Insider lottery wins almost double earlier estimate: analysis

The amount of Ontariolottery prize moneyclaimed by insiders over 13 years is almost double what was originally thought, a professional analysis of prize data shows.

Deloitte, in an analysis of data provided by the Ontario Lottery and Gaming Corporation, found $198 million, or 3.4 per cent of total winnings, was claimed by insiders in the past 13 years.

Originally, the OLG had determined that the value of insider winnings was $106 million or 1.7 per cent of total winnings.

The firm carried outa forensic audit of the OLG's winners database,pinpointing trends in player winnings, especially those of insiders. The results of the audit were released Wednesday.

Deloitte looked at data from July 1, 1995, to June 20, 2008.

Kelly McDougald, chief executive officer of the OLG, said in Toronto on Wednesday that the corporation has taken steps in the past two years to protect players and limit potential fraud by people who sell lottery tickets.

"For the past two years, the organization has been better protecting players, and this in-depth analysis of 13 years of lottery data confirms we are on the right path and gives us great insight to drive even greater changes into our business," he said.

The analysis identified what the OLG called six "atypical" behaviours where potentially fraudulent activity may have taken place over the 13 years. These include insider claims of winning "free" tickets, potential misreporting of winnings to lottery players and potential ticket tampering.

"What they told us was that there was evidence of potential anomalous or fraudulent behaviour in our retail community, and while we believe our retailers for the most part are very honest and capable individuals, there was clear indication in this report of six behaviours that indicated there were attempts to defraud OLG or to defraud the players," McDougald said.

'Free' ticket wins drop

For example, 1.3 per cent of winning "free" tickets were claimed by insiders over the 13-year period, which amounted to $15.2 million or 4.24 per cent of total free ticket winnings. Since 2002, however, the OLG said the number of insider "free" ticket wins has declined.

Also, the analysis found 50 instances that suggested an insider retained a winning ticket and claimed it for himself or herself. This misreporting occurs when a lottery player has two winning "free" tickets, but the retailer reports only one ticket as a winner.

McDougald said the new measures to protect players include:

• Replacing the free tickets given out on Encore prize payouts with cash starting in April 2009.
• Phasing in, by January 2010, new barcode technology on all instant scratch tickets, which means retailers will not have to scratch off a validation code to validate a ticket.
• Setting aside about $3 million annually to analyze data and free staff time to flag suspicious behaviour and fraudulent lottery transactions.

Ombudsman Andre Marin criticized the OLG in a report last year, saying it ignored claims of widespread retailer fraud.

Insider wins are no longer investigated by the OLG. They're scrutinized by the Alcohol and Gaming Commission of Ontario, which now oversees the lottery corporation.