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First lawsuit in state lottery-fixing scandal seeks millions

Feb 4, 2016, 9:10 pm

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Insider BuzzInsider Buzz: First lawsuit in state lottery-fixing scandal seeks millionsRating:

DES MOINES, Iowa — It was one of those feel-good moments that lotteries love to promote when "Lucky Larry" Dawson smiled as he claimed a $9 million jackpot, surrounded by kids and grandkids. But five years later, the Iowa man could become a key player in a barrage of litigation that threatens to cost state lotteries tens of millions of dollars in damages in an insider jackpot-rigging scandal.

A Des Moines law firm filed a lawsuit Wednesday on Dawson's behalf seeking to declare that his Hot Lotto jackpot in May 2011 should have been nearly three times as big, had the previous one not been fixed. It's the first in what could be several lawsuits filed by players who claim they were ripped off in games allegedly rigged over several years by Eddie Tipton, former security director of the Multi-State Lottery Association.

Tipton has been convicted of rigging a $16.5 million jackpot in December 2010 by tampering with the random number generator that draws the Hot Lotto winning numbers at the association headquarters in Urbandale, Iowa, and then buying the six-number combination himself. He's awaiting trial on charges alleging that he fixed jackpots worth millions in Colorado, Wisconsin, Kansas and Oklahoma between 2005 and 2011, and worked with associates to buy tickets and claim prizes.

Dawson's lawsuit claims the 2010 prize should have rolled over to the next jackpot, which he won. Instead, the jackpot reset to $1 million.

(See Financial advisor wins the lottery, Lottery Post, May 10, 2011.)

"If the lottery hadn't rigged their own game, our client would have had $10 million more in cash value. Obviously, he needs to be made whole. The entire integrity of the lottery run by this organization nationwide is at stake here," said his attorney, Jerry Crawford.

The case isn't a class action, but Crawford didn't rule out filing additional lawsuits.

The Iowa Lottery, named as a defendant along with the association, vowed to fight the lawsuit, saying Dawson "rightfully was paid the jackpot to which he was entitled."

"It is impossible to rewrite history. No one can know what would have occurred in this case had any event in it been changed," CEO Terry Rich said.

The Iowa Lottery didn't pay the jackpot allegedly fixed by Tipton after lawyers who tried to claim it on behalf of a trust refused to identify who purchased the winning ticket. That money returned to 16 states that participated in Hot Lotto as an "unclaimed prize." Tipton wasn't charged until last year, after colleagues identified him as the person seen on gas station surveillance video buying the winning ticket. He was fired by the association, which helps administer games for 37 state and U.S. territorial lotteries.

Dawson — a financial adviser nicknamed "Lucky Larry" for his golf game — purchased his winning ticket at a gas station near his Webster City home. He told reporters he bought $19 in tickets for every bi-weekly drawing so he could cover all 19 "Hot Ball" options after reading a book with tips to improve his odds.

Dawson and his wife, who have used their windfall to expand the family business and support charitable causes, aren't interested in publicity but believe they were wronged by the lottery's mismanagement, Crawford said.

"They also hope that this action will help make sure this doesn't happen to other people in the future," he said.

The lawsuit asks a judge to declare that the December 2010 drawing is void and to award the $16.5 million that should have rolled over to Dawson, plus interest. Iowa law defines a drawing as a process "used to randomly select a winning combination," which wasn't the case since Tipton fixed the outcome, the lawsuit argues.

The lawsuit alleges the association had lax security, saying its in-house random number generator built by Tipton lacked fraud prevention capabilities available in other models. A surveillance camera system — purchased from a company owned by the brother of the then-chief security officer — also repeatedly malfunctioned after its 2008 installation, it alleges.

"It's hard to believe that this association could be allowed to operate the way it was," Crawford said.

The lawsuit alleges the unclaimed prize created a windfall for states, which should not have benefited from "their own misconduct and inability to operate a legitimate lottery game in accordance with their own rules."

Timeline of the biggest crime in US lottery history

The following is a compilation of Lottery Post news coverage chronicling the Hot Lotto mystery and subsequently discovered crime.

We start the timeline with a news story indicating that only 3 months remained for the $16 million Hot Lotto jackpot to be claimed.

Thanks to Prefontaine for the tip.

AP, Lottery Post Staff

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31 comments. Last comment 4 years ago by mikeintexas.
Page 1 of 3

United States
Member #172411
January 23, 2016
3795 Posts
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Posted: February 4, 2016, 9:29 pm - IP Logged

Guys accept it all officials in which ever government position they are in they are paid legal criminals :DDDD

    Avatar
    Kentucky
    United States
    Member #32651
    February 14, 2006
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    Posted: February 4, 2016, 11:26 pm - IP Logged

    The lawsuit asks a judge to declare that the December 2010 drawing is void and to award the $16.5 million that should have rolled over to Dawson, plus interest.

    This results of this case could create precedents for any unclaimed jackpot.

      dallascowboyfan's avatar - chi
      Oklahoma
      United States
      Member #82389
      November 12, 2009
      6371 Posts
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      Posted: February 4, 2016, 11:30 pm - IP Logged

      I rememberedwhen he won, I think this is the beginning of many law suits to come.

      I Love Pink & Green 1908

        KY Floyd's avatar - lysol avatar.jpg
        NY
        United States
        Member #23834
        October 16, 2005
        4246 Posts
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        Posted: February 5, 2016, 12:19 am - IP Logged

        The lawsuit asks a judge to declare that the December 2010 drawing is void and to award the $16.5 million that should have rolled over to Dawson, plus interest.

        This results of this case could create precedents for any unclaimed jackpot.

        Here's a short quiz for you:

        1. Did this particular drawing result in an unclaimed jackpot?
        2. Is there any way in which this drawing was different than the drawings that have result in unclaimed jackpots?
          OldSchoolPa's avatar - Lottery-057.jpg
          Gurnee, Illinois
          United States
          Member #49729
          February 12, 2007
          951 Posts
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          Posted: February 5, 2016, 2:41 am - IP Logged

          We all should be rooting for Mr. Dawson to win this lawsuit as it might just spell the beginning of the end of RNG.

          Given that the Tipton winning ticket was produced through fraudulent means, that jackpot should be awarded to subsequent rightful winner instead of being distributed into state coffers.

          Get MONEY!!! Winning a JACKPOT lottery is one  MIRACLE I desire for 2019!!!  NOW come to my subconscious mind you 6 winning numbers!US Flag

            JAMORA's avatar - ladyclover
            NC
            United States
            Member #164393
            February 28, 2015
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            Posted: February 5, 2016, 2:59 am - IP Logged

            I Agree!

             

            I hope he wins and I believe his legal theory is correct....if the only winning numbers prior to his was won by deception/fraud, and unclaimable...that money  should roll into the legitimate jackpot....

            "Don't waste time, it's the stuff life's made of..."

              OneTrickpony's avatar - rocking horse.jpg

              United States
              Member #167652
              July 25, 2015
              118 Posts
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              Posted: February 5, 2016, 7:43 am - IP Logged

              I Agree!

               

              I hope he wins and I believe his legal theory is correct....if the only winning numbers prior to his was won by deception/fraud, and unclaimable...that money  should roll into the legitimate jackpot....

              Exactly.  They gave the hen house keys to the top fox, then they wonder why he's getting fat.  No over sight, and apparently no independent audit.  And of course Iowa legislators were satisfied with the "investigation" (BY TIPTON!), they have no idea what they are doing most of the time anyway!

              That $16.3M should be awarded to the next legitimate winner after the rigged drawing.  Hopefully, this will get rid of RNG's for good.

                rcbbuckeye's avatar - Lottery-062.jpg
                Texas
                United States
                Member #55887
                October 23, 2007
                10071 Posts
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                Posted: February 5, 2016, 8:19 am - IP Logged

                If it does eliminate RNG draws, it will still be some time before that happens. Frankly, I'm not so sure it will happen, as Terry Rich pretty much said RNG's aren't going away during his Q&A here. He said the focus will be on greater security. Who wants to keep playing RNG games while seeing how that works out? Glad I don't have any RNG games in Texas.

                CAN'T WIN IF YOU'RE NOT IN

                A DOLLAR AND A DREAM (OR $2)

                  Avatar

                  United States
                  Member #141030
                  April 2, 2013
                  1481 Posts
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                  Posted: February 5, 2016, 8:22 am - IP Logged

                  No NoEnough of this nonsense. JUST PAY THE MAN.

                  Seek and ye shall find -Matt. 7:7 ...Ask and ye shall receive -John 16:24 ...Give and it shall be given unto you -Luke 6:38 ...Be careful what you ask for!!! -Mypiemaster 1:1

                  Having Money Solves Problems That Not Having Money Creates Yes Nod ****John Carlton****

                    dr65's avatar - black panther.jpg
                    50
                    Pennsylvania
                    United States
                    Member #74094
                    May 2, 2009
                    24135 Posts
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                    Posted: February 5, 2016, 8:46 am - IP Logged

                    Too many what if's. Who is to say had the JP not been won that more people would have played

                    and Mr Greedy would have won the same with multi winners? I'd be thinking I might possibly have 

                    won more if that happened here in PA but would take the $1m and go. I believe the lottery will win 

                    because there is no telling what would have happened so there is no way to come up with a fair

                    split. Why should he get it all? Nice try but the lottery has the edge.

                    369 1009 1109 1099 110/011/101 

                      OneTrickpony's avatar - rocking horse.jpg

                      United States
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                      July 25, 2015
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                      Posted: February 5, 2016, 10:11 am - IP Logged

                      The number of players who would have played if the jackpot had it steadily grown from $16.5 million and matched the numbers generated prior to Lucky Larry's win, is the magical tangent.  Then again, who's to say that it wouldn't have stayed the course and he would have won a much bigger JP?

                      I agree that they are going to be hit with a lot of these lawsuits, if they settle or not.  I would think that the Lottery Commission wouldn't want this to go to trial because they would have a greater chance of losing, given the circumstances of the suit (among other reasons).  It will be interesting to see how this scenario plays out, that's for sure.

                        RJOh's avatar - chipmunk
                        50
                        mid-Ohio
                        United States
                        Member #9
                        March 24, 2001
                        20272 Posts
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                        Posted: February 5, 2016, 10:44 am - IP Logged

                        I doubt if this suit will be successful since players are playing for the estimated jackpots posted before each drawings, not for a jackpot that might have been had it rolled during an earlier drawing. 

                        The fact that an earlier win wasn't or couldn't be claimed doesn't change that fact.

                         * you don't need to buy every combination, just the winning ones * 

                        Thumbs Up       

                          Avatar
                          Chasing $ Millions.
                          White Shores- California
                          United States
                          Member #136473
                          December 12, 2012
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                          Posted: February 5, 2016, 11:26 am - IP Logged

                          I doubt if this suit will be successful since players are playing for the estimated jackpots posted before each drawings, not for a jackpot that might have been had it rolled during an earlier drawing. 

                          The fact that an earlier win wasn't or couldn't be claimed doesn't change that fact.

                          I Agree!It's not like these folks were destined to win anyway. Attempting to sue the lottery is like trying to sue the Govt. Very difficult,  but some people give it a shot ever so now & then. 

                           * Voice of Reason *   

                           

                          People who say it cannot be done should not interrupt those who are doing it- George Bernard Shaw.

                            RJOh's avatar - chipmunk
                            50
                            mid-Ohio
                            United States
                            Member #9
                            March 24, 2001
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                            Posted: February 5, 2016, 12:25 pm - IP Logged

                            I Agree!It's not like these folks were destined to win anyway. Attempting to sue the lottery is like trying to sue the Govt. Very difficult,  but some people give it a shot ever so now & then. 

                            Sounds like this guy wants his state court to rewrite the rules for a multi-state game and there's no way other states are going to turn over their share of the default prize money to him regardless of the results of his suit.

                             * you don't need to buy every combination, just the winning ones * 

                            Thumbs Up