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Infamous lottery scammer says US computerized lottery drawings remain fatally flawed

Mar 19, 2018, 8:32 am

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Insider BuzzInsider Buzz: Infamous lottery scammer says US computerized lottery drawings remain fatally flawedRating:

Eddie Tipton warned them.

As the head of IT at the Multi-State Lottery Association, Tipton pulled aside his boss and told him the computer software that randomly selected the winning numbers for million-dollar games in as many as 17 states had a terrible flaw.

It wasn't really random.

Though his boss listened, Tipton told state investigators that other officials with the nation's chief lottery system did not. They told him to fix it, then moved on.

A disgruntled Tipton made some updates but also stuck in a computer code that let him rig at least five jackpots in as many states worth a combined $24 million in prizes.

Even after he was caught, Tipton insisted the lottery system remained fatally flawed.

Lottery officials have assured the public that the games' problems have been resolved. But Tipton's lawyers and others aren't convinced.

And some have accused the association of trying to placate the public so people will keep playing. They cite an unreleased internal investigation as one example.

"The Multi-State Lottery Association suggests they only conducted the internal investigation because we sued them," said Gary Dickey, a Des Moines attorney. "And that should be very concerning to anybody who plays the lottery."

One of Dickey's clients, Burlington, Iowa, resident Dale Culler, is seeking a class-action lawsuit on behalf of all players cheated out of lottery wins by Tipton's manipulated drawings.

The association, commonly referenced as MUSL, is owned and operated by 36 member lotteries, mostly state organizations such as the Iowa Lottery. It operates some of the nation's most popular games, including Powerball and Lotto America — as well as the now-defunct Hot Lotto game that was the subject of Tipton's biggest conquest and failure.

Tipton was convicted of fraud and sentenced last year to as much as 25 years in prison related to rigged jackpots in Colorado, Wisconsin, Iowa, Kansas and Oklahoma.

In his confession to state authorities, Tipton said his former employer ignored multiple warnings before his scam was uncovered, including security deficiencies that he pointed out himself.

"It's definitely myself trying to say: 'Look, you guys are skating on thin ice, and you don't even know it and you're not paying attention,'" Tipton told state officials.

The lottery association's mistakes

Citing ongoing litigation, Multi-State Lottery Association officials declined to answer almost all questions related to Tipton's secret coding, which went undiscovered for years.

They also declined to outline what changes the organization has made following the discovery that its own employee had hacked the system.

Association officials did, however, respond to Tipton's statement in which he asserted some state lotteries "actually encouraged me to play their games because they wanted the revenue."

"All MUSL employees are, and have always been, prohibited from claiming prizes in games facilitated by MUSL," said Bret Toyne, the association's CEO. "In 2015, this prohibition was extended to all lottery games offered by United States lotteries, regardless of whether MUSL has any involvement in those games."

The "most obvious and basic" mistake the association made was its failure to have a separation of duties among its employees, said Gus Fritschie, an executive of SeNet International, a Virginia-based company that helped investigators reverse-engineer Tipton's code.

As director of security, Tipton was the lead programmer and had access to the Multi-State Lottery Association's systems, he noted.

Tipton's random-number software was certified by a New Jersey-based company, Gaming Laboratories International. Tipton designed his rigged coding so that it wasn't detected in the company's random tests, according to a report Fritschie helped present last year.

Gaming Labs did not return a request for comment. Its website said early this month it conducts all testing and certification for the Multi-State Lottery Association, but that statement was removed after the Des Moines Register on March 5 requested copies of its contract with the association.

Toyne said the association does not have any ongoing contractual relations with Gaming Labs.

"To give MUSL credit now, they have completely revamped their entire process," Fritschie said, "and their operational, management and technical controls are 100 times better than they were when this fraud was committed."

In 2016, the association's board president, Gary Grief, responded to questions about the Tipton scam posed by the U.S. Senate Committee on Commerce, Science and Transportation.

He assured lawmakers that all of Tipton's illegal software has been taken out of service, and his organization "continuously conducts meticulous analyses, audits and reviews" of all its games.

Des Moines attorney Nick Mauro questions how it is possible that the association was conducting rigorous monitoring during Tipton's tenure and never discovered his coding, yet now professes to have "100 times better" security processes in place.

"It doesn't add up," said Mauro, who is part of the team seeking a class-action lawsuit against the association.

Some consequences apparent

The Multi-State Lottery Association faced consequences even before Tipton was sentenced for spearheading the largest lottery scam in U.S. history.

The Iowa Lottery, for example, no longer uses the association's programs that randomly select game numbers. The Tipton scandal played a part in that decision, Iowa Lottery CEO Terry Rich said.

In addition to the possible class-action lawsuit, the association faces a lawsuit brought by Larry Dawson of Webster City, Iowa, who contends that his jackpot was smaller than it should have been as a result of Tipton's fraudulent win.

It's unknown whether any Multi-State Lottery Association employee other than Tipton has been held accountable for the scandal. Charles Strutt, the director since the association's 1987 founding, retired in 2015, just days after state investigators announced they had expanded their probe nationwide.

An organization statement said Strutt believed new leadership was necessary for it "to move forward to regain its status in the lottery industry."

Strutt did not return calls seeking comment for this story.

Internal investigation's findings

The Multi-State Lottery Association's board hired the Des Moines law firm of Dorsey & Whitney to conduct an investigation into fraud in the wake of Tipton's scheme.

An April 26, 2016, summary obtained by the Register indicates the firm was unable "to do a law-enforcement-style investigation" because it did not have subpoena or compulsory powers.

Nonetheless, Dorsey & Whitney concluded no other association employees were involved.

The summary provided to board members said the association had improved practices or procedures related to the Hot Lotto Draw in 2010 that ultimately revealed Tipton's scam, but "a public description would undermine their purpose and effect."

Jason Maher, a former computer technician for the association, said he was unexpectedly fired about four months after the Dorsey & Whitney report. He said he was given no reason, but he told prosecutors during a Nov. 30, 2016, court deposition that the Powerball drawing was moved to Florida, a blow to the Iowa staff.

"They no longer had a need for me because of the whole thing," Maher said in the deposition, which was related to Tipton's criminal charges. "We lost a lot of clients."

'Huge consequences'

The Register reached out to several state lotteries for reaction to Tipton's confessions. For example, he specifically mentioned deficiencies in California's Lottery that he said made it vulnerable.

Russell Lopez, deputy director of the California Lottery, disputed Tipton's claims, saying its procedures are sound.

Maryland Lottery dropped its membership with the Multi-State Lottery in 2016, largely a strategic decision, said its director Gordon Medenica. Maryland is part of the Mega Millions network and much of the services offered through the association weren't needed, Medenica said.

Even so, lotteries across the nation have taken note of the Tipton scandal, said Gordon Medenica, director of the Maryland Lottery, a one-time member of the Multi-State Lottery Association.

"I think it's had huge consequences," Medenica said. "... Everybody in the technical side of the business is hugely aware of where the vulnerabilities are and what we need to do to prevent any future incidences."

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.

2011

2012

2013

2014

2015

2016

2017

2018

Des Moines Register

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14 comments. Last comment 2 years ago by Hermanus104.
Page 1 of 1
Avatar
Simpsonville
United States
Member #163184
January 22, 2015
2253 Posts
Offline

Todd has been saying this for years.  Get rid of RNG once and for all.   Maybe complex games like 5 Card Cash that seem to require RNG need to go to.  My feeling is you can't win those games, the computer already knows what wagers were placed on various symbols and never picks them.  Never heard of a $100K here in Kentucky.

    Avatar
    Morristown, TN
    United States
    Member #20592
    August 21, 2005
    492 Posts
    Offline

    Todd has been saying this for years.  Get rid of RNG once and for all.   Maybe complex games like 5 Card Cash that seem to require RNG need to go to.  My feeling is you can't win those games, the computer already knows what wagers were placed on various symbols and never picks them.  Never heard of a $100K here in Kentucky.

    Wink  You are exactly right. RNGs are used to cheat the player and insure big bonuses for lottery officials. Tennessee uses an RNG and it is almost impossible to win. I believe as you do. I think it is time for new management her in Tennessee and a return to the balls. Some cash 4 drawings do not even have a .50 cent straight winner and payouts  lower than $2000.00  This is proof Tennessee Lottery Officials are cheating the public.

      konane's avatar - wallace
      Atlanta, GA
      United States
      Member #1265
      March 13, 2003
      5853 Posts
      Offline

      I wish all lotteries everywhere would go back to ball drawings especially in the wake of this scandal and ongoing revelations about how Tipton did in fact manipulate the outcome with a couple of lines of coding.

      This video on Lottery Post  YouTube channel shows the extreme security that goes into ball drawings. 

       

      A look behind the scenes at Hoosier Lottery drawings

      https://youtu.be/AA6P0wX7n0c

      Have fun and the best of luck to everyone! Sun Smiley

        Todd's avatar - Cylon 200.jpg
        50
        Chief Bottle Washer
        New Jersey
        United States
        Member #1
        May 31, 2000
        25836 Posts
        Online

        Todd has been saying this for years.  Get rid of RNG once and for all.   Maybe complex games like 5 Card Cash that seem to require RNG need to go to.  My feeling is you can't win those games, the computer already knows what wagers were placed on various symbols and never picks them.  Never heard of a $100K here in Kentucky.

        You'd think with the number of lotteries using computers to draw their 5 Card Cash games that they were required — but they are not.  You can draw a poker-style game just fine with a traditional ball drawing.

        Here is yesterday's drawing of the Ontario Lottery's Poker Lotto game:

        The only games that require a computerized drawing would be a raffle game or a "Quick Draw" style Keno game, in which the drawings are held every 4 to 5 minutes.  Everything else can be drawn with a ball machine, and it's the lottery's choice to use a computer.

         

        Check the State Lottery Report Card
        What grade did your lottery earn?

         

        Sign the Petition for True Lottery Drawings
        Help eliminate computerized drawings!

          Avatar
          Chasing $ Millions.
          White Shores- California
          United States
          Member #136473
          December 12, 2012
          6312 Posts
          Offline

          I see that Russell Lopez claims that CA’s lottery system is “ sound”- looking at their “ integrity series” involving the lottery, it’s easy to say “ yeah, the games are safe.” But as we all know, if someone can program these infernal machines, they can be hacked. Saying they can’t be hacked or manipulated is downright arrogance.

          PS: Russell is talking about the “procedure”. : l guess his talking about the 24 hour cameras focused on the RNG machine & revolving lights within. Well, thanks a lot Russell, what a relief, you have restored my faith in humanity.

           * Voice of Reason *   

           

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

            Avatar
            Simpsonville
            United States
            Member #163184
            January 22, 2015
            2253 Posts
            Offline

            You'd think with the number of lotteries using computers to draw their 5 Card Cash games that they were required — but they are not.  You can draw a poker-style game just fine with a traditional ball drawing.

            Here is yesterday's drawing of the Ontario Lottery's Poker Lotto game:

            The only games that require a computerized drawing would be a raffle game or a "Quick Draw" style Keno game, in which the drawings are held every 4 to 5 minutes.  Everything else can be drawn with a ball machine, and it's the lottery's choice to use a computer.

            Thanks Todd, didn't know about Ontario's game and non-RNG. 

            Don't know what got into me after knowing our Keno game is RNG and played X3 today.  Not even one dollar won.  It would be too much to have balls come down almost continuously for the every 4' drawings, so RNG is the only way it can be down feasibly. 

             

            What about casinos, the few that offer Keno, do they use balls or computers?

              Todd's avatar - Cylon 200.jpg
              50
              Chief Bottle Washer
              New Jersey
              United States
              Member #1
              May 31, 2000
              25836 Posts
              Online

              You'd have to check with the individual casino.

               

              Check the State Lottery Report Card
              What grade did your lottery earn?

               

              Sign the Petition for True Lottery Drawings
              Help eliminate computerized drawings!

                Avatar
                New Member
                rex ga
                United States
                Member #160371
                October 26, 2014
                8 Posts
                Offline

                Software??? What software?  I could have sworn lottery drawings were by random balls...so what is the computer software used for?

                  Avatar
                  Chasing $ Millions.
                  White Shores- California
                  United States
                  Member #136473
                  December 12, 2012
                  6312 Posts
                  Offline

                  Software??? What software?  I could have sworn lottery drawings were by random balls...so what is the computer software used for?

                  The discussion is about RNG games,where software is required to generate numbers. We not talking about games like Powerball or Mega Million that uses ping pong balls. 

                  What is a random number generator (rng)?
                  A random number generator (RNG) is a computational or physical device designed to generate a sequence of numbers or symbols that can not be reasonably predicted better than by a random chance.- Wiki.

                   * Voice of Reason *   

                   

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

                    txwinr's avatar - Lottery-033.jpg
                    Texas
                    United States
                    Member #1998
                    August 6, 2003
                    43 Posts
                    Offline

                    how do you know what states and what games are using RNGs?  Powerball? Mega? is that posted somewhere on their websites?

                      rcbbuckeye's avatar - Lottery-062.jpg
                      Texas
                      United States
                      Member #55887
                      October 23, 2007
                      10347 Posts
                      Offline

                      how do you know what states and what games are using RNGs?  Powerball? Mega? is that posted somewhere on their websites?

                      Mouse over "results" at the top of the page and click on "state lottery report card".

                      CAN'T WIN IF YOU'RE NOT IN

                      A DOLLAR AND A DREAM (OR $2)

                        Avatar
                        Simpsonville
                        United States
                        Member #163184
                        January 22, 2015
                        2253 Posts
                        Offline

                        You'd have to check with the individual casino.

                        I think I remember a big drum slowly spinning with balls in it somewhere and that is how the casino got their Keno numbers.  Have never played.  No doubt the few Keno spots left are probably RNG.  I don't know/care!

                          Avatar
                          New York, NY
                          United States
                          Member #140630
                          March 23, 2013
                          10638 Posts
                          Offline

                          I thought keno is “rng” in the casinos. Wasn’t there that one time when the same numbers kept coming up all day long because the seed wasn’t changed. The casinos still didn’t lose much lol.

                          Sometimes you do the right thing just because it’s right.

                            Hermanus104's avatar - 5027340606 1e360c8038_s.jpg
                            Bearflag Republic, Los Angeles Division
                            United States
                            Member #83347
                            December 5, 2009
                            1425 Posts
                            Offline

                            I see that Russell Lopez claims that CA’s lottery system is “ sound”- looking at their “ integrity series” involving the lottery, it’s easy to say “ yeah, the games are safe.” But as we all know, if someone can program these infernal machines, they can be hacked. Saying they can’t be hacked or manipulated is downright arrogance.

                            PS: Russell is talking about the “procedure”. : l guess his talking about the 24 hour cameras focused on the RNG machine & revolving lights within. Well, thanks a lot Russell, what a relief, you have restored my faith in humanity.

                            I don't care how safe they are, the only reason that I would play the California Lottery is to prove to them that they are wrong about that.

                            I live in California. My family lives in Virginia. I refuse to play the lottery in California because of the random number generators. I will not even play Powerball or Mega Millions in California, partly because I refuse to buy tickets from a state that uses RNGs in any of its draw games, and partly because of the blatantly unfair payout structure of these games (lower-tier prize winners are basically robbed at gunpoint). Thus, I play the lottery only when I go home and visit my family in Virginia, because they use balls there. 

                            Ball drawings are a lot more entertaining to watch as well. There is nothing like watching balls going up and down in a machine. When I was a teenager, I greatly enjoyed watching the D.C. lottery drawings and watching the numbered balls go up and down in the machine. Then, in 2004, they switched to a random number generator, which made me mad.

                            Today's winning 3-ball is going to be a number between 000 and 999.

                            In a lot of states, lotteries benefit education. That makes the REAL winners the only people who can't play!