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(*This story was updated on Monday, 11/15/21 at 1:41 p.m. to include comment from the Pennsylvania Lottery)
The Pennsylvania Lottery needs to keep closer tabs on frequent winners, and state lawmakers should tighten the rules for retailers who play the Lottery, the state’s elected fiscal watchdog said Monday.
Between July 2017 and March 2020, 17 players racked up 50 or more wins of $600 each. The players submitted 1,344 claims totaling nearly $2.7 million, Auditor General Tim DeFoor’s office said in a report it released Monday. Even if those wins are legitimate, their frequency “warrant[s] further analysis.”
“The most significant finding from our report show Lottery has security measures in place designed to prevent or detect illegal or fraudulent activity from retailers selling lottery products, but not by anyone else who plays the lottery,” DeFoor, a Republican, said in a statement. “When you take a closer look at Lottery’s data, as we did, it is easy to identify these players. The fact of the matter is that Lottery has the data and doesn’t use it.”
According to DeFoor’s office, the Lottery collects data on players who file claims of $600 or more for tax purposes. But the agency doesn’t use the data to identify frequent winners. Such an 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. [The] Lottery would then be able to forward the case to a proper law enforcement agency,” DeFoor’s office said in its statement.
“The Lottery stated it doesn’t have the legal authority to investigate these frequent winning claims from people who aren’t retailers,” DeFoor said. “Lottery officials can either partner with the Pennsylvania Inspector General or the Attorney General to investigate these claims. If they aren’t able to do that then we recommend the General Assembly step in and give Lottery officials the power to do so through legislation.”
*In a statement, the Lottery said that while the agency agrees with some findings in DeFoor’s report, it “strongly disagree[s] with the performance audit’s assertion that frequent wins by Lottery players are an indication of illegal activity on the part of the players. 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.”
In 2017, DeFoor’s predecessor, Democratic Auditor General Eugene DePasquale, put the agency under the microscope after a PennLive investigation “revealed that 200 Pennsylvanians claimed 50 or more lottery prizes worth at least $600 between 2000 and 2016 – a feat that in many cases is improbable according to statisticians,” the news site reported
The winners included more than a dozen current or former retailers, PennLive reported at the time.
The spokesperson, Ewa Swope, said the agency wanted Lottery players to know “that the security procedures that are currently in place validate every Lottery win, which ensures that all prizes that are paid out are legitimate.
“Furthermore, we are continually working to make sure our business operates under the highest standards of integrity and professionalism, which means keeping an open dialogue with Lottery staff in other jurisdictions, industry suppliers, and law enforcement to make sure we are implementing the most current security procedures and safeguards,” Swope said.
Under state law, while Lottery employees, their families and some state employees are barred from playing the agency’s games, retailers and their spouses are allowed to play. DeFoor’s analysis found that one of the frequent winners was the spouse of a Lottery retailer who filed 88 winning claims; the retailer filed 42 winning claims during the same time period. Under current rules, the retailer’s winning claims would be flagged for review, but their spouses would not, DeFoor’s office said.
DeFoor’s office says the General Assembly should pass legislation holding retailers to their same standards as Lottery employees and employees of the Pennsylvania Department of Revenue.
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