Wisconsin Lottery Investigating December 2007 Megabucks Lottery Draw

The Wisconsin Lottery has asked the Wisconsin Department of Justice to review the December 29, 2007, Megabucks drawing to determine if any illegal activity may have occurred. The Lottery made this request because a vendor's employee who had access to Wisconsin's random number generators (RNGs) has allegedly also committed fraud in Iowa and Colorado. The drawing machines used in 2007 are no longer in use, and earlier this year, an independent auditing firm confirmed the integrity of the Wisconsin Lottery's current gaming systems.

"We asked the Department of Justice to look into a December 2007 drawing to determine if any illegal activity occurred in Wisconsin," said Lottery Director Mike Edmonds. "At this time, we have no other suspicions than the December 2007 drawing, and we know DOJ will be vigilant in its review.  Protecting the integrity of our games is of utmost importance, and third party independent validators have confirmed the integrity and security of the Lottery's current random number generators."

Iowa Allegations

According to an Iowa criminal complaint issued on October 8, 2015, Eddie Tipton was convicted in July 2015 on two counts of fraud for his participation in a scheme to collect on a $16.5 million Hot Lotto ticket from a winning jackpot in December 2010 (the Hot Lotto game is not played in Wisconsin). Tipton, who had access to the machines used to pick lottery numbers because of his role in providing software updates as a Multi-State Lottery (MUSL) employee, was accused of rigging the Hot Lotto game to produce predetermined numbers on a specific date. Tipton then later purchased a Hot Lotto ticket with those predetermined numbers in December 2010 and won the jackpot on December 29, 2010. Tipton is appealing those convictions.

On Friday, the Iowa Attorney General announced new charges against Tipton. He is charged with Ongoing Criminal Conduct for an alleged scheme in defrauding lotteries in Iowa, Wisconsin and Colorado.

Wisconsin Review

In September 2015, the Wisconsin Lottery asked the Wisconsin Department of Justice to review the December 29, 2007, Megabucks drawing in which a "Robert Rhodes" claimed the $2 million jackpot prize on February 26, 2008. The ticket was brought to the Lottery's Madison headquarters by an attorney for Rhodes. It was signed by Robert Rhodes of Sugar Land, Texas, with the prize payable to Delta S Holdings, LLC.

State law requires the Lottery to pay a prize to an individual, unless otherwise directed by the courts to pay to a trust. The winner chose the lump sum cash payment of $1,147,630 and was paid $783,257 after taxes to Delta S Holdings, LLC following a Dane County Court Order.

"If it is determined that something illegal took place, we will pursue a criminal prosecution, which will include demanding repayment of the funds," said Edmonds. 

The Lottery's drawing machines are independent devices that are not connected to a network. They are kept on a locked floor, in a locked room, surrounded by a sealed locked case, and all drawings are witnessed by a Certified Public Accountant (CPA) and security to ensure all the proper protocols and internal controls are in place when conducting drawings.

In June 2015, the Lottery also had an independent third party validator, Digital Intelligence (DI), review the three random number generators that were installed in 2014 as an additional precaution. Digital Intelligence provides forensic casework and analysis for law enforcement, intelligence organizations and other corporate security professionals. The RNGs had already been certified in May 2014 by BMM Testlabs as accurately generating random numbers that are unbiased and unpredictable. The BMM Testlabs review also stated that the RNGs do not contain any malicious code.

Digital Intelligence examined the systems to identify unusual, questionable or suspect activity or files on any of the computers. After comprehensive evaluation and testing, DI reached the conclusion that there is no "…unusual, questionable or suspect activity on the RNG computer systems in use by the Wisconsin Lottery.''  DI also did not identify any malicious files or malware.

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