Pennsylvania Lottery Fails to Analyze Suspicious Frequent Winners, Says Auditor General

Posted on: November 16, 2021, 02:00h. 

Last updated on: November 17, 2021, 08:03h.

Philip Conneller @casinoorgphilc Read More

Expertise: Gaming Business, Regulation, Tribal Gaming.

The Pennsylvania Lottery does not do enough to analyze data on its customers’ winning patterns, the state auditor general, Timothy DeFoor, said Monday.

DeFoor is concerned that this lack of oversight could be letting frequent winners get away with committing widescale fraud.

We found the lottery has security measures designed to prevent illegal or fraudulent activities from retailers selling lottery products, but not from anyone else who plays the lottery,” DeFoor said in a statement. “This has nothing to do with lottery products. They are completely secure. We are talking about whether or not the person claiming the winning prize is doing something they shouldn’t.

Frequent winners, who appear to defy the odds, should be a red flag to lottery operators because they could be involved in “discounting” or “ten-percenting” schemes.

The Ten-Percenters

In Pennsylvania and many other states, money can be deducted from lottery jackpots over a certain threshold (usually $600) if the winner is found to owe state or federal taxes or child support.

This has created a clandestine market in ticket-cashing businesses which will buy winning lottery tickets, typically for ten percent less than their face value.

Last August in Massachusetts, a father, and his two sons were charged with numerous counts of fraud, money laundering, and tax evasion in what prosecutors have described as the biggest discounting operation uncovered in the US so far.

Over eight years, Ali Jaafar and his sons, Mohamed and Yousef, all of Waterford, Mass., cashed in 13,000 winning Massachusetts Lottery tickets, mostly scratch-offs, for almost $21 million.

In Pennsylvania, the Auditor General’s Office examined 17 winners with over 50 wins over $600 from July 2017 through March 2020. In total, these players claimed almost $2.7 million, according to DeFoor.

He noted that one of the winners was a lottery retailer who had filed 42 winning claims during that period. The retailer’s spouse filed 88.

Lottery Denial

Currently, lottery employees and their immediate family are prohibited from playing lottery games. DeFoor recommended this should apply to retailers, too. He also said that lottery officials should be given greater powers to investigate winners.

“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,” it added.