Eddie Tipton, Mastermind Lottery Fraudster, Wins Parole

Posted on: January 31, 2022, 07:10h. 

Last updated on: February 1, 2022, 10:27h.

Philip Conneller @casinoorgphilc Read More
Expertise: Gaming Business, Regulation, Tribal Gaming.

Eddie Tipton, the Iowa man who rigged the Multi-State Lottery, has been paroled four and a half years into a 25-year prison sentence.

Eddie Tipton
Eddie Tipton, seen in the photo above, installed a self-destructing hack that would allow him to predict the winning lottery numbers three times a year. (Image: Charlie Neibergall/AP)

The Iowa Board of Parole said it had taken the decision because there was “a reasonable probability” that Tipton was not a danger to the community or himself, reports Iowa Capital Dispatch.

Tipton, the former head of security for the Multi-State Lottery Association (MUSL), was imprisoned in August 2017 and ordered to pay $2.2 million in restitution to state lotteries. That was after he pleaded guilty to one count each of theft and computer crime and admitted to fixing the lottery draw six times in six states.

Self-Destructing Malware

Based at MUSL’s Iowa HQ, he was part of the team that built the random number generators (RGNs) that were designed to ensure the draws were fair. But he secretly installed two extra pieces of self-destructing coding that enabled him to manipulate the results at certain times.

The deep-lying malware instructed the RGNs to generate Tipton’s numbers on just three days of the year. He also tampered with surveillance cameras to ensure his scheme went unnoticed.

The six known fixed “Hot Lotto” jackpots were claimed by Tipton or an associate either on November 23 or December 29 between 2005 and 2011 in Iowa, Colorado, Wisconsin, Kansas, and Oklahoma.  

The scheme unraveled in 2011 when MUSL officials became suspicious about several aborted attempts to claim a $16.5 million jackpot anonymously via a third party shortly before its expiration.

The ticket had been purchased at a Des Moines convenience store a year earlier. When the officials checked the security video from the store, they were stunned to see their colleague, Tipton, buying the ticket.

Exploitation Questions Remain 

Later, they linked Tipton, his brother Tommy (a former Texas judge), and their longtime friend, Robert Rhodes, to five other suspicious wins. Both accomplices received short sentences and agreed to repay the money they had fraudulently claimed.

After his arrest, Tipton told authorities he had tried to warn his superiors at MUSL that the system was vulnerable to exploitation, but was ignored. According to The Des Moines Register, he continues to claim the system contains exploitable flaws.

In 2016, the man who won a $9 million jackpot the week after Tipton’s rigged $16.5 million draw sued MUSL.

“Lucky” Larry Dawson, whose nickname reportedly predates his lottery win, argued that without Tipton’s interference, the $16.5 million would have rolled over onto his jackpot. Instead, the money was redistributed to state lottery commissions. MUSL eventually settled with Dawson.

Tipton will be released to the state of Texas, which will supervise his parole. Failure to comply with any state local or federal laws could result in his return to prison.