Numbers Racket

A businessman, his wife, the lottery and their lawyers

Geoffrey Gonsher replaced Spicola as the Arizona Lottery's executive director. With things going badly for the state in court, Gonsher was forced to relent and grant PowerPick a retail license. The state admitted that the lottery had been "arbitrary and capricious" and agreed to pay PowerPick $14,000 in legal fees and costs. PowerPick was given a terminal which allowed the business to electronically register its sales with the lottery.

While the court battle raged, PowerPick was attacked from the flank. The United States Postal Service claimed that PowerPick -- by definition an agent for state lottery players -- was an illegal lottery itself. A federal judge agreed, and PowerPick's mail was cut off. The Amadas appealed to the Ninth U.S. Circuit Court of Appeals, which ruled in January 2000 that PowerPick was not an illegal lottery. The two-year detention of PowerPick's mail retarded the company's growth, and the legal fees were staggering. Amada believes that Arizona Lottery officials asked postal inspectors to intervene. I'd be surprised if this were not the case.

The lottery began another sortie last April, notifying PowerPick that its retail license was in jeopardy due to myriad violations, including selling tickets to itself, paying prizes to itself (PowerPick owns 2 percent of all pools it creates), granting some players credit instead of paying them by cash or check, and selling tickets off-premises (over the phone).

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

PowerPick inquired whether lottery officials would be satisfied if it divested itself of the pooling service. The Amadas got no response, but in May went ahead and shifted the pooling service to a second corporation -- one firm would run the pooling service, one would be the licensed retailer.

Two weeks later, Gonsher informed the Amadas that their retail license was being revoked. PowerPick demanded another hearing. This time, however, an administrative law judge upheld the license revocation. In November, lottery agents descended on PowerPick's office and seized its on-line terminal and instant-game tickets inventory.

The lottery issued a triumphant press release. The tenor of the dispatch raised questions about the legitimacy and future of the pooling service, which was unscathed by the retail license revocation. A Superior Court judge quickly ruled that the state had improperly shut down the Amadas' retail ticket sales operation. The lottery was forced to return the equipment, and the Amadas resumed selling tickets pending their appeal to the Arizona Lottery Commission.

Amada appeared before that panel last Friday. Neither he nor his attorney were allowed to make a presentation. Two commissioners asked a few questions, and the body then voted unanimously to uphold the license revocation. PowerPick will take the case back to Superior Court.

Pardon PowerPick's pugnacious president for his paranoia.

"They just go at you and at you and at you, and it's no skin off their nose, because it's not their money. It's taxpayer money," Amada grouses.

Curiously, no lottery officers or commissioners will utter a bad word about the Amadas' pooling service. Gonsher says there is "no basis" for Amada's claim of a lottery vendetta against his company -- a statement that seems disingenuous at best.

As for the Amadas' retail license, the official mantra is that rules are rules, and PowerPick has violated them. This is an arcane area of law with little legal or administrative precedent in Arizona. It's a semantical thicket. A close reading of the record convinces me that PowerPick has made a good-faith attempt to follow the rules.

Yet, today, PowerPick -- which rates No. 5 in sales volume out of more than 2,500 sites statewide -- can sell no tickets.

Amada quips about the lottery's "Sales Prevention Department."

So why doesn't Amada just surrender and open a coffee shop?

"I guess it's because we enjoy working with our customers, and we believe we can grow the business and expand to other states," he says. "I'm a very idealistic person, and it just burns me up that we have people in the government like these people in the lottery. I can see why people begin to detest their government."

If Andy Amada is a reincarnation of Cervantes' Knight of the Woeful Figure, a man possessed by an idea, he has the good fortune of succor not from a squire named Sancho, but from an esquire named Charles Buri -- a barrister who was once director of the Arizona Lottery.

Don't bet against them.

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