You Were Right; The Pappy Lottery Was Rigged

Reported on PennLive.com: Five PLCB executives were investigated by the State Ethics Commission for, let's not mince words, cheating on the PLCB's Pappy Van Winkle "lottery." 

Let's do a perp walk. 

• Board member Michael Negra
• Cliff McFarland, director of supply chain 
• Tom Bowman, director of product selection
• Bryan Kelleher, director of the bureau of business development for wholesale operations
• Carl Jolly, a retail operations manager

All five of them were found to have participated in a scheme to snap up 'unclaimed' Pappy Van Winkle 12 Year Old bourbon (the "Lot B" bottling prized by the pros) and other allocated whiskeys. See, the PLCB would hold a lottery (which often led to website crashes, and was widely believed to be rigged, though no evidence of that has surfaced...yet) for PA residents to take a chance at buying one of the state's allocated bottles of various whiskey releases. After the results were announced, the winners would then be able to buy the bottles at the PLCB list price, which was, admittedly, often hundreds of dollars less than at private stores in other states. 

'Shopping' at the PLCB Executive Store

But amazingly, not every bottle would be claimed. For instance, the lottery cited in the PennLive article, the January 2020 lottery for the Lot B bottling, had over 17,000 entrants for 999 bottles, and 24 went unclaimed. The rules of the lottery said that those bottles would then be released for a "second-chance" lottery...but the PLCB decided not to do that, and instead the vultures at the top feasted on the remnants. 

Want more? The lottery allowed winning entrants to purchase a single bottle. Ha! Jolly, for instance, despite not having even entered the lottery (why would he? That's for us suckers), "bought three bottles of Pappy Van Winkle bourbon for $410 and separately a bottle of Weller 12-year Reserve Bourbon for $40." That was in one lottery. We're not told how many bottles in total 0were bought by these PLCB parasites. 

There is an aspect to this that is particularly hard to swallow. Their participation is not contested; they all did it, some of them multiple times. They didn't steal the bottles; they bought them, at list price, with their own money. There is apparently no credible evidence that they flipped the bottles to make money; Lot B, for example, is currently going for well over $1,000 in the so-called "secondary market." 

But because there was "insufficient clear and convincing evidence of a pecuniary benefit", the State Ethics Commission found that there was "no violation" of the state ethics code. That's bullshit. The whiskey wasn't theirs to buy, and even if they didn't sell it, they had that potential. That's like saying you're not guilty of theft because you stole a Van Gogh...and then just kept it. I mean, you didn't make any money on it, right? No harm, no foul, baby!

Despite that "innocence," the Ethics Commission's report says that they were each "ordered to fulfill his agreement to not purchase any items offered by the Pennsylvania Liquor Control Board outside of the process by which a Commonwealth resident may purchase such items." Don't the words "fulfill his agreement" sound like a deal was made? 

Of course a deal was made. And once again, the PLCB gets away with this crap. And what do we do? Nothing. That's what we do. Because the miserable PA Legislature has other things to do. Like making it harder to vote, and easier to frack.

Do you remember when the PLCB was the ONLY retail operation to shut down voluntarily in March of 2020? Absolutely closed for six weeks, and not only that, they boarded up the windows because they were afraid of us, that we rampaging drunks would loot their stores. 

Actual PLCB store, Wilkes-Barre, March 2020

Why are these guys still around? Will no one rid us of this troublesome agency?! 

Apparently not, because neither Shapiro's or Mastriano's campaign responded to me when I asked them about their positions on PLCB privatization. I'd remind you that I'm a nationally known whiskey writer, I've testified about these issues before the legislature; I'm not just a blogger howling in the night...but they didn't respond. 

Which leads me to believe that we're screwed. Shapiro is just another Democrat who will veto any privatization bill -- for reasons unclear -- and Mastriano apparently is either beholden to the religiously anti-booze or will be too busy fighting for freedom, whatever he thinks that means. 

But don't worry. These guys promised not to buy booze outside the normal channels again. Pinky swear. 

Looks like it's gonna be a long eight years. 

The PLCB never leads only follows....sometimes even me.

We have been saying for years that the PLCB not only doesn't lead in ANYTHING. Because of the way they do things, they can only follow like sheep...or maybe lemmings.

By way of example... Way back in July of 2015, before the PLCB started a lottery to apportion their allocation of rare Van Winkle bottlings, I laid out how it would be done if I were running things. Here we are, 3 years later: let's see how the two compare.

They didn't follow my first idea: let the lottery commission handle the details. The PLCB decided they would rather reinvent the wheel. I like to think that maybe the lottery commission told them to take a hike. Why take chances? People like the lottery, they hate the PLCB.

I thought they should allow people a week to sign up. This year the PLCB gave people five days; a work week. It makes sense; management in Harrisburg doesn't work weekends. Heaven forbid they actually do something for the consumer like be open when the majority of people have time off to sign up and fill out lottery forms. What was I thinking?

It also made sense to me that everyone who signs up has to provide all their information up front:
ID -- Shipping and billing address -- credit card number (PA billing only accepted!). Get all that entered before making your picks and engaging in the lottery itself, since you're talking about a site that's been known to crash. Why risk having to enter your information again and again? They must have thought it was a good idea; they do exactly that.

My perfect lottery: a separate lottery for each item but with ALL the items on one page. That way people would just have to check the box to enter. Exactly what they did. I suggested limiting entries to one per person and that only one item could be won - they are doing that too.

Lastly I suggested that a verification code be sent with each approved lottery entry. This code would then be posted on the website so that people could check themselves to see if they had won something. We all know how many mistakes the PLCB makes just doing regular stuff and this would be another check on the system. They don't post any numbers on the website. I don't know if each entry has an internal verification code or not. I still think my way is better than what they are doing.

I wonder...

So there you have it. Did the PLCB take my freely given advice?  Did they hire an outside consultant to come up with mostly the same thing?  (The PLCB is big on consultants when they don't have a clue.) Did the lottery folks help them out?  We'll never know for sure, but you know what we think here at the blog. :)

We're still screwed: PLCB flexible pricing is coming.

We've posted a number of  stories about how bad flexible pricing is for the people, the consumers, in Pennsylvania. It is potentially the worst thing ever to come from the police-enforced liquor monopoly.

Despite that, here are some of the "benefits" flexible pricing will bring, according to the Chairman of the PLCB Tim Holden. You probably want to take his thoughts with a grain of salt; Ol' Tim still doesn't know the difference between Jack Daniel's and bourbon, and probably doesn't care.

It seems that Tim is upset that some suppliers don't care about PLCB profits. Well, why should they?  Businesses do not exist so that the PLCB can over-charge the citizens. They exist to do as well as possible for their owners, their shareholders. To assume that a business should care about the success of an agency that depresses their sales performance is ludicrous in the extreme and just reinforces how out of touch the PLCB leadership is.

This is how PLCB flexible pricing is really going to work

Back in April, well before the passage of Act 39, Elizabeth Brassell, the PLCB director of communications, wrote to me: "You are correct that the Liquor Code does not indicate that prices can’t be negotiated or that the PLCB has any obligation to use manufacturers’ suggested retail prices. In fact, as you suggest, the PLCB’s buying power, as well as its discretion to list and delist products, allows for some price negotiation with vendors. However, any advantages obtained through volume purchases are directly reflected in the shelf price." Did they do this? Of course not, because it had no benefit to the PLCB, only the customers.

Chairman Holden tacitly admitted that saving consumers money wasn't all that important when he said: "The PLCB is driven by priorities made clear by the governor and General Assembly: (1) increase customer convenience; (2) generate additional revenue; and (3) achieve more-competitive retail pricing."  It seems that the General Assembly priority is more #3 because they, like most citizens, want to get the PLCB out of the retail and wholesale alcohol business.

Holden goes on to say:" We simply want more competitive costs from our suppliers – comparable to what other states and retailers enjoy." Except that while those other retailers pass on those cost reductions, because they want your business, the PLCB wants to keep that difference, to keep that money to bolster their bloated and failing organization.

They have no reason to pass on anything because they have no competition; there is nowhere else the consumer can legally go. Holden admits this: "We’ll also maintain the current retail price on the vast majority of products we sell, while achieving greater profit on hundreds of them. And, as we’ve said all along, prices will increase for some items, when the supplier and PLCB agree that the market can bear the increase." Of course, when there is no other choice of retailer, the market can bear a lot.

Think I'm over reacting?  Here are some new prices from the PLCB under the "flexible" system on some pretty price insensitive items they know they can bleed enthusiasts for:

Item	2015	2016	$↑	%↑
Family Reserve Rye	$100	$160	$60	60.0%
P. V. Winkle 23 Year	$250	$400	$150	60.0%
P. V. Winkle 20 Year	$150	$250	$100	66.7%
P. V. Winkle 15 Year	$80	$150	$70	87.5%
Old Rip Van Winkle 10	$50	$80	$30	60.0%
V. Winkle Special Res	$60	$100	$40	66.7%

Think that is bad?  Look what happens if you are unlucky enough to win a package deal.

Thirty packages are available with three bottles each: the 20 year, 12 year, and 10 year. The price for each three-bottle package is $999.99; $570 MORE than the individual bottles. There are six packages of four bottles each: the 20 year, 15 year, 12 year, and 10 year. The price for each four-bottle package is $1,199.99: $620 MORE than the individual bottles. And four lucky Pennsylvanians will get the opportunity to buy packages that include each of the six 2016 bottlings, at price of $1,999.99. Only $860 MORE than the individual bottles. Such a deal!!

Tell us again how this is good for the consumer, Chairman Holden? 

This is just one prominent example. Is there any doubt that the PLCB is going to make that extra money by taking it out of your pocket, either surreptitiously or through outright price increases? I hope you're ready Pennsylvania, because you are about to get screwed.

Privatization is the only way to get the PLCB out of sales and into regulation, where it belongs.


All quotes from Chairman Holden are 100% real, and taken from here

The PLCB screwed up Pappy Van Winkle last year (and will do it again this year)

Stacey Kreideman, the PLCB's Minister of Propaganda, said last year that the most "fair" way for the agency to sell their allotment of relatively rare and highly desired Pappy Van Winkle whiskeys was to put them up for sale all at once, online, in mid-morning, with no warning but an email to say "We got 'em, time to buy!"

Calling the results a disaster wouldn't be too far off. The day was so screwed up, with crashing servers and clogged websites, that the PLCB had to apologize. They apologized for not realizing that if you put a high demand item out all at once, and tell everybody at the same time -- by email and Twitter -- system volume is going to spike on your rickety-assed commercial site. In this case, about 20 times the norm, which was 18 times more than they could handle. Customer comments sounded like this:

@PAWineSpirits @pappyvanwinkle what a joke. You couldn't even log on or load the page. How unfair. Most people didn't even have a shot. -- Shannon Barr on Twitter.

@PAWineSpirits you completely botched that sale. The time for PLCB is over. --  from @jxalexander.

The PLCB has decided to do something different this year. Rumor has it there will be a lottery system for the Van Winkle and Antique Collection allotments. Will that be more fair than the most fair way to do it?

I don't have any details, but I do have some suggestions on how it should be done. For starters, I would put the lottery commission in charge of the lottery. Take it out of the PLCB's trembling hands completely. Who knows how to run a lottery better than the folks that run a lottery? Certainly not the PLCB.

Allow customers one week to sign up; say, between the day after Thanksgiving though the next Thursday.

Everyone who signs up has to provide all their required information -- ID, shipping -- along with a credit card number that will automatically be charged if their number is selected. That way no one wastes time trying to enter information on a system that's crashing.

Have a separate lottery for each product, all 11 of them but all on one form, just check the ones you want. Filling out your name, address and credit card info 11 times is something the PLCB would make you do. Limit quantities to one bottle of each item and limit entries to one per person. If we're going to be stuck buying only from the State Stores, make it fair: accept only PA addresses for billing and delivery.

Send out lottery numbers via email with a verification code so if there are any problems or questions the code can be used to confirm the entry. Once selection time is closed, run the numbers until all matches have been made...post the winning numbers on the website and send out the product.

Done.

Have fun with that. Myself, I've been dealing with the same guy at the same store -- out of state -- for about a decade. I pay list price and generally have it a month or more before PA puts it on sale. In business, relationships are everything. It rewards customer loyalty, not forcing them to buy only what the state provides. A lesson the PLCB can't, by its very nature, ever learn.

Selling Allocated Van Winkle Whiskeys Online is the "Most Fair" Method. Really?

Stacey Kreideman, the PLCB's spokesperson, told us that the most "fair" way for the agency to sell their allotment of relatively rare and highly desired Pappy Van Winkle whiskeys was to put them up for sale all at once, online, with no warning but an email to say "We got 'em, time to buy!" So let's look at how much, if any, thought was put into that statement. After all the PLCB has to serve ALL the population: we can't legally go anywhere else.

Pennsylvania's population is about 12.9 million.  Of that about 3 million are under 21, leaving 9.9 million adults who can legally buy liquor. About 800,000 people work in non-management manufacturing, mining, and construction, mostly during the day, so they aren't  -- can't be! -- looking to get twitter blasts in the middle of the work day.  That takes our number down to 9.1 million who may have the time, internet connection, and desire to buy a bottle on line.

Service jobs make up the largest part of PA workers, almost 4.5 million of them.  Even after you take out the IT folks, real estate and "professional business services" that still leaves 3.4 million working in retail, warehouses, restaurants, utilities, and all other manner of service jobs. Most of those people aren't responding to every tweet and email in the middle of work either. Down to 5.7 million

Health Services is another large employer with about 1.2 million employees. Take out the night shift, and the administrators and other desk jockeys, and that is near 800,000 who are actually at work doing something when the PLCB sends out it's email blast. Down to 4.9 million now: half of the population that will never get a shot at the PLCB's rigged Van Winkle race.

Drop another 500,000 for Leisure and Hospitality workers - wait staff, cooks, busboys, hostesses, hotel workers etc., etc. Another 200,000 for government workers like road crews, maintenance, military, police, firemen, state store clerks (they're certainly not checking Twitter; they're too busy shoveling coal into their 1930s-era POS system) and what have you, and at least another 100,000 for non-traditional services, the number drops to 4.1 million or less.

So how fair is it when over 60% of your buying population can't buy what you are selling? Putting it all on sale at 5 AM would be far more "fair" to the majority of buyers, since most could actually try to get on the crashing PLCB website. Ahh, but then the PLCB workers in Harrisburg would have to get up early and actually try to do something for the people they work for. Can't have that, now can we?

I originally made the following up, as a joke, but it turns out to be more true than I thought. "It's the most fair to everyone that works behind a desk" said the PLCB. "If you have one of those laboring jobs we really don't care about you and you shouldn't be buying $100 bottles of whiskey. Our clerks will tell you so." 

The PLCB's online 'store' needs a new motto. Here's a proposal: "We don't deal with the public, we make the public deal with us!"







All the numbers come from the Pennsylvania Department of Labor and Industry website minus an estimated 10% for management