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MUSL settles lawsuit with man who won Hot Lotto jackpot marred by rigging

Nov 26, 2019, 10:10 am

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Insider BuzzInsider Buzz: MUSL settles lawsuit with man who won Hot Lotto jackpot marred by riggingRating:

A national lottery group rocked by an insider's jackpot-rigging conspiracy has settled a lawsuit brought by an Iowa grandfather who said a $9 million prize he won in 2011 should have been far larger.

The Multi-State Lottery Association and Larry Dawson informed a judge of the settlement this month, canceling a trial that had been scheduled to begin next week in Des Moines.

Dawson's lawyer, Nicholas Mauro, said that the terms of the deal are confidential but that his client is relieved that the long-running litigation is over.

A spokeswoman for the association, which is based in Iowa and is owned by dozens of state lotteries, hasn't returned messages seeking comment.

Dawson, a financial adviser who lives in Webster City, won a $9 million Hot Lotto jackpot in 2011 and took the $6 million pre-tax cash payout. He happily claimed the prize, surrounded by his wife, children and grandchildren.

But years later, he learned that the game's previous $16.5 million jackpot had been rigged by Eddie Tipton, the lottery association's information security director, as part of a massive fraud scheme.

Dawson, 66, filed a lawsuit in 2016 alleging that the $16.5 million should have carried over to the prize he won under Hot Lotto's rules. His lawsuit sought $10 million — which would have been the size of the lump sum cash option — plus interest.

In May, a judge ordered a jury trial, in which Dawson could seek a larger prize.

The settlement is the second in recent months to resolve legal claims alleging that the association's lax security allowed Tipton's fraud to occur and cheated players. The association agreed to pay $4.3 million to settle a class-action lawsuit that will give refunds to players who purchased tickets for tainted drawings between 2005 and 2013.

In resolving his case, Dawson will dismiss his claims against the Iowa Lottery. Iowa Lottery CEO Matt Strawn said no state or Iowa lottery money will be used to fund the settlement.

"The settlement between the Multi-State Lottery Association and Mr. Dawson closes a chapter in lottery history that tested" the integrity of lottery games, he said. Iowa officials "passed this test" by investigating, uncovering and prosecuting Tipton's fraud, Strawn said.

Tipton secretly installed code in software used by lotteries that allowed him to predict winning number combinations on certain days of the year. For years, he worked with his brother and other associates to purchase winning tickets and claim prizes around the country. A judge sentenced him in 2017 to up to 25 years in prison.

Tipton's downfall began after he purchased a winning ticket for the $16.5 million Hot Lotto jackpot at a gas station near the association's office in December 2010. He was identified by stunned colleagues as the buyer after investigators released surveillance footage of the purchase years later. Tipton passed the ticket to associates but the Iowa Lottery refused to pay after lawyers for a trust declined to reveal who purchased the winning ticket. (See Timeline of the biggest crime in US lottery history below.)

The money ultimately went back to the 16 states that operated the Hot Lotto as an "unclaimed prize." Dawson's lawsuit alleged that the jackpot should have carried forward, arguing states shouldn't have gotten a windfall for failing to operate a fair and secure game.

Iowa Lottery's previous CEO, Terry Rich, accused Dawson of trying to "rewrite history," saying it was impossible to know what would have happened if the prize had carried over.

Dawson — nicknamed "Lucky Larry" for his golf game — said he bought $19 in tickets for every bi-weekly drawing so he could cover all 19 "Hot Ball" options, after reading a book claiming to have the secrets to winning lotteries.

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

2019

News story photo(Click to display full-size in gallery)

Thanks to the many members who tipped this story.

Des Moines Register

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16 comments. Last comment 8 months ago by noise-gate.
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Raven62's avatar - binary
25
New Jersey
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Posted: November 26, 2019, 10:52 am - IP Logged

Mums the Word, but Inquiring Minds Want to Know!

A mind once stretched by a new idea never returns to its original dimensions!

Catch-22: A dilemma or difficult circumstance from which there is no escape because of mutually conflicting or dependent conditions.

Corruptissima re publica plurimae leges: When the republic is at its most corrupt the laws are most numerous.

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    United States
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    Posted: November 26, 2019, 11:46 am - IP Logged

    Fortunately there are now "safeguards" in place to deter future Tipton-like random-number-generator malfeasance . . at least "until the next time"!

      konane's avatar - wallace
      Atlanta, GA
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      Posted: November 26, 2019, 1:56 pm - IP Logged

      I hope it was a good settlement for him because it seemed he had a sound case had it gone to trial.

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

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        Zimbabwe
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        December 7, 2001
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        Posted: November 26, 2019, 2:02 pm - IP Logged

        The MUSL I'm sure settled for reasons that litigated precedence would have not worked in the Industry's favor.

        Caveat Emptor is your only friend.

        Good Luck.

        .

          cottoneyedjoe's avatar - cuonvFT

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          Posted: November 26, 2019, 3:03 pm - IP Logged

          I Agree!

          Congrats to Larry.

          ... Sooper dooper top seekrit winning numbers: 5 16 17 24 33 52 ...

            Avatar
            Chasing $ Millions.
            White Shores- California
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            Posted: November 26, 2019, 3:52 pm - IP Logged

            Larry is lucky, l mean when was the first time you had a lottery player double dipping. He initially won $6 mil, complained that it should have been a lot more- and then they settled. The players in general from my POV, got screwed. How so you ask? Well first off, the Musl " settled" the previous lawsuit- same game awhile ago where a couple million dollars was to be spread out to the playing public, well as it turns out ONE player along with the attorneys made off with the lion's share of that settlement, and then we got Larry, making off  with a settlement we are told " is none of our business." That would never fly out here. Where is the " transparency " the lotto loves to blow their horn about? Anyways, that's my 3 cents..

             * Voice of Reason *   

             

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

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              Kentucky
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              Posted: November 26, 2019, 5:49 pm - IP Logged

              When I read the article yesterday, I thought there was more to the story because Larry validated his ticket before Shaw made his infamous appearance at lottery headquarters. There were a few other cases where winners sued over unclaimed jackpot prizes, but those results for some reason are seldom published. By sealing the exact details to the Dawson settlement, it will be difficult for anyone to use that as a precedent.

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                Posted: November 26, 2019, 8:09 pm - IP Logged

                Why was Tipton's software not analyzed by multiple third parties before being put into use? Why was one guys software put into place, unquestioned and unchecked?

                 

                The people who chose Tipton to write the software had responsibility to oversee and vet the product they were getting from Tipton, yet they did not do that. It's like the honor system was used. It's crazy when you think about it. The guy was just given blind trust to create and implement the software.

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                  Member #198971
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                  Posted: November 26, 2019, 8:14 pm - IP Logged

                  The MUSL I'm sure settled for reasons that litigated precedence would have not worked in the Industry's favor.

                  Caveat Emptor is your only friend.

                  Good Luck.

                  Also the fact that it wasn't their personal/business money it made no difference financially to the people who represented the MUSL. It kept everything behind closed doors as a trial would be public record.

                    KY Floyd's avatar - lysol avatar.jpg
                    NY
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                    Posted: November 27, 2019, 7:59 pm - IP Logged

                    "it seemed he had a sound case had it gone to trial."

                    He didn't have bad case, but it wasn't a great case, either. If the prize had rolled over more tickets would have been sold between the rigged drawing and the one that he won, and that means there's a chance (that can be calculated accurately) that somebody would have won in between the drawings, and that could have resulted in his prize being smaller rather than bigger.

                    We may never know because the settlement terms are confidential, but if the lottery was smart that was probably a factor in the amount they settled for.

                    "By sealing the exact details to the Dawson settlement, it will be difficult for anyone to use that as a precedent."

                    Except for other incidents where the circumstances are extremely similar a court ruling wouldn't result in any meaningful precedent anyway. I imagine the lotteries were hoping that there are very few future cases with similar circumstances much more than they were hoping to  avoid any kind of precedent.

                    "Why was Tipton's software not analyzed by multiple third parties before being put into use?"

                    That's a great question. While we may not have a "real" or official answer I think we can very safely blame it on high level stupidity. I understand providers of commercial software wanting to keep their code secret, but there are a lot of things where that shouldn't be allowed if they want to sell their programs for use by government agencies. It doesn't take bad intent or a lot of intelligence to recognize that software for things like lotteries and elections could very easily be written to favor the interests of the people writing the code. That government agencies would simply  pay for the software and run it with no questions is unconscionable. Unfortunately it's not also surprising.

                      zephbe's avatar - animal butterfly.jpg
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                      Posted: November 28, 2019, 6:20 am - IP Logged

                      He was the only legitimate winner so the whole jackpot should have been his.

                      Every champion was once a contender who refused to give up.-Rocky Balboa

                      “Don’t let someone who gave up on their dreams talk you out of going after yours.” – Zig Ziglar

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                        White Shores- California
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                        Posted: November 29, 2019, 2:18 pm - IP Logged

                        He was the only legitimate winner so the whole jackpot should have been his.

                        Right. That thinking is often found in the jungle. For instance Lions do not tolerate Hyenas & African painted dogs hunting in " their" territory. They & they alone should be the predators, which is why lions will kill them on sight, after all- they are the only  "legitimate" players in that vast field..Frown

                         * Voice of Reason *   

                         

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

                          cottoneyedjoe's avatar - cuonvFT

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                          Posted: November 30, 2019, 12:53 am - IP Logged

                          Right. That thinking is often found in the jungle. For instance Lions do not tolerate Hyenas & African painted dogs hunting in " their" territory. They & they alone should be the predators, which is why lions will kill them on sight, after all- they are the only  "legitimate" players in that vast field..Frown

                          Did Larry sleep with your wife and run over your dog?

                          Any time an individual player extracts a settlement from a lottery entity, or prevails against one in court, it's a win for all players. Does it matter that Larry's claim is a bit of a stretch? MUSL is paying for their sheer stupidity regarding Tipton.

                          ... Sooper dooper top seekrit winning numbers: 5 16 17 24 33 52 ...

                            Avatar
                            Chasing $ Millions.
                            White Shores- California
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                            Posted: November 30, 2019, 2:16 pm - IP Logged

                            Did Larry sleep with your wife and run over your dog?

                            Any time an individual player extracts a settlement from a lottery entity, or prevails against one in court, it's a win for all players. Does it matter that Larry's claim is a bit of a stretch? MUSL is paying for their sheer stupidity regarding Tipton.

                            What the frell are you on about Willis? l was talking about the distribution of the so called settlement.

                             * Voice of Reason *   

                             

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