Thought Leadership

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.}