do that up until the end of the year."
Spicola, as required, has informed the division when he's delayed the drawings, Stair said.
Gambling is illegal in Alaska, but "gaming" for charity is allowed. Alaska law dictates that nonprofits must get at least 10 percent of the money left after the payout in a raffle. The first time around, STAR got about $11,000, said executive director Nancy Haag.
"There's a couple different raffles, lotteries going on now, so I think people may have more options than just the one," Haag said. "It's really unfortunate and people get discouraged when we have to postpone it."
Meanwhile, as the delays in the current lottery mount, the potential prize money is waiting for the winner in an insured checking account, said Spicola, who got defensive when asked about potential interest on the money.
"People talk about this interest, that I'm drawing all this interest off my account," he said. "It's nothing like that. I think the interest on my account is maybe barely 1 percent."
Tickets cost $5 apiece, Spicola said. Each retailer gets $1 per ticket for its participation, leaving $4 toward the prize, expenses and the charity, he said. But at the Lucky Times store on Spenard Road, tickets are advertised at five for $20 -- essentially buy four, get one free.
Whether discounting tickets -- in effect changing the odds for some customers -- should be allowed is also being looked at for its legality.
"It's not specifically prohibited," Prather said. "There are specific prohibitions against discounting -- for instance Bingo paper -- and those are in the regulations. With the raffles, we don't have that specific prohibition."
The tax division, which regulates gaming, does inspections and random audits on gaming businesses, but Stair said he couldn't comment on whether Lucky Times has been the subject of an investigation.
Because of the issues that have arisen since the advent of the lottery, officials are talking about making changes to gaming regulations, Stair said.
"These lotteries are pretty new to Alaska, so of course it takes a little bit of time for the laws to catch up sometimes with these types of activities," Stair said.
In the wake of the Lucky Times lottery, Jack Powers, owner of Tudor Road Bingo and a competitor of Spicola's, has been the first and only other enterprise in Alaska to start and sustain a lottery. Tudor Road Bingo held three lotteries last year for a total of $350,000 in prizes, Powers said. The business is currently running a progressive lottery with drawings set through the summer.
The secret, Powers believes, is that customers don't want to wait a year for that one big payout.
Find James Halpin online at adn.com/contact/jhalpin or call him at 257-4589.
By JAMES HALPIN
jhalpin@adn.com