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Illinois Lottery Winners Lose In Court Over State’s Failure to Make Payments

A federal court ruled this week that the state of Illinois is immune from claims filed in a lawsuit by lottery winners who have not received recent payments from their winnings.

Illinois earlier this year stopped paying lottery payments to winners, due to the fact that the state failed to adopt a budget for the coming year.

As a result, many Illinois lottery winners have been unable to collect their winnings.

 

The state was sued by those winners, and the federal district court this week ruled that the lawsuit should be dismissed on Eleventh Amendment immunity grounds.

The opinion in Rasche v. Lane, No. 15 C 7918, 2015 U.S. Dis. LEXIS 16593 (N.D. Ill. Dec. 8, 2015), from U.S. District Court Judge Ruben Castillo, included the following background:

On June 30, 2015, the Illinois state budget for the 2015 fiscal year expired.  Illinois failed to adopt — and still has yet to adopt — a budget for the 2016 fiscal year, which runs from July 1, 2015, through June 30, 2016.  On July 1, 2015, Lane announced that due to the budget impasse, the Department would cease making payments to individuals who won in excess of $25,000 from any lottery game offered by the Department, including the interstate Powerball and Mega Millions games.  On or about August 28, 2015, the Department made the following public announcement:

Due to the ongoing budget situation in Springfield, some lottery winner payments have been delayed.  All winners will be paid in full as soon as the Lottery and the Illinois Comptroller have the legislative authority to do so.  Currently, winners may claim prizes under $600 at any of our 8,000 retail locations, and prizes under $25,000 may be claimed at any Lottery claims center, found at illinoislottery.com.

On October 15, 2015, the Department announced that payment would be delayed to any lottery winner whose prize money exceeded $600.  As a result of these pronouncements, numerous Illinois lottery winners have been unable to collect their winnings.  This includes Plaintiffs, who won between $1,000 and $2 million from the Illinois lottery and/or the interstate lotteries after the delay in payment was announced.  Plaintiffs estimate that roughly $288 million in lottery payments are currently being delayed.  Despite the delay in payment to winners, the lottery is still operating as usual, with tickets being sold on a daily basis.

On September 9, 2015, Plaintiffs filed this action in federal court against the Illinois Defendants.  On November 2, 2015, Plaintiffs filed a 118-page amended complaint, reiterating their claims against the Illinois Defendants and adding claims against lottery agencies and officials from nearly every U.S. state, as well as Puerto Rico and the U.S. Virgin Islands.  They assert thirteen separate counts, including violations of their federal due process rights under 42 U.S.C. § 1983, a racketeering conspiracy claim under 18 U.S.C. § 1961, and related state law claims for unjust enrichment, conversion, and other torts.  Plaintiffs also move for certification of a class comprised of 141 winners of lottery games offered by the Illinois Department of the Lottery whose claim to prizes in excess of $600 existed on or after July 1, 2015, and who have not been paid.

The Court noted that the Eleventh Amendment provides that “The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State” (U.S. CONST. amend. XI), which means, “[p]ut simply, ‘the Eleventh Amendment guarantees that an unconsenting State is immune from suits brought in federal courts by her own citizens as well as by citizens of another State.’ ”

Due to Eleventh Amendment immunity, concluded the court, the lawsuit must be dismissed:

 

 

Illinois lottery winners, understandably, wish to get paid.  But this Court cannot disregard fundamental principles of federalism and long-standing rules prohibiting federal courts from interfering with the state’s operation of its own treasury.  Whatever the appeal of an argument that the state should pay its lottery winners (and, indeed, all its creditors), the Eleventh Amendment was a ‘swift and direct rejection’ of the notion that federal courts have the power to compel states to comply with their financial obligations to private parties. . . .  For these reasons, Plaintiffs’ claims against the Illinois Defendants, whether for damages or nominally seeking injunctive or declaratory relief, are all barred by the Eleventh Amendment.  This ruling applies with equal force to Plaintiffs’ state law claims.

The full opinion is available here.

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