Stefan Mandel, an Australian mathematics wizard, spent $5.5 million to buy 90% possible combinations, and won
AUSTRALIANS LUCK OUT IN VA. LOTTERY
By John F. Harris
March 10, 1992
RICHMOND, MARCH 9 -- Virginia lottery officials have decided to award a $27 million jackpot to an Australian gambling syndicate after concluding that the winning ticket was not bought in violation of lottery rules, according to state government sources.
Lottery Director Kenneth W. Thorson has scheduled a news conference for Tuesday morning to announce that the prize will be awarded to the trustee for the Melbourne-based International Lotto Fund, the sources said.
That means the bold gamble by the group -- which includes about 2,500 investors -- to buy out the record Feb. 15 drawing has paid off, even though the syndicate fell short of purchasing all 7 million possible ticket combinations.
Thorson declined to comment tonight. According to sources, Thorson plans to portray his decision as preliminary. The decision will not be final until his agency is able to confirm information about the lottery fund and how its prize will be distributed with Australian securities authorities and the Internal Revenue Service, state officials said.
But Thorson has reached a determination on the key issue that had cast the lottery prize in doubt: whether the winning ticket purchased at a Farm Fresh grocery store in Chesapeake was issued properly.
Lottery officials had considered disallowing the winning ticket because of reports that it was paid for with a cashier's check at Farm Fresh's corporate offices in Norfolk rather than at the Chesapeake store.
State lottery rules say that tickets must be sold at the location where they are issued by a lottery computer.
But Thorson steered away from a challenge on such grounds. According to sources, lottery officials decided it would have been difficult to prove exactly how the winning ticket was purchased. Thorson said at a news conference last week that representatives for the lottery fund told him they paid for some of their tickets in cash at retail locations and for others by check at a central location.
In any case, state officials said, it was decided the lottery had no firm legal grounds for not awarding the prize even if it proved the winning ticket was paid for at a place other than the Chesapeake store.
That's because Farm Fresh called the lottery board beforehand and asked if it was against the rules to participate in block sales of lottery tickets and was not told of the rule that tickets must be paid for at the site of the ticket-issuing computer.
That rule itself was not spelled out until the state lottery board adopted clarifying language last month.
Patricia M. Schwarzschild, a Richmond attorney for the trustee for the lottery fund, said her clients had not been notified of Thorson's decision, but added, "We've been confident all along that the right decision was to validate the ticket quickly and award the money as they would any other ticket."
Some lottery officials also had expressed concern that public confidence in the lottery would erode if people perceived that the lottery was looking for excuses not to honor a winning ticket.
The International Lotto Fund was set up in part by Stefan Mandel, a mathematics wizard who won fame in 1986 by successfully buying out an Australian lottery and now is a consultant for investors trying to buy out lotteries.
The attempted buyout in Virginia was coordinated by an Illinois businessman, Anithalee Alex Jr., and involved more than a dozen people frantically buying tickets throughout the Hampton Roads area.
If Thorson's preliminary decision becomes final, the Australians will get about $1 million annually for 20 years, which investment specialists have described as a reasonable return for the money, estimated to be about $5.5 million, that was put down. But the gamble would have failed if the prize had been split among several winners, as it often is.
Though lottery officials insist that trying to buy out the lottery is an unwise investment, last month they instituted rules designed to discourage block purchases in the future.
Meanwhile, though, the publicity about the buyout seems to be giving the lottery a boost. Thorson said ticket sales in recent weeks have been up by about 15 percent.
