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Audit of frequent Pennsylvania Lottery winners draws concern

Nov 20, 2021, 7:28 pm

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Lottery pushes back against stricter auditing processes for potential fraud

By Kate Northrop

The Pennsylvania Lottery is butting heads with Pennsylvania Auditor General Tim DeFoor on whether stronger controls are needed to monitor frequent lottery winners.

An audit conducted on Pennsylvania Lottery winners of prizes between July 1, 2017 through Jan. 26, 2021 revealed that the Lottery gathers data on players who claim prizes of $600 and above solely for tax-related purposes but does not evaluate the same data for suspicious winning patterns.

There are certain stops in place to monitor for fraudulent claims, but the auditor general is asserting that the Lottery is simply not doing enough.

One of those protocols involves triggering "a flag for the lottery to investigate," should a lottery retailer were to play and file 50 or more wins for themselves, Communications Director for the auditor general April Hutchinson told the Pittsburgh-Post Gazette.

However, the audit found that the same type of checks and balances are not in place for regular players.

Between July 1, 2017 and March 2, 2020, the audit singled out 17 non-retailer players who filed 50 or more prize claims over $600, accounting for over 1,300 claims and adding up to nearly $2.7 million in winnings.

"As far as the frequency of winning, it's something that caught our attention," DeFoor said. "It kind of defies the odds and warrants [the state Department of Revenue] to investigate this further."

One of the 17 frequent claimants spotted by the audit was the spouse of a retailer who had submitted 88 claims. While lottery retailers are identified for review, spouses of retailers are not.

According to DeFoor, these are the types of claims that should be added to the Lottery's parameters for investigation into potential fraud so that retailers may hold as much accountability as Lottery and Department of Revenue employees.

"This analysis would help determine if someone is claiming prizes for a prohibited player or engaged in illegal activity such as avoiding paying taxes or child support," DeFoor argued.

In response to the auditor general's conclusions that the Lottery's processes are not thorough enough, Lottery officials labeled them "misguided assertions" and argued that his office was missing several key pieces of context in the data.

"Those who conclude that the small subset of lottery players who are perceived to win too frequently are somehow committing fraud often fail to consider essential factors, such as how frequently those players play and the way in which they play certain games," the Lottery responded to DeFoor's office in a letter. "Without considering those factors, it is impossible to conduct a fair and reasoned analysis."

In a formal statement, the Lottery contended that frequent claims do not explicitly indicate illegal activity.

"We strongly disagree with the performance audit's assertion that frequent wins by lottery players are an indication of illegal activity on the part of the players," the Lottery said. "From our perspective, this unfounded assertion relies upon the same flawed methodology that others have relied on to erroneously raise questions about the perceived statistical improbability of certain lottery players' wins."

After delving into the 17 frequent winners, the Lottery concluded that every single claim has a reasonable explanation that a high-level overview of data cannot uncover.

For example, one player had purchased 68 identical tickets for one Pick 4 drawing. Rather than cash in all their winning tickets all at once, that individual spread out their claims over the next few months, racking up the total number of prize claims.

"Our agency agrees with the majority of the DAG's findings and recommendations," the Lottery continued in a statement. "The reality is the Pennsylvania Lottery is a leader in its industry and utilizes a number of security measures and internal controls to validate the wins of players."

Another issue that the Lottery had with the auditor's conclusions was the concern that it would negatively impact sales and lottery revenue-funded programs. While it disagrees with the claim that their controls are not set up to catch every instance of potential fraud, it says it will take every bit of the findings into consideration.

"We take this responsibility very seriously and will continue to take the appropriate steps so that Pennsylvania Lottery players have the utmost confidence that our games are operated fairly and securely."

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22 comments. Last comment 4 days ago by grwurston.
Page 1 of 2
winsumloosesum's avatar - Lottery-060.jpg
Philadelpia/Pennsylvania
United States
Member #2218
September 1, 2003
6679 Posts
Offline

Why the Auditor General is conducting this investigation which it seems some people are finding a loophole in the system or in fact abusing the system how about doing an investigation into the iLottery scam of their bonus programs.

iLottery and the Pennsylvania lottery seem to be 2 different entities and their is no control of what the iLottery does from the state of Pennsylvania.

Stupid games, no online Pick 3 or Pick 4 games, no online Cash 5 or Pick 6 online play.

    Avatar
    Gallatin Tennesee
    United States
    Member #194096
    November 29, 2018
    103 Posts
    Offline

    It's a lot easier to check on crooked retailers, than to try to figure out the playing habits of millions of people who play every day

     😲😫

      Avatar
      Kentucky
      United States
      Member #32651
      February 14, 2006
      9318 Posts
      Offline

      Lottery pushes back against stricter auditing processes for potential fraud

      By Kate Northrop

      The Pennsylvania Lottery is butting heads with Pennsylvania Auditor General Tim DeFoor on whether stronger controls are needed to monitor frequent lottery winners.

      An audit conducted on Pennsylvania Lottery winners of prizes between July 1, 2017 through Jan. 26, 2021 revealed that the Lottery gathers data on players who claim prizes of $600 and above solely for tax-related purposes but does not evaluate the same data for suspicious winning patterns.

      There are certain stops in place to monitor for fraudulent claims, but the auditor general is asserting that the Lottery is simply not doing enough.

      One of those protocols involves triggering "a flag for the lottery to investigate," should a lottery retailer were to play and file 50 or more wins for themselves, Communications Director for the auditor general April Hutchinson told the Pittsburgh-Post Gazette.

      However, the audit found that the same type of checks and balances are not in place for regular players.

      Between July 1, 2017 and March 2, 2020, the audit singled out 17 non-retailer players who filed 50 or more prize claims over $600, accounting for over 1,300 claims and adding up to nearly $2.7 million in winnings.

      "As far as the frequency of winning, it's something that caught our attention," DeFoor said. "It kind of defies the odds and warrants [the state Department of Revenue] to investigate this further."

      One of the 17 frequent claimants spotted by the audit was the spouse of a retailer who had submitted 88 claims. While lottery retailers are identified for review, spouses of retailers are not.

      According to DeFoor, these are the types of claims that should be added to the Lottery's parameters for investigation into potential fraud so that retailers may hold as much accountability as Lottery and Department of Revenue employees.

      "This analysis would help determine if someone is claiming prizes for a prohibited player or engaged in illegal activity such as avoiding paying taxes or child support," DeFoor argued.

      In response to the auditor general's conclusions that the Lottery's processes are not thorough enough, Lottery officials labeled them "misguided assertions" and argued that his office was missing several key pieces of context in the data.

      "Those who conclude that the small subset of lottery players who are perceived to win too frequently are somehow committing fraud often fail to consider essential factors, such as how frequently those players play and the way in which they play certain games," the Lottery responded to DeFoor's office in a letter. "Without considering those factors, it is impossible to conduct a fair and reasoned analysis."

      In a formal statement, the Lottery contended that frequent claims do not explicitly indicate illegal activity.

      "We strongly disagree with the performance audit's assertion that frequent wins by lottery players are an indication of illegal activity on the part of the players," the Lottery said. "From our perspective, this unfounded assertion relies upon the same flawed methodology that others have relied on to erroneously raise questions about the perceived statistical improbability of certain lottery players' wins."

      After delving into the 17 frequent winners, the Lottery concluded that every single claim has a reasonable explanation that a high-level overview of data cannot uncover.

      For example, one player had purchased 68 identical tickets for one Pick 4 drawing. Rather than cash in all their winning tickets all at once, that individual spread out their claims over the next few months, racking up the total number of prize claims.

      "Our agency agrees with the majority of the DAG's findings and recommendations," the Lottery continued in a statement. "The reality is the Pennsylvania Lottery is a leader in its industry and utilizes a number of security measures and internal controls to validate the wins of players."

      Another issue that the Lottery had with the auditor's conclusions was the concern that it would negatively impact sales and lottery revenue-funded programs. While it disagrees with the claim that their controls are not set up to catch every instance of potential fraud, it says it will take every bit of the findings into consideration.

      "We take this responsibility very seriously and will continue to take the appropriate steps so that Pennsylvania Lottery players have the utmost confidence that our games are operated fairly and securely."

      "As far as the frequency of winning, it's something that caught our attention," DeFoor said. "It kind of defies the odds and warrants [the state Department of Revenue] to investigate this further."

      I get a W-2G every time I cashed a ticket worth over $600 so it's odd that DeFoor would call for an investigation into something the PA Department of Revenue should already know. Maybe someone will tell him the reason some people frequently cash ticket is because they are buying the tickets from the actual winners. 

      "This analysis would help determine if someone is claiming prizes for a prohibited player or engaged in illegal activity such as avoiding paying taxes or child support," DeFoor argued.

      Apparently DeFoor wants lottery players to prove they are not criminals when they cash a winning ticket. Can't find any PA state law that requires the person purchasing a lottery ticket to sign it and cash the ticket. So as long as the people cashing the tickets are paying the taxes, what's the problem?

      For example, one player had purchased 68 identical tickets for one Pick 4 drawing. Rather than cash in all their winning tickets all at once, that individual spread out their claims over the next few months, racking up the total number of prize claims.

      PA state law allows players up to one year to cash their tickets, what's the problem with "racking up the total number of prize claims"? 

      Another issue that the Lottery had with the auditor's conclusions was the concern that it would negatively impact sales and lottery revenue-funded programs.

      It should be obvious to the lottery people that based on DeFoor's conclusions, he has no clue why they operate a very successful state lottery.

      It's not my fault! I voted for Amy.

        Avatar
        NY
        United States
        Member #23834
        October 16, 2005
        4495 Posts
        Offline

        "the Lottery concluded that every single claim has a reasonable explanation"

        Is that reasonable explanation that PA is the only state where people don't claim prizes on behalf of others who don't wamt to claimthier own priozes for some reason?

          dartiger's avatar - teddy simple.png
          Elkins Park PA
          United States
          Member #942
          December 22, 2002
          1444 Posts
          Offline

          Agree why not pick 3 4 5 and cash5 and match 6. I have asked

            Avatar
            Simpsonville
            United States
            Member #163182
            January 22, 2015
            2756 Posts
            Offline

            Agree why not pick 3 4 5 and cash5 and match 6. I have asked

            We're 'lucky' to have a progressive lottery in Kentucky.   Months ago they added Pick 3 and 4 to the on-line mix.  Already had Cashball 225 which I'd think is similar to your Cash 5??

            As mentioned before, on-line instant games are different then the scratch tickets @ the retailer.

             

            Nothing wrong with spreading out 68 winning tickets over a period of time...am curious as to how much each one was worth?

              Avatar

              United States
              Member #136773
              December 18, 2012
              39 Posts
              Offline

              No, the article does not say how much the 68 winning tickets were worth. I am going to assume the tickets were a straight win played for $1 each.The win would be 5K per ticket. This would have given the winner $340K spread out over the 68 tickets. This would be half of 340K is the tickets where played for 50 cents instead. I just wish I knew someone who would share there secret for winning pick 4 with buying lots of same number tickets

                Tony Numbers's avatar - Lottery-022.jpg
                Bronx ny
                United States
                Member #158510
                August 25, 2014
                809 Posts
                Offline

                Often you read stories here about lucky people who win jackpots 2-3 times.People play low odds games pick3 pick4,with multiple  tickets. They want to cash anonymously. The taxes are being paid. So why this extra scrutiny???

                  Todd's avatar - Cylon 200.jpg
                  50
                  Chief Bottle Washer
                  New Jersey
                  United States
                  Member #1
                  May 31, 2000
                  26501 Posts
                  Offline

                  Often you read stories here about lucky people who win jackpots 2-3 times.People play low odds games pick3 pick4,with multiple  tickets. They want to cash anonymously. The taxes are being paid. So why this extra scrutiny???

                  It's important to remember that it is not the PA Lottery that is causing the extra scrutiny.  In fact, they are defending their players, who they say in each case are legitimate wins/claims.  This is about the current administration in Pennsylvania trying to get extra cash from the lottery by alleging that there is something suspicious about these wins.  Government being meddlesome and grabby.  Which is basically government being government.

                    TheGameGrl's avatar - Lottery-012.jpg
                    A long and winding road
                    United States
                    Member #17083
                    June 10, 2005
                    6618 Posts
                    Offline

                    Keep in mind the PA lottery wouldn't want to scrutinize itself. Thus why we have a division to audit it's procedures and funds. 

                    Lucky numbers (movie), triple six fix , come to mind on how the lottery deserves being monitored and fine tuned. 

                     

                    I detest the new CASH5 change. From payout tier change to the increase in play .

                     

                    A person would have to have very rose colored glasses to think certain players are above board. 

                     

                    Have yet to see  any player play one number for 68 tickets . My area blocks ( supposed sold out) . Yet I ask here and ppl say in their area they can still buy said number.  It's a mystery to me how number allocation works.

                    Count your smiles.

                      Avatar
                      New Member

                      United States
                      Member #218826
                      November 21, 2021
                      2 Posts
                      Offline

                      If they want to investigate something they should be investigating the person with the 68 winning tickets instead of if those 68 tickets was legitimate tickets. 

                      I mean come on now...why would anyone buy 68 tickets with all 68 tickets for 1 drawing time AND have the exact same numbers on ALL 68 tickets? Maybe Rainman might or somebody thats extremely confident that those numbers would be the winning numbers for that specific draw on that specific date.

                      The fact that they made the effort to cash in those 68 tickets over a period of time is suspicious anyway. As if they did it to try to not look suspicious and bring attention to them selfs. Obviously anyone attempting to cash in 68 winning tickets, with all 68 for the same draw time/date would create unwanted attention.

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                        New Member

                        United States
                        Member #218826
                        November 21, 2021
                        2 Posts
                        Offline

                        Often you read stories here about lucky people who win jackpots 2-3 times.People play low odds games pick3 pick4,with multiple  tickets. They want to cash anonymously. The taxes are being paid. So why this extra scrutiny???

                        To make certain that the person did infact "pick" a winning combination of numbers and that those winning numbers infact did fall randomly without any "help" from a human.

                          Tony Numbers's avatar - Lottery-022.jpg
                          Bronx ny
                          United States
                          Member #158510
                          August 25, 2014
                          809 Posts
                          Offline

                          It's important to remember that it is not the PA Lottery that is causing the extra scrutiny.  In fact, they are defending their players, who they say in each case are legitimate wins/claims.  This is about the current administration in Pennsylvania trying to get extra cash from the lottery by alleging that there is something suspicious about these wins.  Government being meddlesome and grabby.  Which is basically government being government.

                          Hear Hear Defend the players. We need all the help and support we can get.If our perogotive is to play multiple tickets, there should be a streamlined method of cashing said tickets, without interference from big brother.

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                            New Member

                            United States
                            Member #205572
                            April 3, 2020
                            18 Posts
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                            Playing multiple tickets with the same number in Pick 4 or Pick 3 is not unusual and several players in many states have hit big playing that way. I always have one Pick 3 number that I play straight or in exact order on 30 to 40 tickets every day until it is drawn, however long that takes, usually about six months to a year, although I played one number for two years before I hit for $10,000 but that number I only played on five tickets until going to 40 tickets a week before I hit it.  These separate tickets wins when cashed individually are not taxed.

                            The odds on hitting a Pick 3 are very good, 1000 to 1, as are the odds on hitting a Play 4. Personally, I typically play the exact same number on a Pick 4 straight on two to four tickets, but I play multiple box tickets, usually 12. However, I must say that it is true that many people sell their winning tickets at a discount in order to get immediate cash or to avoid having their taxable winnings flagged by the state for various reasons and possibly forfeited to pay some outstanding fine, taxes, child support or other debts. Some winners also may not have a social security number because they entered the country illegally. There are many retail owners who will take advantage of this situation by buying the tickets for about 70 percent of the value and then have one of their relatives file for the winnings. This is what the Pa Auditor suspects in some of the cases and like what happened in Massachusetts recently he thinks the Lottery should be investigating those possibilities and then filing fraud charges, etc.