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From Wikipedia, the free encyclopedia

Lottery-rigging scandal in the United States

The Hot Lotto fraud scandal was a lottery-rigging scandal in the United States. It came to light in 2017, after Eddie Raymond Tipton (born 1963),[1] the former information security director of the Multi-State Lottery Association (MUSL), confessed to rigging a random number generator that he and two others used in multiple cases of fraud against state lotteries. Tipton was first convicted in October 2015 of rigging a $14.3 million drawing of MUSL's lottery game Hot Lotto. Eddie Tipton ultimately confessed to rigging lottery drawings in Iowa, Colorado, Wisconsin, Kansas, and Oklahoma. Also involved in the scheme were his brother and former Texas justice of the peace Tommy Tipton, and Texas businessman Robert Rhodes.[2][3] Eddie Tipton was sentenced to 25 years in prison.[2][3] He was released on parole in 2022 after serving five years.[4]

A $14.3 million prize for the Hot Lotto draw on December 29, 2010, had been left unclaimed for nearly a year. When attempts were finally made to claim the prize on behalf of an anonymous off-shore trust company in Belize, the claim was rejected by the Iowa Lottery because it was made anonymously.[5][6][7][8] A subsequent investigation into the trust and the discovery of surveillance footage from a convenience store that depicted the ticket being purchased led to the arrest of Eddie Tipton on two counts of fraud for attempting to illegally participate in a lottery game as an employee of the MUSL, and then trying to claim a prize through fraudulent means.[9]

When his trial began on April 13, 2015, evidence was introduced by the prosecutors to support allegations that Tipton had rigged the draw in question by using his privileged access to an MUSL facility to install a rootkit on the computer containing Hot Lotto's random number generator, and then attempting to claim a winning ticket with the rigged numbers anonymously.[10][11] On July 20, 2015, Tipton was found guilty on both counts;[10] he was sentenced to 10 years' imprisonment, pending an appeal.[7]

Eddie Tipton and his brother Tommy Boyd Tipton were subsequently accused of rigging other lottery drawings, dating back as far as 2005.[12][13] Based on forensic examination of the random number generator that had been used in a 2007 Wisconsin lottery incident, investigators discovered that Eddie Tipton programmed a lottery random number generator to produce special results if the lottery numbers were drawn on certain days of the year.[13][14][15]

The Iowa Lottery and MUSL were also sued by a subsequent winner of a Hot Lotto drawing who sought to have his winnings retroactively increased because the jackpot had been illegitimately reset by Tipton's rigged win.[16][17] He settled with MUSL for an undisclosed amount on the eve of trial in 2019,[18] but a memo from 2015 was revealed during discovery that showed that MUSL's security officers lacked confidence in the random number generation process and recommended that some of the games be suspended.[19]

Hot Lotto held its final drawing on October 28, 2017;[20] the game was replaced by Lotto America in November 2017.

Investigation<br>[edit]

The December 29, 2010, drawing of the multi-state lottery game Hot Lotto featured an advertised top prize of US$16.5 million.[21] On November 9, 2011, Philip Johnston, a resident of Quebec City, Canada,[5] phoned the Iowa Lottery to claim a ticket that had won the jackpot; stating he was too sick to claim the prize in person, he provided a 15-digit code that verified the winning ticket. However, Johnston's prize claim was turned down when he was unable to answer questions that verified he was the owner of the ticket.[22] On December 6, Johnston phoned again, stating the ticket was actually owned by an anonymous individual who was being represented by a Belize-based shell company, Hexham Investments Trust. However, Iowa Lottery rules forbid anonymous prize claims, so the claim was turned down.[22]

On December 29, 2011, less than two hours before the expiration of a one-year deadline for prize claims, representatives of a Des Moines law firm presented the winning ticket at the Iowa Lottery headquarters, signed on behalf of Hexham Investments and New York City-based attorney Crawford Shaw. However, Hexham was misspelled on the ticket as "Hexam", and the claim was, once again, turned down.[22] On January 12, 2012, Shaw met with Iowa Lottery officials in person to try claiming the prize, but was turned down yet again after he refused to identify the owners of the trust. Shaw withdrew his claims over the prize afterward, and the prize money was returned to Hot Lotto's member lotteries in February 2011.[5][6]

In an interview with Iowa's Division of Criminal...