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Study: N.C. Lottery scammers have cheated state out of $7 million

North Carolina LotteryNorth Carolina Lottery: Study: N.C. Lottery scammers have cheated state out of $7 million
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Lottery scammers have cheated North Carolina out of an estimated $7 million in back taxes and delinquent child support since 2009, a non-partisan arm of the General Assembly said.

At the request of a state legislator, the Fiscal Research Division teamed up with a UNC-Chapel Hill statistician to calculate the loss following an Observer investigation that found dozens of players winning the lottery so often that their luck defies logic.

Highlighted in the Observer's series was a lucrative secondary market for winning lottery tickets. In it, players resell tickets to avoid automatic withholdings, such as back taxes and child support. Buyers collect the prize and sellers remain anonymous, the Observer found.

Some players may be undocumented immigrants wanting to avoid government scrutiny, said an attorney for the lottery.

The division's analysis was the first time the state tried to estimate how much it was losing to players who resell winning tickets.

The estimated loss nearly matches the $11.5 million the state has automatically withheld from winners who owed debts since 2006.

"Seven million is a big enough loophole to plug," said Rep. Paul Stam, a Wake County Republican who asked the research division to investigate. "Unless they (legislators) are just in love with the lottery, I'd say almost unanimously, they'd want to plug that loophole."

Stam is retiring from the General Assembly but said he's spoken with a senior legislator who plans to introduce a bill next session that would make ticket reselling "a low-grade misdemeanor."

Alice Garland, the lottery's executive director, said she would like to see the specific legislation before saying whether lottery staff would support the proposal.

Indiana, Florida and Iowa have laws against reselling tickets. Here, it's against lottery policy for retailers or employees to buy resold tickets. Regular players are free to do so, even though North Carolina Education Lottery officials acknowledge it can hurt taxpayers and single parents.

Statisticians who reviewed lottery data for the Observer's series said they recognized trends that suggest fraud or reselling tickets.

A simple online search shows just how easy it can be. Two weeks ago, a lottery winner from Morganton offered to sell on Craigslist a winning $1,000 scratch-off ticket for $750.

"Need money now!!!," the ad read.

Jan Hannig, the UNC statistics professor who helped the research division, said his analysis took a conservative approach by only looking at the most prolific winners. It's likely, he said, the state was missing out on much more debt set-off payments.

Lottery Commission chair Kim Griffin Jr. said he was aware of the $7 million estimate but has yet to form an opinion on it.

"I don't know if we're able to say if it's accurate or if it's bull," he said.

But consider the Observer's findings:

  • Many players beat baffling odds for months at a time, raising red flags about how they won. For instance, a High Point woman hit winners nine times in a four-month span, overcoming odds of 1 in 5,000, 1 in 40,000, 1 in 70,000 and 1 in 120,000. She collected $21,000 that year from scratch-off tickets, data show.
  • Most big-prize winners won once or twice. But the number of repeat big winners  some of whom won on 15 or more scratch-off tickets in a single year  has surged since the lottery began in 2006, far outpacing the growth in total winners.
  • Dozens of retailers or their employees — the gatekeepers to potential fortunes  have beaten improbable odds time and again to collect significant prizes at their own stores.

Lottery critics say allowing retailers and employees to play where they work creates too much temptation. Some North Carolina workers have been caught stealing winning tickets from their customers and then claiming the prize for themselves.

In 2010, a store owner in Dunn told a player that her ticket was a loser, then pocketed her winning ticket worth nearly $90,000. The retailer was caught more than a year later when he tried to claim the prize, which was returned to the original ticket buyer.

Workers at two stores recently tried to steal an undercover agent's fake winning ticket, the lottery announced Tuesday. The lottery terminated their license to sell tickets. The lottery suspended the license of a third store after a worker bought a fake ticket from an officer for a discounted price.

The tickets, used during security checks at 138 locations statewide, looked like real winners. The lottery celebrated the results, saying that 98 percent of those checked were truthful to the undercover officers.

"We wish all retailers who were checked had passed the test," Garland said. "Every lottery player who has the good luck to win a lottery game deserves to get the prize they won and we will continue efforts such as this to ensure that happens."

Also Tuesday, the commission made it a best practice for retailers and employees to only buy lottery tickets where they work while they're off duty and the purchase is made through another employee. A spokesman said the lottery will emphasize the new policy at upcoming retailer training sessions.

Griffin called the change "very reasonable" but added that he's open to looking at other options, too.

Stam said the change doesn't go far enough.

"It ought to be totally prohibited," he said.

Indiana is the only state that prevents retailers or employees from buying tickets where they work.

Charlotte Observer

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14 comments. Last comment 1 month ago by itpmguru.
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Greensboro, North Carolina
United States
Member #1616
June 5, 2003
1288 Posts
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Posted: December 7, 2016, 5:28 pm - IP Logged

I appreciate reading the article, but N.C. must not be singled out in this Nation wide act. N.C. is just the only state presently that has come up with a guess estimate of how much they are losing from dead beat parents and illegals. Just 6 weeks ago we had a guy, where I work at, won $1,000 on a scratch off and was trying to sell it for $600 because he owed back child support. I see it all the time.

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    Simpsonville
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    Member #163189
    January 22, 2015
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    Posted: December 7, 2016, 6:07 pm - IP Logged

    I appreciate reading the article, but N.C. must not be singled out in this Nation wide act. N.C. is just the only state presently that has come up with a guess estimate of how much they are losing from dead beat parents and illegals. Just 6 weeks ago we had a guy, where I work at, won $1,000 on a scratch off and was trying to sell it for $600 because he owed back child support. I see it all the time.

    A Granny @ work had on a KY Lottery winner t-shirt.  Asked her how much she won and she said she cashed in a ticket for a 'friend'.  So it probably happens everywhere.

      RJOh's avatar - chipmunk
      mid-Ohio
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      Member #9
      March 24, 2001
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      Posted: December 7, 2016, 6:12 pm - IP Logged

      Lottery scammers have cheated North Carolina out of an estimated $7 million in back taxes and delinquent child support since 2009, a non-partisan arm of the General Assembly said.

      That comes out to about a million dollars a year,  I wonder how much the state would be willing to spend trying to collect it.   There's a reason states don't bother tracking prizes less than $600.   If a person is in the business of buying winning tickets then he/she is prepared to make it costly for the state to prove it.

       * you don't need to buy more tickets, just buy a winning ticket * 
         
                   Evil Looking       

        helpmewin's avatar - dandy
        u$a
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        February 22, 2011
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        Posted: December 7, 2016, 6:26 pm - IP Logged

        Why don't they just pay the money they owe with the Lottery's money.

        Let it Snow Snowman

          grwurston's avatar - 144
          Let's Go Rangers!!!
          bel air maryland
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          April 24, 2010
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          Posted: December 7, 2016, 6:40 pm - IP Logged

          The clerks know which of their regular players hit the most often. After the customer leaves, they just need to pull up a printout and play the same numbers themselves.

          Are there dishonest clerks that rip people off? Yep. But that happens to the players who hand their tickets to the clerk and  say, "Can you check this for me".  If they would check the tickets themselves, that would end.

          "You can observe a lot just by watching." Yogi Berra, Hall of Fame baseball player.

          The numbers will tell you what numbers to play. Pay attention to the numbers.

          Don't just think outside the box, crush it.

            MaximumMillions's avatar - Lottery-013.jpg

            Germany
            Member #164603
            March 8, 2015
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            Posted: December 7, 2016, 6:54 pm - IP Logged

            Why don't they just pay the money they owe with the Lottery's money.

            They probably owe more and wouldn't be able to keep any of it.

            Nolege is power.

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              south el monte
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              May 4, 2014
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              Posted: December 7, 2016, 7:01 pm - IP Logged

              It's not always about owing money or being illegal. Im not illegal and dont owe anything but i wouldnt claim the money myself if i ever were to win for certain reasons that is my personal business. I dont see how its scamming.

                KINDWIN's avatar - Lottery-002.jpg
                New Member

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                Member #174214
                April 9, 2016
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                Posted: December 7, 2016, 8:49 pm - IP Logged

                How about, people win because they bought a ticket?.( Multi tickits.) How much would they make  if people stopped playing ? there have been record  breaking sales almost every month..  they are trippin!!!

                  music*'s avatar - nw bookeep.jpg
                  Happy California
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                  Posted: December 7, 2016, 9:21 pm - IP Logged

                  Do not forget Karma. What goes around comes around to get you. 

                   Dishonesty will slow you down on your path. 

                   Do unto others as you would have them do to you.White Bounce

                   Chi ha danari, trova cugini. (He who has money finds many cousins.) Italian proverb

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                    Franklin-n.c
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                    April 12, 2006
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                    Posted: December 8, 2016, 5:58 am - IP Logged

                    Raleigh will just think of something  else to Tax us on to make up for the loss

                      itpmguru's avatar - 42a4d4d8f2a4312fb8e253dd8f6ef251
                      No Man's Land
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                      February 19, 2015
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                      Posted: December 8, 2016, 10:42 pm - IP Logged

                      IMHO, the only "Scammers" at play here are NCEL themselves under direction of Director Alice Garland herself.  NCEL P3/P4 games have changed SO VERY much in the past 3 years since introducing 1-off, (which only pays when you are 1-off) that many veteran players in NC have given up.   They have given up because numerology does not lie in other states, but does not even come close in NC anymore.   Player-ship is up in NC, but yet they have had some of the lowest payouts ever in the history of NCEL over the past 12 mos.


                      The only thing here that smells funny or that could be considered fraudulent here, is the lottery director who wants to tell everyone how she does everything right and how you will win big by playing.  This lottery is rigged beyond belief (and is more apparent everyday) and warrants a Dept of Justice investigation!

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                        USA
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                        January 16, 2016
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                        Posted: December 10, 2016, 7:11 am - IP Logged

                        The clerks know which of their regular players hit the most often. After the customer leaves, they just need to pull up a printout and play the same numbers themselves.

                        Are there dishonest clerks that rip people off? Yep. But that happens to the players who hand their tickets to the clerk and  say, "Can you check this for me".  If they would check the tickets themselves, that would end.

                        I am sure the Printed Lottery Tickets (PB, MM, Etc)have changed a lot since I last worked at a Convenience Store but their was no way to pull a printout of what #'s were ever sold on a Ticket! at the end of each shift all you could do was print out the dollar amount of lotto tickets sold! Even back then when employee's wanted to buy Lottery Tickets another Employee had to ring them up & take the money, why would you want to make your own employees go to a different Store and spend their money there? That makes ZERO sense, When a customer brings in a Ticket too be checked the Machine Makes a Noise for a few seconds alerting you the ticket is a WINNER, If It's payable at the store It prints out a separate half Ticket with the amount on it, if not It tells you to go to the Lottery Office too claim your WINNINGS. 

                        I AM VERY PROUD TO SAY I NEVER EVER TRIED TO CHEAT A CUSTOMER ON ANY TICKET, TAUGHT MY EMPLOYEES TO BE THE SAME WAY, always show customer the Printout If It was a WINNER and If It's a Losing ticket offer It back to the Customer If they didn't want It, RIP It up in front of them and throw It away! NOW HOW DIFFICULT IS THAT????

                         CAN'T Wait till a LP POSTER WINS BIG Party

                          LottoAce's avatar - WWI Flying_Ace.gif
                          N.C.
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                          Member #56005
                          October 28, 2007
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                          Posted: December 10, 2016, 12:35 pm - IP Logged

                          Lottery scammers have cheated North Carolina out of an estimated $7 million in back taxes and delinquent child support since 2009, a non-partisan arm of the General Assembly said.

                          That comes out to about a million dollars a year,  I wonder how much the state would be willing to spend trying to collect it.   There's a reason states don't bother tracking prizes less than $600.   If a person is in the business of buying winning tickets then he/she is prepared to make it costly for the state to prove it.

                          I agree with you RJOh. it would not be cost effective to track a million dollars a year.
                          the manpower and resourses alone would bite you in the rear.

                          "know your limitations, but excede your expectations"

                            itpmguru's avatar - 42a4d4d8f2a4312fb8e253dd8f6ef251
                            No Man's Land
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                            February 19, 2015
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                            Posted: December 13, 2016, 8:17 pm - IP Logged

                            The couple of million dollars that the state loses to people like these (having others claiming prizes for the),  pails in comparison to the MILLIONS every week that NC players are bilked by a corrupt lottery system.  Every since Alice Garland came into "power" she has been non-stop trying to scam players!


                            It is time for the people of NC to demand a NCEL investigation and for her to go to prison!