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In re Hantsoulis

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


June 5, 2007

IN THE MATTER OF DIMITRIOS HANTSOULIS, APPELLANT.

On appeal from the Division of State Lottery, No. 03-356.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted April 18, 2007

Before Judges Wefing and Yannotti.

Dimitrios Hantsoulis appeals from a Final Decision of the Executive Director of the Division of State Lottery denying payment of a winning Big Cash Casino ticket. After reviewing the record in light of the contentions advanced on appeal, we affirm.

Because the appeal revolves around an attempt to collect the proceeds of a winning scratch-off ticket, we deem it necessary to set forth the procedures mandated by the Lottery Commission for the sale of such tickets. Such tickets may only be sold by agents licensed by the Director of the Lottery.

N.J.S.A. 5:9-8(e). The tickets are delivered to an agent in packs, each of which is worth three hundred dollars. The Lottery has a record of each pack delivered to an agent and the agent is responsible to check the manifest against the packs received to make sure that the numbers correspond. Prior to any tickets being sold from a pack, the pack itself must be activated on the Lottery's computers. Once a pack has been activated, the agent is responsible to the Lottery for any unsold tickets. The agent is not responsible for packs which are not activated and unsold; these may be returned to the Lottery. The Lottery will not award a prize for a ticket from a pack which has not been properly activated.

Hantsoulis was employed as a district manager by Raceway Petroleum. As such, his duties included supervising several gas stations owned and operated by Raceway. We infer from the testimony that Raceway's stations included a convenience store at which the station's customers could purchase various items. Raceway was licensed to sell lottery tickets at its stations, and Hantsoulis was designated as key personnel in connection with the operation and sale of lottery tickets at Raceway facilities. N.J.A.C. 17:20-2.1.

On December 12, 2003, Hantsoulis went to the Division of Lottery and presented a claim form and a winning Big Cash Casino scratch-off ticket with a face value of $500,000. It is the practice of the Lottery to investigate the circumstances surrounding the presentation of any high tier winning ticket, and Hantsoulis was interviewed briefly that day by Lawrence Mullane, a special investigator with the Lottery and Raymond Ryan, Deputy Director of Security for the Lottery. They asked him to explain the circumstances surrounding his purchase of this ticket. Hantsoulis told them that he activated the pack with the winning ticket and said he sometimes activated packs that way.

Ryan then initiated a field investigation to review the activity on the particular lottery terminal, to get a history of this ticket and determine when the pack was activated. The investigators compared when the first ticket in the pack was validated to when the $500,000 ticket was validated to determine if that corresponded to what Hantsoulis had told them. When they reviewed the activity on that lottery terminal for the day in question, they learned that five Code 16s had occurred that day.*fn1 The investigators also learned that all of the winning tickets from this pack were validated within three minutes. They considered this highly unusual because of the complexity of the Big Cash Casino tickets. Each Big Cash Casino ticket had fifteen possible ways to win and in the judgment of the investigators, it would take more than three minutes to play twenty-six cards, the number Hantsoulis had played.

The investigators asked Hantsoulis to return for a second interview. Mullane and Ryan testified that during the course of that interview, which took place on December 17, 2003, Hantsoulis admitted to them that he would regularly play scratch-off instant games without first having activated the pack. They said that Hantsoulis told them that after he had achieved a sufficient number of winning tickets from a pack, he would activate the pack and then pay for the tickets he had played. The following statement was prepared, which Hantsoulis signed that day.

Because of my cooperation in NJL Case #03-1356 I have been offered administrative discipline to resolve this matter and I willfully agree without any coercion to this settlement. I admit I violated NJL rules, regulations, and procedures pertaining to instant tickets by failing to activate book number 443 030185 on 12/11/03. In so doing I scratched the tickets in this book prior to activating it and validated just the winning tickets, which included one, which was a $500,000.00 winner. I also acknowledged that I have done this before and it is a regular pattern on my part, I understand my actions placed players of the Lottery at a distinct disadvantage, my actions were a specific violation of NJL 17:20-5.1(a)2. Failure to perform in accordance with procedures of NJL and 17:20-5.1(a)4 failed to maintain a sound business relationship with N.J.L. [sic].

Therefore to resolve this matter I agree to forfeit any right, title, interest and claim to ticket #443-030185-026 valued at $500,000.00. I also agree to suspension of six months of having any participation in New Jersey Lottery Business.

Based upon the information Hantsoulis had provided in this interview, the Lottery reviewed its records of ticket sales at the facilities he managed for the thirty-five days preceding Hantsoulis's apparent good fortune. It found a variety of violations and suspicious activities. The Lottery then informed Raceway that Hantsoulis could no longer have any involvement in the sale of lottery tickets at any of its facilities.

Hantsoulis then renewed his attempt to collect upon this winning ticket. He was notified by letter dated March 2, 2004, that his claim was denied. He appealed to the Executive Director, and a hearing was held on December 8, 2005.

At that hearing, Hantsoulis retracted the admissions he had made in his statement of December 17, 2003. He said that he had given another employee a pack of Big Cash Casino tickets to activate and then went to the office to attend to paper work. After finishing that, he went to the cash register and saw the pack of tickets, which had been opened. He assumed that the employee had properly activated the pack and began to play. After playing more than twenty cards, he decided to total his winnings. It was at that point, he said, that he learned that the employee had never activated the pack. Hantsoulis then activated the pack, played one or two more cards and selected the $500,000 ticket.

Hantsoulis said that he had signed the statement of December 17, 2003, because Mullane and Ryan had threatened to go to the Attorney General. He said they did not permit him the opportunity to think for a day or two before deciding whether to accept the proposed settlement; rather they insisted he decide that day. Mullane and Ryan denied they had in any way improperly pressured Hantsoulis to sign the statement.

After hearing all the testimony presented at the hearing, the Director denied his claim by letter dated January 20, 2006. In her letter, the Director found that Hantsoulis had played the lottery tickets before activating them, a violation of Lottery procedures. She termed his claim that he had inadvertently played from a pack that had not been activated "dubious." She concluded that such conduct "compr[om]ised the integrity of the New Jersey Lottery and begs to question whether the New Jersey Lottery general playing public has been put at a disadvantage." This appeal followed.

Our standard of review in a matter such as this is limited. Karins v. City of Atl. City, 152 N.J. 532, 540 (1998). We should not disturb a final administrative decision unless it is "arbitrary, capricious or unreasonable." Ibid. Under this standard, we are limited to four inquiries:

(1) whether the agency's decision offends the State or Federal Constitution; (2) whether the agency's action violates express or implied legislative policies; (3) whether the record contains substantial evidence to support the findings on which the agency based its action; and (4) whether in applying the legislative policies to the facts, the agency clearly erred in reaching a conclusion that could not reasonably have been made on a showing of the relevant factors. [Ibid. (quoting George Harms Constr. Co. v. N.J. Tpk. Auth., 137 N.J. 8, 27 (1994) (citations omitted)).]

We must give "due regard to the opportunity of the one who heard the witnesses to judge of their credibility . . . and . . . with due regard also to the agency's expertise where such expertise is a pertinent factor." Mayflower Sec. Co. v. Bureau of Sec., 64 N.J. 85, 93 (1973) (quoting Close v. Kordulak Bros., 44 N.J. 589, 599 (1965)).

Relying on a series of cases which have held that the purchase of a lottery ticket creates a contract between the purchaser and the lottery, Hantsoulis argues that the Lottery breached its contract with him when it declined to honor this ticket. We are satisfied that none of the cases upon which he relies supports such a conclusion in this case. In Haynes v. Department of Lottery, 630 So.2d 1177 (Fla. Ct. App. 1994), the court rejected the claim that a computer malfunction which resulted in the printing of tickets that did not reflect the numbers selected by the purchaser, which ultimately proved to be the winning numbers, represented a breach of contract. In re D'Amico Estate, 460 N.W.2d 198 (Mich. 1990), involved the question whether the annual installments of a state lottery prize unpaid at the death of the owner of the winning ticket were subject to Michigan's state inheritance tax. Paulsen v. Bureau of State Lottery, 421 N.W.2d 678 (Mich. Ct. App. 1988), rejected the claim that a change in procedures from a once-a-week drawing to a twice-a-week drawing, which had the result of shortening the time a lottery subscription card was valid, was a breach of contract. Finally, in Parsons v. South Dakota Lottery Comm'n., 504 N.W.2d 593 (S.D. 1993), the court held that plaintiffs had no standing to contest the settlement of a lawsuit over ownership of a winning lottery ticket.

We have no basis to disagree with the premise that the purchase of a lottery ticket leads to a contract; indeed, we have recognized that principle. Triano v. Div. of State Lottery, 306 N.J. Super. 114 (App. Div. 1997). That premise, however, does not advance Hantsoulis's case.

[T]he relationship arising out of the lottery system is primarily contractual in nature, and, from a contractual perspective, "the terms of the contract are subject to the lottery law, and the rules and regulations promulgated pursuant to that authority." Therefore, "[t]he rights and obligations of the contracting parties arising out of a lottery ticket purchase[] cannot contravene the rules and regulations of the Commission." [Triano, supra, 306 N.J. Super. at 124 (quoting Driscoll v. Dep't of Treasury, Div. of Lottery, 265 N.J. Super. 503, 510 (Law Div. 1993)).]

Here, Hantsoulis, by playing tickets from a pack that had not been properly activated, did not comply with the Lottery's rules and procedures. Thus, no contract came into existence between Hantsoulis and the Lottery, and it cannot be held liable on a theory of breach of contract.

Hantsoulis also contends that the rule cited by the Director in her letter of January 20, 2006, provides no basis to deny him the prize.*fn2 This rule includes among the responsibilities of lottery agents, "[a]ctivating packs of tickets, via the pack activation." Hantsoulis stresses that this rule contains no provision that tickets sold from a pack not properly activated would not be honored. While that may literally be true, his contention overlooks Paragraph A subsection (1) of Section 4 of these rules which states:

[t]ickets will be considered valid and therefore entitled to a prize if they meet the following conditions:

(1) There has been compliance with the rules of eligibility specified on the Lottery tickets, and with these rules and regulations.

Here, Hantsoulis did not comply with the rules governing these games, and thus the Director properly deemed his ticket invalid.

We also reject Hantsoulis's next argument, that the Lottery has not promulgated sufficient standards to guide its determination whether a lottery ticket is valid or invalid. Hantsoulis's conduct had the clear capacity to jeopardize the integrity of the Lottery.

Hantsoulis also challenges the manner in which the Lottery obtained his statement of December 17, 2003. Although we need not address this contention because the decision of the Director did not rely upon that statement, we do so for the sake of completeness. Hantsoulis complains that the Lottery breached the settlement by continuing its investigation into lottery sales at other facilities he managed. Assuming this to be true, a point we do not decide, the relief to which he would be entitled would relate to the information uncovered in that subsequent investigation, not collection upon this ticket. His assertion that the conduct of the Lottery constituted equitable fraud and estops it from challenging his right to collect the proceeds of this ticket lack sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(D) and (E).

Affirmed.


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