Numbers Racket

A businessman, his wife, the lottery and their lawyers

 Only the wise possess ideas; the greater part of mankind are possessed by them.

-- Samuel Taylor Coleridge

The modifier "Quixotic" is a too-convenient label for the benignly touched, the daft but determined, the delusional, the obsessed, the prophet of the hopeless cause. Even before Cervantes gave the condition a name, novelists bestowed their heroes with Quixotic qualities. In fiction, the misunderstood knight is romanticized and ultimately vindicated.

Andy and Judy Amada have taken a big spin.
Paolo Vescia
Andy and Judy Amada have taken a big spin.

But Andy Amada is not a fictional character.

He is a boyish-looking 55-year-old entrepreneur who is convinced he possesses a great idea. It could make him a very wealthy man.

To that end, however, Amada believes he must slay a meddlesome giant -- specifically, the Arizona Lottery, which is a hideous gargoyle indeed.

Until he accomplishes this feat, he remains a man possessed by an idea.

Andy Amada has a thing for numbers. He holds an MBA in finance from Arizona State, 33 hours toward a doctorate at the University of Iowa. But Amada forsook academy for a business world replete with hulking windmills and apparitions.

He was a financial analyst for U-Haul and then a medical device manufacturer. He taught managerial accounting and finance at the University of Phoenix before going to work for Sun State Savings & Loan. In 1990, Sun State preceded every other Arizona thrift on the ash heap of unregulated speculation. Amada, a vice president, managed investments, not loans, and paid no penalty for the thrift's meltdown. Many Sun State officers did. Taxpayers expended some $400 million to clear the detritus of Sun State. Amada emerged from the S&L debacle to become a partner in Exxis, which peddled software. The partners sold that business in 1995.

That same year, Amada and his wife, Judy, a former court reporter, launched their brainchild. It's called PowerPick, a business that for a fee enters players in lottery pools. PowerPick's ads stress that by joining a pool, lottery players vastly increase their odds of winning a jackpot. The prize, however, must be shared with 25 or 50 others in the pool.

Courts have held that what PowerPick does is legal.

PowerPick claims to have serviced more than 10,000 clients. This despite the fact that the fine print in its brochures warns that players are likely to lose money. The Amadas attribute their success to added excitement (owning a share in more lottery numbers) and convenience (players need not venture out to buy tickets).

Individuals form ad hoc lottery pools all the time, and the Arizona Lottery has even promoted informal pooling among players. PowerPick apparently is the only business of its kind in the nation. The Amadas hope to expand to other states.

PowerPick's growth has come in fits and starts, depending on the government's assailant du jour.

And considering that a mere $5.10 of a client's $22 buy-in goes toward the purchase of actual Pick and Powerball tickets, it's a wonder PowerPick has any customers at all.

It seems inexplicable until I remind myself that lotteries are nothing more than state-sanctioned taxes on ignorance. Americans ploughed more than $36 billion into lotteries in 1999. So it can only follow that a service that dilutes lottery winnings would be warmly embraced.

The Arizona Lottery has always loathed PowerPick, and it's easy to understand why. Lottery officials see that nearly $17 of a PowerPick member's $22 minimum monthly ante going not to ticket purchases, but to PowerPick's overhead.

They see someone running a legal scam that eclipses their own legal scam. They see someone exploiting the exploiters.

From the start, Andy Amada has kept the state informed of exactly what he is doing. And from the start, the state has done little to disguise its contempt for Amada's business.

Amada met with lottery officials early on to explain his enterprise, and the record brims with letters from Amada stating his intentions, offering previews of his marketing materials and seeking feedback from lottery bureaucrats and lawyers. Nobody voiced any opposition.

The state tolerated the Amadas until they applied for a license to become a lottery retailer in December 1996. They wanted to actually sell the tickets they market to the PowerPick players. The Amadas had always schlepped to retailers to stand in line and buy up to 7,000 lottery tickets and 1,000 instant scratcher tickets a week. (The instant tickets are given to PowerPick players in their monthly statements.) A sinister character tailed Amada after one such foray. Security became a concern.

Furthermore, a retail license would give PowerPick a 6 percent commission on the tickets it was buying.

The lottery director denied the application, a decision the Amadas appealed. During a May 1997 hearing, the lottery's director of security testified that the license was denied because he was not certain whether PowerPick was a legal business. Andy Amada took the stand and explained his business thoroughly. On June 11, 1997, an administrative law judge sent the lottery director his recommendation: Give PowerPick a license.

State regulations give an agency chief 30 days from the receipt of such a ruling to act. The then-director, Jody Spicola, did nothing until PowerPick's attorney informed him that the 30 days had elapsed. Under the circumstances, the agency was bound to follow the judge's recommendation. Instead, Spicola issued an undated decision, again denying the license. The Amadas bolted to Superior Court.

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