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New report criticizes Iowa Lottery security

Apr 22, 2009, 12:08 pm

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Iowa LotteryIowa Lottery: New report criticizes Iowa Lottery security

Report claims lottery not investigating fraud complaints

DES MOINES, Ia. — The state ombudsman issued a report Tuesday alleging Iowa Lottery officials have failed to adequately protect the enterprise's customers from fraud and theft by retailers.

Iowa Citizens' Aide/Ombudsman Bill Angrick said his review of three years' worth of lottery investigations found numerous customer complaints where leads went unexplored and potential crimes were not pursued.

And, Angrick said in a 210-page report, even when the lottery substantiated complaints against retailers for fraud or theft, in many instances those retailers were not held accountable.

In general, the ombudsman found that the Iowa Lottery has maintained a weak, reactive enforcement system that fails to detect retailer dishonesty independently of customer complaints. This means that there likely have been instances of fraud — possibly large-scale fraud — that have gone undetected, he added.

"What our investigation revealed is a pattern of indifference and incuriosity in an area where customers depend on the government to protect their interests," Angrick said in a news release.

"Unfortunately, when we sought to learn what was being done to prevent and police theft by lottery retailers, the answer we arrived at was, 'Not much,' " he added.

The ombudsman said he found problems with the lottery's response to eight customers who reported they were sold tickets that appeared to have been tampered with - alleging lottery officials declined to investigate or discontinued their probes after gathering evidence which appeared to support the customers' claims.

Angrick also contended the owner of a retail store reported the systematic theft of some $86,000 in lottery tickets by four employees, but the lottery investigator backed out of the probe without conducting interviews of key witnesses.

The ombudsman said he discovered at least nine Iowa retailers and store employees who have collected five or more major wins, otherwise known as "high-tier" prizes. The odds of winning a high-tier prize, on average, are about one in 67,450, Angrick noted.

The ombudsman said his investigation was triggered by developments in Canada, where independent investigators found that lottery retailers were winning a disproportionately large number of prizes, sometimes by defrauding customers.

Angrick said he found that customer safeguards in Iowa fell well short of those in place in Canada, despite the Iowa Lottery's public claims to the contrary.

"This is an extremely serious issue, one we believe must immediately be brought to Iowans' attention so we all can have an open, frank and timely discussion about consumer protection issues in our state," Iowa Lottery chief executive officer Terry Rich said.

The lottery leader said the ombudsman's lengthy probe "did not uncover a case of large-scale fraud" involving Iowa's lottery, which he said supported Angrick's assessment that "the vast majority of Iowa retailers and clerks are honest, reputable and do not engage in fraud or theft."

Rich said the lottery agrees with or has already implemented many of the concepts in principle and 60 recommendations outlined in the report. But, he said he disagrees with some of the findings due to concerns regarding player security, game security and what he called undue governmental intrusion, red tape and impractical business application in the retail environment.

Rich said the lottery's security department handled 182 inquiries last year, compared with more than 148.1 million transactions that year for the sale and cashing of lottery tickets at about 2,500 licensed retailers in Iowa. In other words, he said, 99.999 percent of those transactions had no security-related inquiry associated with them.

"Another way of putting it is to say that the odds of anyone having a security-related concern about the sale and cashing of lottery tickets in Iowa is about 1 in 813,936," Rich said. "You have a better chance of being struck by lightning (1 in 700,000) or freezing to death (1 in 423,582) than you do of having a security-related concern about a lottery ticket in Iowa."

Quad City Times

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2 comments. Last comment 11 years ago by jim695.
Page 1 of 1

United States
Member #58526
February 18, 2008
710 Posts

The only problem that I ever had with the Iowa Lottery was with one of their retailers.I bought a $3 scratch off ticket from one of those machines and the machine took my money.Nobody at the retailer had the key to the machine so they couldn't open it up and retrieve my ticket for me and they refused to refund my money.When I got home I sent an email to the Iowa Lottery and complained about the retailers attitude.The Iowa Lottery sent me $3 worth of "Lotto Bucks" that could be redeemed at any Iowa Lottery retailer.I think the Ombudsman is full of himself.Personaly,I think the Iowa Lottery bends over backwards to be honest & above board with their customers.Especially in comparison to some of the other lotterys that I've read about.Iowa was the first lottery in the nation to require a signature on ALL lottery tickets before they can be scanned to see if they are winners and before you can be paid.This is to protect the customer from thieving store clerks.The Iowa lottery is constantly updating their security for the benefit of the playing public.I think most of the complaints come from disgruntled customers that haven't won a jackpot or think that because the odds on some games are 1 in 4 or 1 in 3 that every third or fourth ticket should be a winner.They don't understand odds and get upset when they don't win after buying 3 or 4 tickets.

    Columbia City, Indiana
    United States
    Member #2978
    December 9, 2003
    381 Posts


    Iowa runs one of the best lotteries in the country, having effectively removed any possibility of fraud or corruption within their corporate structure. The Iowa Lottery doesn't even conduct their own drawings - they use Illinois's numbers for their lotto and daily games.

    Apparently, from what I read in the article, the problem rests with dishonest retailers who don't feel compelled to pay their winners, but the Iowa Lottery can't be held responsible for the criminal behavior of their retail agents. Dishonest people are going to be dishonest, and they're probably not going to tell us of their plans to do so.

    I agree with MaddMike51; it sounds like Mr. Angrick is looking for a sword to rattle, maybe in hopes of making a bid for state representative. God, how I hate politicians ...

    Come, Pinky; we must prepare for tomorrow night...