Virginia Lottery says it will monitor frequent winners after Virginian-Pilot investigation

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RICHMOND

In the wake of an investigation by The Virginian-Pilot on frequent winners, the Virginia Lottery has rolled out three policy changes aimed at identifying and stopping potential fraud among its roughly 5,200 retailers.

The most significant step: The state lottery will start regularly analyzing its winner database to identify those frequently claiming tickets, Director Kevin Hall announced Wednesday.

"Going forward, this will identify repeat winners and help us determine if circumstances warrant further investigation," Hall said at one of the lottery's public meetings.

Lottery spokesman John Hagerty confirmed that the agency has started reviewing the state's most frequent winners, as long as they have claimed a winning ticket in the last year. The roughly 40 top players, which The Pilot identified to the agency months ago, had not previously been investigated.

The Pilot's investigation found that between 2008 and 2016, 92 people won at least 50 tickets worth $600 or more apiece, according to data from the Virginia Lottery. Some of these players collected prizes with statistically impossible frequency.

The story, published last month, focused on whether there was manipulation of the lottery's ticket redemption process – not the integrity of the games themselves. Currently, it is legal for store owners and workers to play the lottery at their own businesses.

One of the state's top winners, from Hampton, won most often at a Newport News store he owns, according to lottery data. Another, from Ruther Glen, Va., cashed in more than 200 tickets worth a total of roughly $800,000 in just a few years, the records show.

Bill Hertoghe, a former director of security at the California Lottery who has been critical of Virginia's $2 billion lottery operation, said the agency's changes are a step in the right direction but don't go far enough to truly protect players. 

He previously called the decision not to scrutinize frequent winners "negligent," contending that the state could be left vulnerable to fraud. Previously, the Virginia Lottery was one of 10 in the nation that did not regularly monitor frequent winners, according to a survey by PennLive, a central Pennsylvania newspaper. 

"That's just lottery protocol. But at least they're getting to it," Hertoghe said in an interview Friday morning. "It's too bad it takes a news article to get them off their ass."

Before The Pilot story was published, the Virginia Lottery also amended its claim form to ask winners to identify whether they're a retailer or connected to one in any way. So far, just over 1 percent of people claiming tickets worth $600 or more – the amount that needs to be reported – are tied to retailers, according to lottery data.

As a result of its updated claim form, the lottery announced this week that it had opened 16 investigations into potentially fraudulent winners. Hagerty said the investigations are ongoing and declined to provide any additional details.

Hertoghe, who was a consultant for other state lotteries, said California started monitoring frequent winners and their possible connections to retailers more than a decade ago. Virginia, he said, is just getting up to speed.

In order for the Virginia Lottery to root out problem retailers, he stressed, the agency needs to start doing undercover stings, either administratively or criminally. The lottery's update gave no indication whether it would take that step.

When asked if the Virginia Lottery was planning to do any such operations, Hagerty said they "are evaluating security procedures used in other states, and will make that determination at an appropriate time."

Hertoghe said, "I hope we don't have to wait another decade for them to do that."

The Virginia Lottery took two other steps to further scrutinize repeat winners. The materials it sends monthly to each retailer will "now feature prominent reminders of the rules and regulations about the proper handling of Lottery products."

Directors and managers throughout the agency are also consulting with other states to determine the best practices related to security and repeat winners, said Hall, who became the lottery director in January.

"I have a responsibility to act on anything that could undermine public confidence in the Virginia Lottery," he said at the meeting. "I told the reporter we would look into this. I said we could do better, and I meant it."

Overall, Hertoghe thought the policy changes were "good progress." If any of the past frequent winners are still active retailers, then they should be investigated, he said.

"They have the resources," he said. "Even if you never left your cubicle, you could figure out what's going on."

https://pilotonline.com/news/government/virginia/article_49102ec0-d91c-11e8-bdf9-33ec09c1bae3.html