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First lawsuit in state lottery-fixing scandal seeks millions

Topic closed. 31 replies. Last post 10 months ago by mikeintexas.

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cbr$'s avatar - maren
Cordova,Al.
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Posted: February 5, 2016, 1:15 pm - IP Logged

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.

I too believe they are going to be hit with a lot of lawsuits. I'm waiting for them to be hit with either a class action suit or a civil suit, that represents the Iowa every day players. This is going to get very interesting. Tipton & his friends won jackpots . Top prizes over time again & again. Which means the Iowa's every day players get rip- off again & again. This lottery integrity when down the drain the minute this story became national news. Every day players should been real salty about this. What is Iowa's Lottery going to do for it regular every day players that feed these rigged jackpot? The word Nothing isn't a option in this case. To regain your players trust you need to come up with something.

    noise-gate's avatar - images q=tbn:ANd9GcR91HDs4UJhjxO7cmeMQWZ5lB_FOcMLOGicau4V74R45tDgPWrr
    Bay Area - California
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    Posted: February 5, 2016, 2:53 pm - IP Logged

    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.

    Exactly. .

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

      Artist77's avatar - batman14

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      Posted: February 5, 2016, 3:58 pm - IP Logged

      This suit is not about unclaimed jackpots....but about a prior "winner", later voided, which reset the jackpot amount. The jackpot should have kept growing so I think this is a brilliant argument.

      J'aime La France.

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        Kentucky
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        Posted: February 5, 2016, 5:25 pm - IP Logged

        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?

        You missed where I said "could", but the winnings from the drawing were Tipton was convicted for rigging went unclaimed.

        "Is there any way in which this drawing was different than the drawings that have result in unclaimed jackpots?"

        Nobody said the drawing Dawson won was rigged so of course it was different. Just because the winning went unclaimed doesn't change the fact the drawing was rigged.

          Think's avatar - lightbulb
          Marquette, MI
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          Posted: February 5, 2016, 10:21 pm - IP Logged

          If it is proven that the Michigan RNG games have been rigged then I just want all my money back for all the tickets I bought along with triple damages because the game was rigged and unfair and there was fraud in that not everyone had an equal chance.

          If it is ever proven that the Michigan "Rigged Numbers Games" were ever rigged then let me at the MSL!!!

          I hope victims in the Tipton cases who didn't win have saved some of their tickets and demand their money back for those tickets.

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            Posted: February 6, 2016, 2:06 am - IP Logged

            You missed where I said "could", but the winnings from the drawing were Tipton was convicted for rigging went unclaimed.

            "Is there any way in which this drawing was different than the drawings that have result in unclaimed jackpots?"

            Nobody said the drawing Dawson won was rigged so of course it was different. Just because the winning went unclaimed doesn't change the fact the drawing was rigged.

            It's not about saying "could", it's about your apparent inability to understand what actually happened. The jackpot for the rigged drawing didn't go unclaimed. The reason Tipton rigged it was so that he could claim the a jackpot. He did claim it, but the lottery didn't pay it. Do you understand the difference between a valid prize not being claimed by the rightful winner and a prize not being paid because it wasn't really won?

            This case is going to have absolutely no effect on how unclaimed prizes are treated, because it doesn't involve an unclaimed prize.

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              Posted: February 6, 2016, 4:38 am - IP Logged

              It's not about saying "could", it's about your apparent inability to understand what actually happened. The jackpot for the rigged drawing didn't go unclaimed. The reason Tipton rigged it was so that he could claim the a jackpot. He did claim it, but the lottery didn't pay it. Do you understand the difference between a valid prize not being claimed by the rightful winner and a prize not being paid because it wasn't really won?

              This case is going to have absolutely no effect on how unclaimed prizes are treated, because it doesn't involve an unclaimed prize.

              "Do you understand the difference between a valid prize not being claimed by the rightful winner and a prize not being paid because it wasn't really won?"

              Read the article again; it's about a jackpot that was never paid out. Whether it was because a ticket went unclaimed or in this case the claim was invalid per Iowa Lottery rules, the jackpot prize was still never paid. Crawford can prove the jackpot wasn't really won because the lottery declared the winning ticket invalid. The court will decide if Dawson has a legitimate claim.

              The was a case in Ohio when one of three winning lotto tickets went unclaimed; the two winners argued they should get the unclaimed share. Maybe RJ remembers the outcome. Like I said before any lottery could be sued. Winning their case is another story.

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                Posted: February 6, 2016, 5:14 am - IP Logged

                Great to see the actions of the winners! This goes to the heart of the matter- trust.  Anyone who played the game trusted that it was a valid game and you had a chance to win.  If a judge agrees with the lawsuit I could see it shutting the game down. The ramification through out the lottery's across the country could be huge. 

                This might be what we need to get away from RNG's - Thumbs Up

                  OneTrickpony's avatar - thought

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                  Posted: February 6, 2016, 9:44 am - IP Logged

                  I too believe they are going to be hit with a lot of lawsuits. I'm waiting for them to be hit with either a class action suit or a civil suit, that represents the Iowa every day players. This is going to get very interesting. Tipton & his friends won jackpots . Top prizes over time again & again. Which means the Iowa's every day players get rip- off again & again. This lottery integrity when down the drain the minute this story became national news. Every day players should been real salty about this. What is Iowa's Lottery going to do for it regular every day players that feed these rigged jackpot? The word Nothing isn't a option in this case. To regain your players trust you need to come up with something.

                  I hope there isn't a class action lawsuit, because the only people who win in those scenarios are the law firms.  I thought maybe if people who played this Lotto could take their tickets and trade them in for a free ticket for each game bought?  But then I remembered that the tickets will be almost 5 years old and probably completely illegible by now.  But they do have a "VIP Club" on the Iowa Lottery website where people enter their non-winning tickets, but I don't know how far it goes back. 

                  You are right, this is a PR nightmare and people tend to have long memories.  Well, I hope that people who are way smarter than me can figure this out.

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                    Posted: February 7, 2016, 4:14 am - IP Logged

                    "Do you understand the difference between a valid prize not being claimed by the rightful winner and a prize not being paid because it wasn't really won?"

                    Read the article again; it's about a jackpot that was never paid out. Whether it was because a ticket went unclaimed or in this case the claim was invalid per Iowa Lottery rules, the jackpot prize was still never paid. Crawford can prove the jackpot wasn't really won because the lottery declared the winning ticket invalid. The court will decide if Dawson has a legitimate claim.

                    The was a case in Ohio when one of three winning lotto tickets went unclaimed; the two winners argued they should get the unclaimed share. Maybe RJ remembers the outcome. Like I said before any lottery could be sued. Winning their case is another story.

                    "it's about a jackpot that was never paid out."

                    It's about a jackpot that was never won. That's completely different than a jackpot that was won but not claimed by the winner. I'll ask again: do you understand that there's a difference?

                    "The court will decide if Dawson has a legitimate claim."

                    If they do decide his claim is legitimate it will be based on the argument that the jackpot should have been bigger because Tipton didn't win the earlier jackpot, not because it wasn't paid.

                    "one of three winning lotto tickets went unclaimed"

                    Anyone with a clue can tell you what the result was. There were three separate prizes. Two people claimed, and were paid, the prize they were entitled to. Their prizes were completely independent of the third prize and what the winner of the third prize did or didn't do.

                    "Like I said before any lottery could be sued."

                    What you said before was that this case could create a precedent for "any unclaimed jackpot". It can't, because this case doesn't involve a jackpot that went unclaimed.

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                      Posted: February 8, 2016, 8:58 pm - IP Logged

                      "it's about a jackpot that was never paid out."

                      It's about a jackpot that was never won. That's completely different than a jackpot that was won but not claimed by the winner. I'll ask again: do you understand that there's a difference?

                      "The court will decide if Dawson has a legitimate claim."

                      If they do decide his claim is legitimate it will be based on the argument that the jackpot should have been bigger because Tipton didn't win the earlier jackpot, not because it wasn't paid.

                      "one of three winning lotto tickets went unclaimed"

                      Anyone with a clue can tell you what the result was. There were three separate prizes. Two people claimed, and were paid, the prize they were entitled to. Their prizes were completely independent of the third prize and what the winner of the third prize did or didn't do.

                      "Like I said before any lottery could be sued."

                      What you said before was that this case could create a precedent for "any unclaimed jackpot". It can't, because this case doesn't involve a jackpot that went unclaimed.

                      "It's about a jackpot that was never won."

                      The lottery said the jackpot was won and even lowered the prize for the next drawing. The California Lottery was waiting to pay out a $63 million jackpot before the ticket expired last Thursday.  The Iowa Hot Lotto "winning" ticket became invalid even before the lottery knew the drawing circumstances. Dawson suing tying to collect a jackpot prize that was never paid out.

                      "What you said before was that this case could create a precedent for "any unclaimed jackpot". It can't, because this case doesn't involve a jackpot that went unclaimed."

                      You're arguing just for the sake of arguing. It's obvious unclaimed jackpots mean the jackpot prize was never paid out just like the Hot Lotto jackpot. As for setting precedents, they were already set. Any winning case against a lottery that forces it to pay non-traditional prize money will set a precedent and it could happen.

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                        Posted: February 8, 2016, 11:33 pm - IP Logged

                        "It's about a jackpot that was never won."

                        The lottery said the jackpot was won and even lowered the prize for the next drawing. The California Lottery was waiting to pay out a $63 million jackpot before the ticket expired last Thursday.  The Iowa Hot Lotto "winning" ticket became invalid even before the lottery knew the drawing circumstances. Dawson suing tying to collect a jackpot prize that was never paid out.

                        "What you said before was that this case could create a precedent for "any unclaimed jackpot". It can't, because this case doesn't involve a jackpot that went unclaimed."

                        You're arguing just for the sake of arguing. It's obvious unclaimed jackpots mean the jackpot prize was never paid out just like the Hot Lotto jackpot. As for setting precedents, they were already set. Any winning case against a lottery that forces it to pay non-traditional prize money will set a precedent and it could happen.

                        "The lottery said the jackpot was won"

                        And we all know that it turns out that they were wrong.

                        "and even lowered the prize for the next drawing."

                        Well, duh. They always reset the jackpot after they think there has been a jackpot winner. Since there wasn't really a winner the jackpot should have rolled over instead of being reset.

                        "Any winning case against a lottery that forces it to pay non-traditional prize money will set a precedent"

                        That's true, but a precedent in a case about apples won't apply to cases about oranges. That's why your original claim is wrong. This lawsuit isn't about a legitimate prize that went unclaimed, so it can't possibly create a precedent about legitimate prizes that go unclaimed. I've got no idea what's preventing you from understanding something so simple.

                        Oranges: When a prize is won the winner becomes entitled to the prize. If the winner fails to claim the prize they're entitled to it reverts back to the lottery, and the lottery does what their rules require them to do with it. They may pass it on to other players by way of their various games, but in that case it goes to the winners of those games. No player other than the rightful winner(s) ever has a claim on the original prize, and other players only acquire a claim on the money from the unclaimed prize by way of any games the lottery may use to distribute that money in the form of new prizes.

                        Apples: Jackpot prize money rolls over to the next jackpot if there isn't a winner. In the Tipton there wasn't a winner, but for a period of time the Iowa lottery mistakenly believed there was a winner. Dawson's case is about jackpot money that was never won, not an unclaimed prize.

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                          Posted: February 9, 2016, 6:46 pm - IP Logged

                          "The lottery said the jackpot was won"

                          And we all know that it turns out that they were wrong.

                          "and even lowered the prize for the next drawing."

                          Well, duh. They always reset the jackpot after they think there has been a jackpot winner. Since there wasn't really a winner the jackpot should have rolled over instead of being reset.

                          "Any winning case against a lottery that forces it to pay non-traditional prize money will set a precedent"

                          That's true, but a precedent in a case about apples won't apply to cases about oranges. That's why your original claim is wrong. This lawsuit isn't about a legitimate prize that went unclaimed, so it can't possibly create a precedent about legitimate prizes that go unclaimed. I've got no idea what's preventing you from understanding something so simple.

                          Oranges: When a prize is won the winner becomes entitled to the prize. If the winner fails to claim the prize they're entitled to it reverts back to the lottery, and the lottery does what their rules require them to do with it. They may pass it on to other players by way of their various games, but in that case it goes to the winners of those games. No player other than the rightful winner(s) ever has a claim on the original prize, and other players only acquire a claim on the money from the unclaimed prize by way of any games the lottery may use to distribute that money in the form of new prizes.

                          Apples: Jackpot prize money rolls over to the next jackpot if there isn't a winner. In the Tipton there wasn't a winner, but for a period of time the Iowa lottery mistakenly believed there was a winner. Dawson's case is about jackpot money that was never won, not an unclaimed prize.

                          "Well, duh. They always reset the jackpot after they think there has been a jackpot winner."

                          Which state lottery announces "we thing there was a jackpot winner"?

                          "Since there wasn't really a winner the jackpot should have rolled over instead of being reset."

                          Yep and that's the basis of this lawsuit. The point you're missing is there are no lottery rules or guidelines to deal with a rigged drawing. Iowa is probably using the same guidelines the use for unclaimed prizes.

                          "Dawson's case is about jackpot money that was never won, not an unclaimed prize. "

                          You're back to silly semantics again and ignorance of what really happened Iowa. The Iowa Lottery validated the winning ticket, refused pay out the prize, found out an employee rigged the drawing, and will argue in court the prize is the same as an unclaimed ticket.

                          Which part of there was a winning Hot Lotto ticket is confusing you?

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                            Posted: February 9, 2016, 10:59 pm - IP Logged

                            "Well, duh. They always reset the jackpot after they think there has been a jackpot winner."

                            Which state lottery announces "we thing there was a jackpot winner"?

                            "Since there wasn't really a winner the jackpot should have rolled over instead of being reset."

                            Yep and that's the basis of this lawsuit. The point you're missing is there are no lottery rules or guidelines to deal with a rigged drawing. Iowa is probably using the same guidelines the use for unclaimed prizes.

                            "Dawson's case is about jackpot money that was never won, not an unclaimed prize. "

                            You're back to silly semantics again and ignorance of what really happened Iowa. The Iowa Lottery validated the winning ticket, refused pay out the prize, found out an employee rigged the drawing, and will argue in court the prize is the same as an unclaimed ticket.

                            Which part of there was a winning Hot Lotto ticket is confusing you?

                            "Iowa is probably using the same guidelines the use for unclaimed prizes."

                            There's the heart of the matter. Since the money was returned to the various states it seems pretty obvious that they are treating it as an unclaimed prize.

                            "will argue in court the prize is the same as an unclaimed ticket."

                            Let's assume that's exactly what they'll do. Do you agree with that argument? <- That's a question mark. It means I've asked something (as I've done before) that you should answer, assuming you're capable of answering. It's a simple yes or no question, so I don't think it should be too challenging.

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                              Posted: February 14, 2016, 7:16 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.

                              Your comment about the 2008 Presidential WINNER, by the way His name is PRESIDENT OBAMA!! Has absolutely nothing to do with the story at hand also, He and His Wife The FIRST LADY, had plenty of Money before he became PRESIDENT of AMERICA,Both were Attorney's, then he was a Senator before running for President! I am positive their is a Book about him out their somewhere, If you can READ????