Pa. fighting craft-whiskey scalpers with liquor lottery

A bottle of Whistle Pig third edition at Village Whiskey in Philadelphia, PA on March 16, 2017.

Internet robots hunt them down. Scalpers try to flip them. A couple of guys who got their paws on them in Pennsylvania got pinched by police for trying to then unload them on Craigslist.

The rare-whiskey-and-bourbon craze that has some bottles selling for as much as $1,000 in some states is making liquor regulators scramble in Pennsylvania.

Every time the state gets ahold of a bunch of the very-hard-to-find bottles of premium batch Pappy Van Winkle, WhistlePig Boss Hog, Parker's Heritage, or others like them, officials strategize: How can we sell this fairly, while keeping the craft booze from ending up in too-crafty hands?

A few years into a new system that literally keeps all such limited-release booze off its store shelves, the Liquor Control Board thinks it just might be one step ahead of the highfalutin'-hooch gamers.

On Monday, the LCB is putting a batch of 258 rare bourbons and rye whiskeys on the market through its lottery system. It will be the ninth such lottery, an approach launched soon after the LCB website crashed during a first-come, first-serve sale of Pappy in December 2014.

But this year, anyone who wanted to put his or her name in for the mere shot of buying had to acknowledge and accept this new warning: If you resell a single bottle in Pennsylvania, you're breaking the law.

Only by signing off on the new terms can a bar, restaurant, or individuals submit their name, credit card, and other identifying information for the chance at winning a number Monday and, consequently, the right to buy a $279.99 bottle of WhistlePig (125 proof, aged 14 years) or drop $249.00 for a fifth of Parker's heritage (100 proof, 24 years old). 

The change came after state police liquor enforcement officers, trawling Craigslist and going undercover, busted a Lancaster man in December for trying to resell a prized bottle he bought after drawing a lucky number in an LCB lottery. Two years earlier, at Duquesne University in Pittsburgh, state police had nabbed someone who tried to resell a 20-year-old bottle of Pappy just bought from the LCB.

"When you entered the lottery it previously had read, 'I'm a Pennsylvania resident of legal age,' " said spokeswoman Elizabeth  Brassell. "We added to that ... 'resale is illegal.' "

It is, arguably, a minor tweak. But one that accompanies a bevy of technological changes that regulators say they are making each year to the liquor lottery system.

Combined, the goal is to reduce the risk of scalping and that no one person — or particularly slick computer code — scoops up more than one bottle each time the LCB sells them online.

The lottery was designed to help put the bourbon and whiskey into the hands of restaurant owners and individuals — and not the online checkout accounts of internet robots, as had come to be the case.

Limited-release whiskeys and bourbons have become a prized commodity in recent years as consumers have come to treat the spirits with the same craft-crazed palate that has spawned countless niche beers.

One of the early Philadelphia establishments to capture this burgeoning market was Village Whiskey, a gourmet pub opened in 2009 and owned by chef Jose Garces. But even that vaunted venue had trouble buying, when available, the liquor equivalent of a rare stamp at auction.

General manager Justin Holden still remembers staring at an LCB computer screen, as though at the start of a sprint, when a bottle of Pappy went on sale a few years ago. He typed and swiped his mouse quickly.

"I put it in the shopping cart," Holden recalled Thursday, "and then ... it was gone."

That is why the LCB began a lottery system for the liquors in 2015.

Pappy Van Winkle produces 10,000 cases across the line, compared with major producers such as Makers Mark or Jim Beam, who make hundreds of thousands, said LCB digital director Jane Merritt, who was in charge of internet sales during the Pappy crash.

"Bourbon craziness," Merritt calls it.  

Whenever the LCB would release a few bottles for sale on its website, there was so much demand — and so many computer robots doing the buying — the site "just couldn't handle it," she said.

Some states, she said, such as Utah and Alabama, still sell the hooch at stores, which means fairness there comes in the form of old-fashioned shoe leather and long lines.

And while there is no shortage of derision that many consumers and restaurateurs feel for Pennsylvania's liquor regulators, the lottery seems to be working quite well, overall.

"Before this, there was sort of like a free-for-all online," said Village Whiskey's Holden. 

One unexpected benefit, he said, is that even with the lottery, the LCB sells some of the rarer bourbons for less than liquor stores in unregulated states would charge.

Village Whiskey has bought several Pappys through the lottery — and served it up in 2-ounce Glencairn glasses for $70 a pop.

Just how eager are customers for a shot or so of the premium joy juice?

"We don't need to advertise it," he said.