By Jason Clayworth
The mastermind behind a national lottery scam says he warned officials about a glitch in computer-generated drawings 11 years ago, but "nobody seemed too worried," his lawyer revealed in an exclusive interview.
The same glitch — involving identical numbers drawn consecutively or nearly consecutively — occurred again in the past two weeks in Arizona, prompting state officials to offer players a refund.
Eddie Tipton's new behind-bars revelation, paired with the duplicate number drawings in Arizona, indicate ongoing problems that threaten the integrity of U.S. lottery systems, critics contend.
"How many of these types of events need to occur before you do in fact create that perception of 'Why play? It's rigged anyway?'" asked Dan Zitting an executive of ACL, a software company based in Vancouver, Canada, that works with more than 900 state and federal government agencies. "I would certainly want to get ahead of it if I were the lottery commission."
Tipton, a longtime computer programmer in the Iowa offices of the Multi-State Lottery Association (MUSL), was sentenced in August to up to 25 years in prison for his role in rigging games in Iowa, Colorado, Wisconsin, Kansas and Oklahoma.
He designed and installed code that allowed him to predict winning numbers drawn every May 27, Nov. 23, and Dec. 29 in non-leap years, investigators said. The resulting rigged lotteries netted $2 million in illegal wins.
Tipton had already started installing his rigged programming code when he first spotted the random-number flaw after two Wisconsin SuperCash games drew the same six numbers in a 10-day period in 2006.
Tipton contends he alerted Multi-State Lottery Association officials about the duplication flaw soon after the Wisconsin drawings.
"Since Eddie wrote the original code that drew the same numbers, he knew there was a problem and he told someone at MUSL," said West Des Moines Attorney Nick Sarcone, who was given permission by Tipton to speak about the matter with the Register. "But nobody seemed too worried about it other than Eddie Tipton."
Joe Diaz, who assisted Iowa with gaming issues as the Iowa Lottery's former vice president of security and a former assistant director of the Iowa Division of Criminal Investigation, said the Multi-State Lottery Association never told him about the concerns over the duplicate Wisconsin drawings.
"That is something highly unusual, and with MUSL being right here, it very much should have been investigated how that took place," said Diaz, who retired in 2011. "It's a big deal, and it should have been brought to Iowa's attention."
Ban computer lottery drawings?
The duplicate drawings in Wisconsin in 2006 carried odds of 1 in 326,000, according to the watchdog group Lottery Post, an online lottery watchdog site based in New Jersey.
Tipton told his boss at the Multi-State Lottery Association, Ed Stefan, that computer software used to draw numbers for dozens of state lotteries had a "randomness problem," Sarcone said.
Stefan took the matter seriously, but other Multi-State Lottery Association executives did not see the issue as a critical problem, Sarcone said.
Ultimately, the association instructed Tipton to make a fix, and Tipton did make changes, Sarcone said.
By that time, Tipton's rigged coding had already been embedded in the programming for almost a year before the duplicate Wisconsin drawings, court records indicate.
But the association failed to have multiple people overseeing Tipton's work, Zitting and Diaz said in response to court testimony in Tipton's case and the Wisconsin drawings.
Because of the lack of oversight, the Multi-State Lottery Association missed an opportunity to detect Tipton's rigged coding and remove it before it damaged the credibility of dozens of state lotteries, Zitting and Diaz said.
Moreover, state lottery members of the Multi-State Lottery Association were not notified about the Wisconsin programming error, according to officials who worked at the Iowa Lottery.
The Multi-State Lottery Association also failed to warn its members following the Arizona duplication glitch, according to Oct. 10 interviews with lottery officials in Iowa and Colorado said.
The lack of system-wide alerts raises serious questions about the integrity of the nation's lottery system, said Todd Northrop, the founder of Lottery Post, who has long advocated for the ban of random computer drawings.
The site's "state lottery report card" indicates that at least 34 states participate in games that use computer-generated numbers.
"No matter how great your (computerized) random drawing allegedly is, there is no way ... to know for 100 percent certainty that you don't have a hack," Northrop said.
The Iowa Lottery is phasing out its only remaining computer drawing game, with Hot Lotto concluding Oct. 28.
Northrop, who has a professional background in computer systems, contends all lotteries should divorce themselves of the Multi-State Lottery Association's computer-generated picks and re-embrace traditional ball-machine drawings.
He questions whether any savings are gained through computer picks if the loss of integrity, lawsuits and other issues are factored in.
"I don't know the answer why they are so dedicated to computerized drawings," Northrop said.
"It might just be because they are easier."
Association remains tight-lipped
Bret Toyne, executive director of the Multi-State Lottery Association, declined multiple requests for an interview, citing ongoing civil litigation related to Tipton's crimes.
Stefan, the association's former chief security officer and Tipton's former supervisor, did not return calls seeking comment.
The association is involved in at least three lawsuits connected with the Tipton scam.
The Register confirmed through Iowa Lottery Director Terry Rich that Tipton had shared the information about the 2006 double drawings in Wisconsin with state investigators following his confession earlier this year.
That information was not part of public court testimony.
Tipton was employed by the Multi-State Lottery Association and was not an Iowa Lottery employee.
But the Iowa Lottery is one of the 36 state or U.S. territory members that owns and operates the Multi-State Lottery Association.
Rich started his role at the Iowa Lottery in 2009. But he said he does not believe that the Multi-State Lottery Association executives notified the Iowa Lottery about Wisconsin's duplicated drawings.
Iowa Lottery Board member Mike Klappholz told the Register in an interview before the Arizona drawing that he believed any problems with computer-generated drawings were fixed and that integrity was restored to the lottery system.
"I've been assured about the random-process generator that is now in place and that integrity at all cost is maintained with checks and balances," said Klappholz, a retired Cedar Rapids Police chief.
Iowa Treasurer Michael Fitzgerald, a nonvoting member of the Iowa Lottery board, said he too had been assured the problems were fixed.
But when the Register spoke with him Sept. 19, he wasn't certain it wouldn't be manipulated again — a significant concern given that the national lottery system had $80.5 billion in sales last year.
"I think you're talking about human nature of someone always trying to game the system," Fitzgerald said.
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