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State auditor general to audit Pennsylvania Lottery, with special focus on high-frequency winners

Dec 4, 2019, 3:32 pm

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Pennsylvania LotteryPennsylvania Lottery: State auditor general to audit Pennsylvania Lottery, with special focus on high-frequency winnersRating:

State Auditor General Eugene DePasquale announced a new performance audit of the Pennsylvania Lottery Wednesday, with a special emphasis on studying the state-run gaming franchise's protections against being ripped off by players or retailers who are intentionally gaming the system.

"Last fiscal year, Pennsylvania Lottery players bought $4.5 billion in game tickets and claimed more than $2.9 billion in prizes," DePasquale said in announcing the new review at the state Capitol. "Seniors, lottery players and the general public deserve to know if every dollar of those prizes was claimed in accordance with the law."

DePasquale said his interest in the subject has been piqued by news investigations in 2017 that looked into high-frequency wins by hundreds of lottery players in several states that, in some cases, showed the potential to be rooted in illegal activity. Those reports also found weak or non-existent oversight of those irregular win patterns in many lotteries.

In one of the most egregious cases highlighted in the "Defying the Odds" reports, Massachusetts resident Clarence Jones wound up pleading guilty to federal tax evasion charges in a scheme where he would buy winning tickets from lottery players at a discount for cash. The real winners would keep the cash and not pay taxes on their winnings.

Jones would then claim the prize from the Lottery, report the winnings on his tax returns and report enough alleged gambling losses on his taxes to offset the Lottery prizes.

Prosecutors said Jones — who received a two-month federal prison sentence in September — cashed out about 4,670 tickets between January 2013 and December 2016 to total winnings of approximately $6.3 million, prosecutors said.

Small numbers of high-frequency winners were also discovered in Pennsylvania.

DePasquale said Wednesday it's time to make sure that similar frauds aren't being perpetrated here, and that state lottery officials have the safeguards in place to detect and stop them if they are. Similar audits in other states have already resulted in recommendations for tighter security procedures in their games.

Since the 2017 news reports, DePasquale noted, the Pennsylvania Lottery has actually become bigger, with Keno and Internet-based games that have only increased the opportunity for cheats.

"I appreciate it when the Lottery says that they are doing everything they can (to prevent fraud)," DePasquale said, "but for seniors who count on Lottery-funded programs, and the players, I want to dig deeper and do an independent review to make sure they are doing exactly that... It could be that some people are just luckier than others, but as the Auditor General I am not paid to believe in coincidences."

The Pennsylvania Lottery provides more than $1 billion in proceeds annually to state coffers to help support a variety of benefits for senior citizens, including price breaks on prescription drugs, rebates of property taxes, and a home care services designed to help older Pennsylvanians stay in their homes.

DePasquale said his audit team will also be looking at two other specific areas:

  • An ongoing procurement process to select a third-party contractors to run the state's terminal-based games and design its immensely popular instant lottery tickets. The state has already spent $1.3 million in evaluations of bids from two competitors in a process that has gone into two rounds.

    "We certainly have the right to make sure that all appropriate procedures were followed during this procurement, and to ask why that dollar figure is (so high)..." DePasquale said. "There may be a good answer for it, but we'll certainly be asking that question."

  • Sexual harassment policies in place at the state Department of Revenue, which oversees the Lottery. In the wake of "#me-too" inspired revelations of taxpayer-funded payouts to settle sexual harassment claims, DePasquale last year had announced that he would make reviews of agency sexual harassment policy and procedures a standard part of his audits.

    "In 2016, state taxpayers paid $900,000 to settle a sexual harassment lawsuit against a former Revenue Department regional manager," DePasquale said Wednesday. "I want all state agencies to learn from that case and put an end to sexual harassment once and for all."

Patriot-News, Lottery Post Staff

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13 comments. Last comment 7 months ago by noise-gate.
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United States
Member #183941
August 21, 2017
2333 Posts
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Posted: December 4, 2019, 3:46 pm - IP Logged

DEE88 are you scared? all those million$ winners u have cashed in

Don't ever fall in love with a number it will always break ur heart!

    music*'s avatar - DiscoBallGlowing
    Fresno, California
    United States
    Member #157851
    August 2, 2014
    3862 Posts
    Offline
    Posted: December 4, 2019, 4:44 pm - IP Logged

    Excellent goals for the Lottery and Sexual Harassment policies.

     This is the 21st Century after all.

    When will COVID-19 be finished?  A vaccine may protect all of us.

      grwurston's avatar - Lottery-012.jpg
      Win Today.
      bel air maryland
      United States
      Member #90247
      April 24, 2010
      9113 Posts
      Offline
      Posted: December 4, 2019, 6:52 pm - IP Logged

      It's nice to know that the taxpayers had to shell out 900K to settle a lawsuit against a Revenue Dept. regional manager. Why didn't he pay it himself?

      "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.

      Be willing to try a new strategy. If it doesn't work, try a different one.

        Avatar
        Chasing $ Millions.
        White Shores- California
        United States
        Member #136473
        December 12, 2012
        6211 Posts
        Offline
        Posted: December 4, 2019, 7:36 pm - IP Logged

        Jones, unlike Indiana- is in the history books. He is not a fictional character. I mean you collect $6 mil, spend a little time in jail, but come out clean on the other side.Jones was born under a lucky star.

         * Voice of Reason *   

         

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

          Avatar
          Kentucky
          United States
          Member #32651
          February 14, 2006
          8923 Posts
          Offline
          Posted: December 4, 2019, 11:26 pm - IP Logged

          State Auditor General Eugene DePasquale announced a new performance audit of the Pennsylvania Lottery Wednesday, with a special emphasis on studying the state-run gaming franchise's protections against being ripped off by players or retailers who are intentionally gaming the system.

          "Last fiscal year, Pennsylvania Lottery players bought $4.5 billion in game tickets and claimed more than $2.9 billion in prizes," DePasquale said in announcing the new review at the state Capitol. "Seniors, lottery players and the general public deserve to know if every dollar of those prizes was claimed in accordance with the law."

          DePasquale said his interest in the subject has been piqued by news investigations in 2017 that looked into high-frequency wins by hundreds of lottery players in several states that, in some cases, showed the potential to be rooted in illegal activity. Those reports also found weak or non-existent oversight of those irregular win patterns in many lotteries.

          In one of the most egregious cases highlighted in the "Defying the Odds" reports, Massachusetts resident Clarence Jones wound up pleading guilty to federal tax evasion charges in a scheme where he would buy winning tickets from lottery players at a discount for cash. The real winners would keep the cash and not pay taxes on their winnings.

          Jones would then claim the prize from the Lottery, report the winnings on his tax returns and report enough alleged gambling losses on his taxes to offset the Lottery prizes.

          Prosecutors said Jones — who received a two-month federal prison sentence in September — cashed out about 4,670 tickets between January 2013 and December 2016 to total winnings of approximately $6.3 million, prosecutors said.

          Small numbers of high-frequency winners were also discovered in Pennsylvania.

          DePasquale said Wednesday it's time to make sure that similar frauds aren't being perpetrated here, and that state lottery officials have the safeguards in place to detect and stop them if they are. Similar audits in other states have already resulted in recommendations for tighter security procedures in their games.

          Since the 2017 news reports, DePasquale noted, the Pennsylvania Lottery has actually become bigger, with Keno and Internet-based games that have only increased the opportunity for cheats.

          "I appreciate it when the Lottery says that they are doing everything they can (to prevent fraud)," DePasquale said, "but for seniors who count on Lottery-funded programs, and the players, I want to dig deeper and do an independent review to make sure they are doing exactly that... It could be that some people are just luckier than others, but as the Auditor General I am not paid to believe in coincidences."

          The Pennsylvania Lottery provides more than $1 billion in proceeds annually to state coffers to help support a variety of benefits for senior citizens, including price breaks on prescription drugs, rebates of property taxes, and a home care services designed to help older Pennsylvanians stay in their homes.

          DePasquale said his audit team will also be looking at two other specific areas:

          • An ongoing procurement process to select a third-party contractors to run the state's terminal-based games and design its immensely popular instant lottery tickets. The state has already spent $1.3 million in evaluations of bids from two competitors in a process that has gone into two rounds.

            "We certainly have the right to make sure that all appropriate procedures were followed during this procurement, and to ask why that dollar figure is (so high)..." DePasquale said. "There may be a good answer for it, but we'll certainly be asking that question."

          • Sexual harassment policies in place at the state Department of Revenue, which oversees the Lottery. In the wake of "#me-too" inspired revelations of taxpayer-funded payouts to settle sexual harassment claims, DePasquale last year had announced that he would make reviews of agency sexual harassment policy and procedures a standard part of his audits.

            "In 2016, state taxpayers paid $900,000 to settle a sexual harassment lawsuit against a former Revenue Department regional manager," DePasquale said Wednesday. "I want all state agencies to learn from that case and put an end to sexual harassment once and for all."

          "Seniors, lottery players and the general public deserve to know if every dollar of those prizes was claimed in accordance with the law."

          Interesting how they added "in accordance with the law" that still opens the door for claiming anonymously. It looks like lots of lotteries are going after the "it's your money, get it now" people that are probably paying 50 cents on the dollar or less on winning tickets. 

            DEE88's avatar - animal doggy2.jpg
            100
            PA
            United States
            Member #69847
            January 18, 2009
            19777 Posts
            Online
            Posted: December 5, 2019, 6:30 am - IP Logged

            DEE88 are you scared? all those million$ winners u have cashed in

                I'm shaken in my boots..  Now I know why I'm not winning...  there goes my money!!!  after what you posted on the thread about 2 weeks ago I am now wondering about PA they are racking in big bucks from the people and they know it and they are getting greedy...

                   2079    1085   8841    7227   3305   4651

              Avatar

              Zimbabwe
              Member #21
              December 7, 2001
              4530 Posts
              Offline
              Posted: December 5, 2019, 8:10 am - IP Logged

              Huh, that's funny.

              We just completed our download of the PA Payouts yesterday.

              You can see the raw data here: ftp://www.jadexcode.com/Text/PAPayouts.zip

              You might want to use Notepad++ to view the text doc.

              It's pretty big.

              Good Luck

              .

                dpoly1's avatar - driver
                PA
                United States
                Member #66139
                October 16, 2008
                1985 Posts
                Offline
                Posted: December 5, 2019, 8:57 am - IP Logged

                Nick Perry does not approve of this message LOL!

                Green laugh

                dpoly1 - Playing the lottery to save the jobs of those that build, transport, sell & maintain luxury items! -

                 

                Eschew Poverty ........... Vote Conservative!

                  cbr$'s avatar - maren
                  100
                  Cordova,Al.
                  United States
                  Member #104478
                  January 15, 2011
                  11304 Posts
                  Offline
                  Posted: December 5, 2019, 3:21 pm - IP Logged
                  I Agree! with State Auditor General Eugene DePasquale on two points only. I don"t believe in coincidences
                  either. Senior Lottery players & the general public deserve to know were every dollar is spent not just 
                  prize money. It's called being accountable to the players & the public. With his mouth , he is saying he
                  concern about the senior citizens, price breaks, taxes, home care etc.....His action is total different. Most
                  company's wouldn't go a 2nd round on a $1.3 million bid-out job unless. options pick one, split the work
                  or open the bid up to other bidders who maybe more suitable for your needs. Why did it take so long for
                  you to catch Mr. Jones ? Are you trying to tell the public your book keeping or your accounts are so bad
                  that between 2013 - 2016 you concealed a $6.3 million dollar error? You're right to say sexual harass -
                  ment on any job won't be tolerated. Why in 2016 did the taxpayers pay for this $900,000. settlement ?
                  They don't do the crime. I'm sure this isn't your first settlement. All I see here is it not your money so
                  just spend it like crazy in other words waste it ! I see at this point you're going to milk this opportunity 
                  for all it worth. In my opinion, you've unestimated your lottery players & your senior citizens. You've
                  over burden your taxpayers with paying for sexual harassment lawsuits for some one else that has a 
                  job & a mind or brain of it own. Two wrong doesn't make this right. Is this what the lottery players &
                  senior citizens have to look forward to under your watch ? The Pennsylvania Lottery which will get 
                  even more money with the on line gaming will they continue to spend & waste it like this ? Let these
                  people pay their own bills for the lawsuits. Not the taxpayers. Stop dragging your feet on who get the 
                  bid. If it costing the lottery money it costing players money as well. I want to invite State Auditor
                  General Eugene Depasquable to the Lottery Post to answer some of our questions on the forum.
                    Avatar

                    Zimbabwe
                    Member #21
                    December 7, 2001
                    4530 Posts
                    Offline
                    Posted: December 5, 2019, 8:47 pm - IP Logged

                    Huh, that's funny.

                    We just completed our download of the PA Payouts yesterday.

                    You can see the raw data here: ftp://www.jadexcode.com/Text/PAPayouts.zip

                    You might want to use Notepad++ to view the text doc.

                    It's pretty big.

                    Good Luck

                    We trimmed and sorted the raw data.

                    ftp://www.jadexcode.com/Text/PAPayouts-0F.zip

                    .

                      Avatar
                      New Member
                      marietta
                      United States
                      Member #150658
                      December 28, 2013
                      15 Posts
                      Offline
                      Posted: December 5, 2019, 10:45 pm - IP Logged

                      "Prosecutors said Jones — who received a two-month federal prison sentence in September — cashed out about 4,670 tickets between January 2013 and December 2016" "Prosecutors said Jones — who received a two-month federal prison sentence in September" @ this jones guy, I bet u wish u did not do it, now u have a felony record. I would like to win, but I do not need to win, and I am not greedy. 

                        Avatar
                        New Member
                        marietta
                        United States
                        Member #150658
                        December 28, 2013
                        15 Posts
                        Offline
                        Posted: December 5, 2019, 10:52 pm - IP Logged

                        "but come out clean on the other side"?  tax evasion is a felony offense, plus I might have missed it in the article but normally the gov will make your pay it back! and if he says he does not have it or he spent it? they will watch him like a hawk!  he might not be able to get a passport! they have jammed up movie stars over not paying their taxes! 

                          Avatar
                          Chasing $ Millions.
                          White Shores- California
                          United States
                          Member #136473
                          December 12, 2012
                          6211 Posts
                          Offline
                          Posted: December 12, 2019, 4:38 pm - IP Logged

                          "but come out clean on the other side"?  tax evasion is a felony offense, plus I might have missed it in the article but normally the gov will make your pay it back! and if he says he does not have it or he spent it? they will watch him like a hawk!  he might not be able to get a passport! they have jammed up movie stars over not paying their taxes! 

                          He has come out clean on the other side, how so you ask? Well take a gander at these facts: According to the LP information-Between 2011- 2017, Clarence pulled in $10.8 million. Paid something like $16,000 in taxes. Was told- he could serve up to 8 years in prison & have a $350,000 fine handed to him.

                          Well as luck would have it, Jones served less than 3 months in prison. Taking $350K from $10.8 is nothing more than a mild headache.At 80 years of age, Clarence couldn't give a S**%%.! As l said Clarence was born under a lucky star. Wesley Snipes has nothing on Jones. I can think of a few LP members who would gladly trade places with Jones, starting with Prince of thieves. He may so no way, but deep down he knows 3 months in prison with millions squirreled away is " way too easy." 

                           * Voice of Reason *   

                           

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