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.
- Deadline for claiming $16.5M Hot Lotto jackpot nears, Sep. 21, 2011
- Unclaimed Iowa lottery jackpot to expire Dec. 29, Dec. 1, 2011
- Iowa $16.5M Hot Lotto winner claims prize with two hours to spare, Dec. 29, 2011
- Iowa Lottery security chief bent on determining identity of jackpot winner, Jan. 10, 2012
- NY lawyer in lottery mystery travels to Iowa this week, Jan. 17, 2012
- Iowa Lottery security chief to grill NY lawyer over Hot Lotto ticket, Jan. 17, 2012
- Representative of Hot Lotto winner named in lawsuit, Jan. 20, 2012
- Hot Lotto trust representative won't name winner, Jan. 20, 2012
- Iowa Lottery threatens to deny jackpot payout if winner stays anonymous, Jan. 23, 2012
- Lawyer gives up $14 million Iowa lottery ticket claim, Jan. 26, 2012
- $14.3 million Hot Lotto prize claim withdrawn, Jan. 27, 2012
- Iowa Legislators satisfied with Lottery's handling of mystery jackpot winner, Feb. 1, 2012
- Iowa Lottery to give away millions from jackpot mystery, Feb. 26, 2012
- Iowa Lottery director: 50-50 that Hot Lotto mystery will be solved, Aug. 9, 2012
- Iowa officials trying to solve lotto mystery, may release surveillance video, Aug. 19, 2012
- 1 year later, Iowa Lottery still hunting for suspicious no-show winner, Jan. 30, 2013
- Inquiry in Iowa Lottery mystery touches Canada, Jul. 26, 2013
- Lottery jackpot probe heats up after immunity deal, Oct. 8, 2013
- Iowa Lottery still hunting mystery Hot Lotto winner [video], Oct. 10, 2014
- MUSL employee arrested in Hot Lotto jackpot mystery, Jan. 15, 2015
- BOMBSHELL: MUSL employee might have rigged Hot Lotto computerized drawing, Apr. 13, 2015
- Texas man charged in Iowa lottery case contests extradition, Apr. 20, 2015
- Extradition trial begins this week in $16.5M Hot Lotto fraud case, Jun. 7, 2015
- Inside the biggest lottery scam ever, Jul. 7, 2015
- Trial underway in world's biggest lottery fraud case, Jul. 14, 2015
- Lottery security chief: Rigging computerized game "sadly" possible, Jul. 15, 2015
- Prosecution rests in Hot Lotto trial, Jul. 16, 2015
- Defense quickly wraps up in Hot Lotto trial, Jul. 16, 2015
- Hot Lotto case moves to jury for deliberations, Jul. 17, 2015
- Former lottery security employee guilty of rigging $14.3M drawing, Jul. 20, 2015
- MUSL security worker who rigged drawing gets 10 years, Sep. 9, 2015
- HOT LOTTO DRAWING CHEAT CHARGED WITH RIGGING MORE JACKPOTS, Oct. 9, 2015
- Texas authorities had previously investigated brother of lottery cheat, Oct. 14, 2015
- Another $1.2M Hot Lotto jackpot rigged by Tipton, officials say, Nov. 21, 2015
- Jackpot-fixing investigation expands to more state lotteries, Dec. 18, 2015
- Prosecutors say Tipton rigged two jackpots he purchased tickets for in Kansas, Dec. 21, 2015
- Maine gives names of Hot Lotto winners to Iowa team looking into rigging scheme, Dec. 23, 2015
- S.C. Lottery assures public no computerized drawings used in state, Dec. 23, 2015
- Kansas lottery players questioning game's integrity, Dec. 23, 2015
- MUSL CHIEF OUSTED OVER JACKPOT-RIGGING SCANDAL, Dec. 23, 2015
- Lottery scandal unlikely to affect New Mexico, official says, Dec. 26, 2015
- Tipton granted delay in next trial until July, Dec. 29, 2015
- Iowa Lottery CEO Terry Rich to answer lottery player questions live Monday evening, Jan. 11, 2016
Thanks to Prefontaine for the tip.
Guys accept it all officials in which ever government position they are in they are paid legal criminals :DDDD
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.
I rememberedwhen he won, I think this is the beginning of many law suits to come.
Here's a short quiz for you:
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.
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.
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.
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.
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.
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.
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.