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Defense Digest

Winning the Golden Ticket: Ownership of Terminal-Printed Lottery Tickets

Defense Digest, Vol. 27, No. 3, June 2021

June 1, 2021

by Lauren E. Purcell

Key Points:

  • When deciding ownership of a terminal-printed lottery ticket, courts are permitted to use other generally applicable law in addition to the Pennsylvania Lottery Code.
  • A licensed retail store owns a terminal-printed lottery ticket at the time the ticket is printed, regardless of whether it was mistakenly printed and remained unsold.
  • Sections 875.8(a) and 875.9(a) of the Pennsylvania Lottery Code do not defeat a licensed retail store’s ownership claim of a terminal-printed lottery ticket.

As a matter of first impression, the Superior Court of Pennsylvania recently analyzed ownership rights of an unsold winning terminal-printed lottery ticket in Acme Markets, Inc. v. Seltzer, 244 A.3d 469 (Pa. Super. 2020). Acme Markets is a retailer licensed to sell terminal-based lottery tickets. In accordance with a license agreement, the Pennsylvania Lottery placed a terminal in Acme’s store. Prior to a round of upcoming drawings, the terminal automatically printed lottery tickets. At the end of each week, the Lottery withdrew the total dollar amount for all printed tickets from a bank account maintained by Acme. Crucially, Acme was required to pay for all tickets that were printed from the terminal, even if the tickets were printed by mistake and Acme was unable to sell the tickets. Acme was not permitted to return the “mistake tickets” and, instead, kept the mistake tickets in a pile near the terminal. Each morning, the office coordinator for the store scanned the unsold mistake tickets to determine whether any tickets were winners. Acme collected the prize money associated with those tickets, and then discarded the remaining mistake tickets.

On March 21, 2019, a ticket was printed from the terminal at Acme but was rejected by a customer, therefore making it a mistake ticket. The subject ticket was placed in the pile containing all mistake tickets. Following the lottery drawing later that day, Beverlie Seltzer, a long-time employee of Acme, scanned the pile of mistake tickets and determined that the subject ticket was, in fact, a winning ticket for a prize of $4,150,000. Ms. Seltzer then rang up her own transaction and purchased the subject ticket. No Acme employee or supervisor authorized or approved Ms. Seltzer taking possession of the subject ticket. While Ms. Seltzer informed other employees that she had a winning lottery ticket, she failed to tell anyone the true value of the ticket or the circumstances surrounding its purchase. After Acme reviewed security tapes, it discovered that Ms. Seltzer purchased the subject ticket after she learned it was a winning ticket. When Acme confronted Ms. Seltzer, she claimed possession of the subject ticket and contacted the Lottery to claim the prize money.

Acme filed a lawsuit to determine the proper owner of the subject ticket, and the parties filed cross-motions for summary judgment. On appeal, the Superior Court of Pennsylvania affirmed the trial court’s grant of summary judgment in favor of Acme.

As a matter of first impression, the Superior Court determined that provisions of the Lottery Code viewing the owner of a lottery ticket to be the person holding the ticket did not defeat Acme’s ownership claim. On appeal, Ms. Seltzer argued that the Lottery Code, specifically Sections 875.8(a) and 875.9(a), was the sole authority governing ownership of a lottery ticket. Ms. Seltzer then argued that, pursuant to the Lottery Code, she had a superior ownership interest in the subject ticket which defeated Acme’s interest. In opposition, Acme contended that pursuant to its license agreement with the Lottery, it was the owner of the subject ticket. The Superior Court ruled that other laws could be applied to determine ownership of a lottery ticket and that the Lottery Code “does not deprive a court the authority to determine who is entitled to” the winnings of the lottery ticket once the funds leave the possession of the Lottery. Applying contract law, the Superior Court agreed that Acme was the owner of the subject ticket. The Superior Court reasoned that, pursuant to the license agreement Acme had with the Lottery, it was financially responsible for all printed tickets. The Superior Court held that a retailer owns a ticket “as soon as it is printed, unless and until it is resold to a customer.” As such, Acme was the owner of the subject ticket as soon as it was printed.

The Superior Court further held that the subject ticket was never missing or abandoned by Acme. The court noted that mistake tickets, including the subject ticket, were kept on the lottery terminal located behind the customer service desk in the store. This was not a situation where a customer found a ticket believed to be lost. Instead, Ms. Seltzer was acting in the scope of her employment when she found the subject ticket and knew the store’s process for handling and storing mistake tickets. The court further reasoned that “Acme purchased the [Subject Ticket] from the Lottery when it was printed, and the customer rejected Acme’s offer to sell it to him, the customer never owned the property, and therefore lacked the ability to abandon it.” Lastly, the Superior Court ruled that Acme had established as a matter of law a conversion claim, as it was the owner of the subject ticket and Ms. Seltzer took possession of the ticket without any justification or consent.           

*Lauren is an associate in our Pittsburgh, Pennsylvania office. She can be reached at 412.803.1170 or lepurcell@mdwcg.com.

Defense Digest, Vol. 27, No. 3, June 2021 is prepared by Marshall Dennehey Warner Coleman & Goggin to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. ATTORNEY ADVERTISING pursuant to New York RPC 7.1. © 2021 Marshall Dennehey Warner Coleman & Goggin. All Rights Reserved. This article may not be reprinted without the express written permission of our firm. For reprints, contact tamontemuro@mdwcg.com.

Firm Highlights

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Ch. 2506 appeal, therefore res judicata could not be triggered to apply to the § 1983 action. Additionally, Sheetz moved to certify the issue to the Ohio Supreme Court, citing differing results between the second and sixth districts on this same issue. Centerville approached the question, not from a claim preclusion standpoint, but from the holding in Grava v. Parkman, Twp which states that a final judgment rendered on the merits bars all subsequent action based on the same transaction or occurrence.  In yet another approach, an objector argued that claim preclusion was satisfied because Sheetz could have raised its damages claims in the administrative appeal – Sheetz disagrees. In their analysis, the Supreme Court of Ohio broke down the elements of a claim preclusion analysis: 1) a prior final, valid decision on the merits by a court of competent jurisdiction; (2) a second action involving the same parties, or their privies, as the first; (3) a second action raising claims that were or could have been litigated in the first action; and (4) a second action arising out of the transaction or occurrence that was the subject matter of the previous action. The Court held that R.C. Ch. 2506 does not permit a party to argue damages as R.C. Ch. 2506 limits the common pleas jurisdiction as if it were sitting on appeal, and therefore can only affirm, reverse, vacate, or modify the appealed order, or can remand the case to the administrative body. Further, the Court held that Grava’s conclusion that a final judgment precludes additional litigation for different relief is inapplicable under this fact pattern because it was meant only to apply to those matters in which the plaintiff brings the exact same case twice, but for new relief. The Court found Grava was inapplicable because Sheetz could have requested damages or declaratory relief in the R.C. 2506 appeal. Therefore, Grava would be nothing more than dicta if it even did apply. Going further, the Ohio Supreme Court disavowed Sixth Circuit precedent which, in reliance on Grava and other district court decisions, permitted an owner to seeking relief under 42 U.S.C. § 1983 alongside an administrative appeal. See Moore v Hiram Twp., 988 F.3d 353 (6th Cir.2021). The Ohio Supreme Court found that the Sixth Circuit had disregarded a critical decision in Community Concerned Citizens, Inc. v. Union Twp. Bd. of Zoning Appeals, 1993-Ohio-115, which clearly held that a R.C. 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The remaining question for practitioners looking to apply or defend against this exception is when does the statute of limitations begin to run on damages and declaratory relief claims related to an administrative decision on appeal? A takings action in federal court has a 2-year statute of limitations, or as a state claim, 4 years (like the other tortious claims raised therein). Correlating this case with others, an administrative appeal will not likely toll the statute of limitations on claims based on a final decision by a municipal authority. Therefore, practitioners should look for these cases to be brought simultaneously.

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