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Wednesday, November 10, 2021

Let's Have An Honest Talk About These OHLQ Lotteries

Ohio laws are such that the only way liquor can be sold is through the State. It's a ridiculous system that harms the consumer by allowing a monopoly and limits the availability and flow of the products that consumers actually want. I would also argue that it costs Ohio millions and millions in lost tax revenue by consumers going to neighboring states to buy bottles they can't get in Ohio. Another casualty of this policy is that no liquor can be ordered online, neglecting Ohioans the opportunity to buy many wonderful bourbons. 

Additionally, the State runs several lotteries throughout the year... presumably to fairly allocate a limited supply of hard to find bourbons and whiskeys... These lotteries are becoming more and more prevalent each year... in fact, this year alone, we're already on our 7th lottery. 

All this is fine in a vacuum... the lotteries are supposed to make to make the high demand bourbons available to everyone in a fair way.... the allocation of bourbons are supposed to make it so everyone and all various locations across the State have fair access when non-lottery bourbons are released, and not having online sales is supposed to keep consumers safe? Not really sure on the logic on the no online sales. Let's focus on each one individually. 

Lotteries

Since the start of COVID, the State has relied more on lotteries than geographical limited releases. This makes sense in order to limit in-person interactions... especially before there was an effective vaccine. Everything was going fine until some eyebrows were raised when 5 individuals won multiple times in the same lottery (in this lottery, there was a Pappy Van Winkle and a Buffalo Trace lotter). The odds of winning one bottle were 0.364% (around 1 in 270)... I'm no mathematician, but I'm fairly confident the odds of winning two are going to be worse than winning one... and for it to happen 5 times certainly brings up questions. 

The second issue with the lotteries is the complete lack of transparency from the State. I did an information request from the October lottery so I could report to the wonderful people of Ohio what the final odds were. This hasn't been a problem in the 20+ lotteries I've covered... however, this time, the State has outright refused to provide this information, even questioning when and where the data would be published... If the State won't provide information on how winners are chosen (I've heard rumors that it's through an excel query), or provide the number of entries or other information, it's hard to believe that the lotteries are done in a fair way. 

Allocation

There are countless stories of people somehow knowing about allocation before the inventory is available... Check this reddit thread of someone who got an 'insider tip' and arrived at the store at 3:30am only to find 12+ people already there. 

Another issue I've personally seen is stores hoarding the allocated releases behind the counter or in the back office and not making them available to the general public (Arena Liquor, I'm looking in your direction). It also means that if you want a hard to find bottle, the only option you have is to troll various sites or Facebook groups to find ahead of time when allocation leaks, and then stand in line with the others for ungodly amounts of time. A better system would be to decentralize everything and allow the stores to compete on price and selection

Summary

With everything detailed above, it's fair to question the Ohio Department of Liquor (OHLQ) practices and if everything is above board. Without providing lottery specifics (number of entries, way users are selected), I'm beginning to question the fairness and legitimacy of the lotteries and with so many issues about allocation, it's time to start thinking about OHLQ in a bigger picture and start questioning many of their processes, which have become antiquated and adversely impact all Ohioans. I think we can all agree this isn't the System we want.... it's sad that it's our only option. 

2 comments:

  1. Hi Mark, interesting topic.

    Lotteries: I actually like the online system more than the convene at a Giant Eagle crapshow of the past. I do not like crowds (and generally think any gathering of more than two other people is a crowd.) I found that I didn't always have time to get to the in person lotteries and my wife vowed to never attend another lottery after the chaos at the last one we attended. And I know from talking to several staff at different Giant Eagle stores that held lottery drawings the staff did not like the lotteries.


    Now, under the online registration system, like many people I get my family and a few friends to register in the lotteries. Even with the greater numbers I figure my chances of getting hands on a bottle are probably about the same. And I did get one bottle through an in-person lottery and my daughter has won one bottle in an online lottery.

    As far as who wins in the online lotteries I have mixed feelings. Odds of someone winning more than one bottle are just that, odds. I agree it seems amazing five were fortunate to get more than one bottle during a lottery period but I admit I would find it less amazing if it were me.

    Of course, the state can do it's part. The simplest would be to just say any given person can only win one bottle in any given lottery. But then who decides which bottle the person gets - the winner, the state? It is tougher during lotteries like the current one (O.F.C. Bourbon 1993, Double Eagle Very Rare, Michter’s 25 Year Kentucky Straight Bourbon, King of Kentucky, and Old Forester Birthday Bourbon) where I will only chase Birthday bourbon because, to me, that is the upper amount I'll pay for a whiskey and I'm not a flipper. Or maybe the state should say only one winner in any calendar year (akin to Buffalo Trace putting the 90-day rule on purchases at the distillery.)

    Under the online system I like that a winner has to show an Ohio id when collecting their bottle. With a scarce allocation I do like that Ohio is trying to give Ohioans the chance at the booze.

    Ideally bottles get into the hands of people who will enjoy the whiskey. I realize there are many ways to "enjoy" the whiskey too. I understand there are collectors who want a bottle on their shelf. And there are investors who want a sealed bottle in their collection. And maybe now and then someone will donate a bottle to a charity to auction off; the recipient would surely want a sealed bottle.

    But what gets under my skin are the flippers who want to sell the bottle for more than they paid for it. I know, I know, its a free country so let them do what they want with their property. If you don't like the secondary market, which I don't, then don't play in that market, which I don't. (I do share bottles with friends but I do so for exactly what I paid.) I suppose the state could say all bottles won through lotteries will have the seal broken at time of pickup but as I said before, there are legitimate reasons to keep the seal intact.

    Continued in part 2

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  2. Tom's part II

    Moving on...

    Allocation: I believe, and it's just a belief, that there are many games played with allocation. But before that, I wish OHLQ was both a) more transparent, b) only included what a store has for retail sale (i.e., leave the wholesale sales out of inventory) and, c) more real-time (in that if I'm checking OHLQ at noon it does me no good to know what the inventory was at 3:00 am.)

    Beyond that, I think the state has to do a better job of getting inventory into Ohio. I understand we're just one customer put make better use of being the gateway to x number of customers.

    Or buy a lot more barrels through barrel programs. For instance, if Ohio bought a thousand barrels of Blanton there is no risk, every bottle will sell.

    Privatizing the system has many pros and cons. One 'pro' of state control is obviously price control. I was in Bardstown a few months ago and a store had a bottle of Stagg Jr. for something ridiculous like $269.00. To me, what's the difference if I can't get it for $46.00 in Ohio cuz I sure won't get it for $269.00 in Kentucky.

    Inventory could go up if the system was privatized. Stores like Total Wine would see Ohio as an attractive venture. I suppose there's a remote possibility stores like Kroger or Giant Eagle would use their size toward customer benefit but I wouldn't hold my breath. But then what happens with pricing? Does stuff stay nicely priced.

    Would availability go up? Back to Kentucky, I've never seen a Stagg Jr. available at a decent price.

    And then would the stores just run their own allocation lotteries? Stores aren't just going to put hard to get stuff on shelves. Would you have to be a "Club" member to get into lotteries? Would getting a bottle cost you money and club points (think Stadium Liquor in Covington.) Would we still run into store managers tucking bottles away for "special" customers.

    I have no first-hand experience with an Ohio store personnel offering to hold something back for me. But a relative told me he ran into a former co-worker now working at a grocery store who offered to hold stuff back for him. I was once on the receiving end of a Weller Antique - I walked into a Kroger on a Saturday afternoon and an Antique was sitting on a shelf behind the counter. I asked what's up with the Weller and the clerk said said some guy called that morning and asked that it be held. The clerk reached back and put the bottle in front of me saying the caller did not leave a name and she was going of duty soon. My good fortune.

    I'm just not sold on the idea privatization solves more problems than it creates. It is all about implementation.

    Having some discussion is a great thing to have; thanks for putting the question out there.

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