Why are there Rules Against Lottery Retailers or Family Members Buying Tickets?
Update: scroll down to see the OLG’s clarifications regarding “insider win definitions” for purposes of OLG ticket purchase and more information on ticket safety.
A recent article in the Washington Post repots that, in a review of lottery wins in New Jersey, lottery retailers and their family members accounted for half of the lottery’s biggest winners. Out of 20 frequent Lottery winners in New Jersey since 2009, tenwere either lottery retailers or members of their families.
Although most of the Canadian lotteries have instituted safeguards in cases where lottery corporation employees, lottery retailers or family members of either group buy lottery tickets, it seems that there are still gaps in the system.
In Canada, the lottery corporation of each individual province has its own rules regarding wins by lottery-connected individuals. Some, such as the OLG, have recently instituted rules that simply forbid lottery employees, retailers or family members from buying tickets. This, however, does not fully address the issue — what constitutes “family?” Parents? Siblings? Children? Aunts and Uncles? First cousins? Second cousins? Third cousins? What about friends? The corporation doesn’t address this issue.
In British Columbia the BCLC investigates any wins that result from lottery product purchases by retailers or family members. The other provincial Lottery corporations have their own variations of these safeguards. Why? Some recent incidents offer a glimpse into the need for such protections.
Fraud and Suspicions
Between 1999 and 2006 Ontario retail store owners and their families claimed lottery wins of approximately $100 million. That doesn’t even account for the tens of millions of dollars in fraudulent claims that were ignored by the Lottery Corporation. A statistician has noted that the statistical changes of this happening are “one in trillions.”
The scandal came to light when a report was released by the provincial ombudsman which accused the OLG of turning a blind eye to allegations of corruption. The report noted that 247 major lottery wins, with payouts ranging from $50,000 to $12.5 million, were claimed by retailers and their families.
Western Canada Lottery Corporation, which administers the lotteries of Alberta, Manitoba, Saskatchewan and the Northern Territories, also conducted a review of lottery wins. Their report doesn’t indicate findings of anything improper in their region. However, in the Atlantic Lottery Corporation region, an ALC review found that retail owners and their families won prizes at 10 times the rate of non-retailers.
The Ontario ombudsman’s report identified several methods by which retailers cheated. Some included “pin pricking” whereby instant-win tickets are scratched with a pin to reveal winning numbers. More commonly, retailers kept free tickets generated by winning lottery numbers.
Ontario Lottery officials have been soundly criticized. The ombudsman’s, issued in 2009, said that that the OLG’s bottom line involved only the profits that the lottery generated. As long as the lottery ran profitably, cheating down the line was tolerated.
Focus on the way in which lottery retailers and their family members were able to cheat the system started when the story of Bob Edmonds, age 78 from Coboconk Ontario, hit the papers. Edmonds a long time lottery players, went to the Coby Milk & Variety store to check on the results of a Super 7 with Encore ticket that he had purchased two weeks earlier using his customary numbers. When clerk Phyllis LaPlante checked his numbers, Edmonds heard the winning musical jingle sound twice, indicating that he’d won two prizes: La Plante gave him 1 prize, a free ticket, but denied that there was a second prize. Then she cashed in his winning ticket.
Edmonds alerted OLG officials to the fraud but he was stonewalled and ultimately had to hire a lawyer and sue OLG in court to recover his win.
In another Ontario scam, Kathleen Chung claimed a Super 7 jackpot for a ticket that was purchased in a convenience store in Burlington Ontario which was managed by her brother. The prize, $12.5 million, was paid out to Chung but the OLG was suspicious and investigated even after the payout.
After the OLG was able to prove the fraud they pursued the search for the real winners and found them — 7 men who bought the ticket as part of a lottery pool through their workplace. They split the win 7 ways.
The BCLC doesn’t prohibit lottery retailers from purchasing tickets, but they do investigate all retailer and retailer-family wins. That hasn’t prevented BC retailers from racking up some impressive payouts that raise questions.
In recent years retailers across the province won significant amounts of money — one Aldergrove grocery store employee took home $1.35 million. The winning tickets came through purchases of 6/49, Payday, Extra Keno and SportsAction tickets. Critics note that over the span of six years, BC lottery retailers won 4.4% of all lottery prizes valued at over $10,000. That figure is 3-6 times the expected winning average, given the population. Most of the winnings were on Keno tickets.
All of the winning retailers are owners or employees of lottery ticket outlets. These include convenience stores, pubs, inns and family diners, general stores, gas stations and smoke shops. One retailer-winner, Avendas Brito, who owns the Broadway Smoke Shop in Vancouver, pointed out it shouldn’t be assumed that all retailers are crooked. Another, Carole Agate of the OK Falls Hotel in Okanagan, said the same thing. “It’s wrong to suspect every retailer who scores a win.” But the questions persist.
Retailers do have access to techniques that allow them to acquire winning tickets illicitly. To keep your lottery ticket safe from any type of theft or fraud, the lottery recommends that you sign the back of your ticket as soon as you buy it.
Update March 22 2016 — with thanks to the OLG media relations
As the Senior Manager of Media Relations at OLG, I am dismayed by some errors and inaccuracies in your recent posting “Why are there rules against lottery retailers or family members buying tickets?”
I encourage you to reach out to OLG Media Relations at 1-888-946-6716 when you have an article in development to ensure your articles are factually correct.
Below are the errors and inaccuracies that need to be correct immediately:
1.“Some, such as the OLG, have recently instituted rules that simply forbid lottery employees, retailers or family members from buying tickets. This, however, does not fully address the issue – what constitutes “family?” Parents? Siblings? Children? Aunts and Uncles? First cousins? Second cousins? Third cousins? What about friends? The corporation doesn’t address this issue.”
In April 2009, OLG announced that all OLG employees are prohibited from playing OLG lottery games. And in November 2009, OLG prohibits lottery retail employees from playing at their own stores.
Insider Win definitions
An Insider Win occurs where an Insider claims and is paid a lottery prize.
It is the policy of the Ontario Lottery and Gaming Corporation (OLG) that any Directors, Officers, Partners, Owners, and employees of the Defined Categories (listed below) and their immediate family members, including spouse (whether married or common law relationship), children, parents, siblings and any other relatives who reside with them will be subject to Insider Win Procedures as defined by the Corporation.
It is the responsibility of the Insider to advise OLG of their relationship to OLG upon claiming their prize.
Insiders are classified as any person who, within twelve (12) months prior to the date of a prize claim, is defined as:
o Retailers of OLG lottery products and all employees or individuals of the retailer who are involved in the sale and redemption of lottery products
o Interprovincial Lottery Corporation
o Key Lottery Suppliers to OLG
o Regulator of Lottery (Alcohol and Gaming Commission of Ontario)
o Suppliers of Independent Audit, Advisory or Security Services
o Other Canadian Lottery Jurisdictions
o An employee of accountable Ontario Government Ministries of the OLG and AGCO:
o Ministry of Finance (effective July 8, 2009)
o Ministry of Government Services
o Ministry of Public Infrastructure and Renewal (pre July 8, 2009)
o Immediate Family Members and Relatives of an OLG Employee or any other relatives who reside with an OLG Employee
Immediate family members of a defined Insider or any other relatives who reside with the Insider will be treated as Insiders.
2.“Retailers do have access to techniques that allow them to acquire winning tickets illicitly. To keep your lottery ticket safe from any type of theft or fraud, the lottery recommends that you sign the back of your ticket as soon as you buy it.”
LOTTERY TERMINAL ENHANCEMENTS
oAudible sounds and tones on terminals: OLG lottery terminals have winning and non-winning audible tones with voice-over messages to help inform customers if their ticket is a winner or a non-winner right away. This prize information is also displayed on terminal screens that face the customer.
oLottery terminals freeze when a prize worth $5,000 or more is validated: This allows OLG’s Customer Support Centre to make immediate contact with the lottery winner and give them direction on how they can claim their prize.
o Customers must sign tickets before they are validated: This is a vital security feature for OLG customers. The customer must sign their lottery ticket when purchased and only then can the customer claim a lottery prize.
o Customers can see if their own lottery tickets are winners: Customer are encouraged to check their tickets themselves using in-store self-serve ticket checkers available next to all lottery terminal locations. This measure offers the customer confidence that, they, too, can determine if a ticket is a winner right away. Receipts are provided to customers for all ticket validation transactions at the lottery terminal.
RULES FOR RETAILERS
oRetailers are prohibited from purchasing lottery tickets in their own stores: The No Play at Work Policy requires people who work at a lottery retailer must line up to buy their lottery tickets at a different store, just like members of the public must line up at a store, too. Retailers must also validate their winning tickets at a store other than their own.
âˆ™ There is a retailer compliance program that includes escalating penalties: While OLG appreciates its retailer partners, the contract with retailers includes a ”zero tolerance” policy for fraud, theft or dishonest behaviour.
o Retailers are required to return all winning and non-winning tickets to customers: Retailers validate signed lottery tickets for the customer. OLG’s Prize Centre tracks all wins of $1,000 and more, including those of retailers and insiders.
Lottery terminal suspension: Lottery terminals may be suspended when unusual retailer activity is suspected.