PITTSBURGH — Pennsylvania Auditor General Tim DeFoor is calling for stronger processes to monitor frequent lottery winners, after an audit revealed that the Pennsylvania Lottery doesn’t analyze data surrounding winning patterns, though lottery officials called them “misguided assertions.”
The audit — which focused on findings from July 1, 2017, to Jan. 26, 2021 — found that even though the Pennsylvania Lottery collects information on players who file claims for more than $600 for tax purposes, it doesn’t analyze that data to monitor people who are frequently filing winning claims.
With their current protocols, if a lottery retailer were to play the lottery and file 50 or more wins for themselves, it would “trigger a flag for the lottery to investigate” to rule out any fraud, according to April Hutchinson, the communications director for the auditor general.
For regular players, though, the same type of fraud monitoring is not done.
The audit found 17 nonretail players who filed 50 or more claims for wins over $600 from July 1, 2017, to March 2, 2020. These 17 players have filed over 1,300 claims totaling nearly $2.7 million, according to the report.
“As far as the frequency of them 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.”
Among the 17 players, one was the spouse of a retailer who had filed 88 winning claims. Winnings from retailers’ spouses are also not flagged for review.
“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 Pennsylvania Lottery said in a letter sent to DeFoor’s office. “Without considering these factors, it is impossible to conduct a fair and reasoned analysis.”
DeFoor is asking that the Pennsylvania Lottery begin investigations into these claims and for the state Legislature to pass legislation that would hold retailers to the same standard as Pennsylvania 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,” the audit said.
A formal statement from the Pennsylvania Lottery pushed back against the notion that foul play was involved in the winnings.
“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 statement 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.”
The lottery said its research confirmed all of the claims for the 17 players mentioned in the audit “can be reasonably explained.”
One example was of a player playing Pick 4. They played the same numbers on 68 tickets on the same day. The player then spread the winning claims out over the next few months rather than cashing everything in at once, the lottery said.
The statement also noted that how a person plays the lottery has a “huge impact” on how the data appears.
The Pennsylvania Lottery also raised concern in its statement that the publication of the audit would negatively impact lottery sales and lottery-funded programs.
“Our agency agrees with the majority of the DAG’s findings and recommendations,” the statement said. “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 its players.
“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,” the statement added.
———
