North Carolina lottery officials and state lawmakers said this week they are examining reforms to better safeguard the games following an Observer investigation that found hundreds of players who beat staggering odds time and again, raising red flags among experts.
Dozens of repeat winners were lottery retailers or employees – men and women entrusted to deliver potential fortunes to customers.
Others may not have been the original winners at all. North Carolina has a lucrative secondary market, the Observer found, where players sell winning tickets at a discount, possibly to avoid automatic withholdings for back taxes and child support.
Buyers cash the tickets and sellers remain anonymous. The state has acknowledged the potential problem but has done little to stop it.
That could change. Following the Observer’s series:
▪ Lawmakers said they’d push to make reselling tickets a crime. Lottery officials said they’d review the practice and speak with leaders in other states where it is against the law.
▪ Lottery officials said they’d look into making retailer discipline more available to the public.
▪ And commissioners who oversee the game’s operations said they will review the policy that allows retailers to bet at their own stores to “see if a more aggressive stance is warranted,” said Alice Garland, the North Carolina Education Lottery’s executive director.
“If someone is gaming the gaming system that certainly gives me heartburn,” said state Rep. Jason Saine, R-Lincoln, co-chair of the legislature’s lottery oversight committee.
Saine said he intends to hold hearings when the legislature returns in January on issues raised by the Observer.
One topic that concerned Saine was reselling tickets. It’s against lottery policy for retailers or employees to buy or sell discounted tickets, but players can do it without fearing any penalty.
Saine said he plans to call lawmakers in other states and possibly leaders of other lotteries to testify. Indiana and Florida make reselling tickets by anyone a misdemeanor, while in Iowa, it is a crime under a broader statute.
In an op-ed for the Observer after the series ran, Garland said she will ask those three states about their laws’ effectiveness, benefits and costs. “Such a policy appears difficult and costly to enforce,” she said, “but the lottery will give this a review.”
Rep. Paul Stam, Speaker Pro Tem of the House, is retiring at year’s end but said he is recruiting a lawmaker to introduce a bill in the new session that would make ticket reselling by players or retailers a misdemeanor.
The extent of the losses from reselling is not known, though Stam, R-Wake, said he renewed a request to the legislature’s Fiscal Research Division to find out. Since 2006, the North Carolina lottery has automatically withheld nearly $11.5 million from winners who owed debts to the state or local governments.
Garland said the agency is committed to continuously improving security. “There’s always someone trying to beat the system,” she added.
If someone is gaming the gaming system that certainly gives me heartburn
N.C. Rep. Jason Saine
The lottery also addressed another concern raised by the Observer: finding information on cheating retailers is difficult in North Carolina.
The Florida Lottery website, posts press releases on its website naming stores and owners caught cheating their customers. It also lists stores whose licenses were terminated “for conduct prejudicial to public confidence.”
Such information is not nearly as readily accessible here, but Garland stated the lottery “will review if that information can be and should be more easily accessible to players and the public.”
Lottery commission chair Kim Griffin Jr. and board member Jody Tyson said they would be open to exploring such a move.
Overall, Griffin said he was impressed there were only a few “bad apples” among all the state’s roughly 6,850 retailers, adding, “We’re doing something right.”
Griffin said he’d like to review the policy that prohibits retailers from playing at their own store, but doesn’t think it should become a state law.
Indiana is the only state that outlaws retailers, employees or family members from buying tickets at their stores because it fosters mistrust, officials there said.
Here, retailers are not lottery employees, but the state recommends that retailers do not let workers play the games at the store where they work. Eighty percent of the lottery’s retailers told lottery they have their own “no play on duty” policies.
North Carolina’s lottery commission began reviewing retailer wins after the Observer raised questions about them. The commission is scheduled to discuss the issue at its December meeting.
“When we’ve reviewed retailer wins, we’ve largely found them to be legitimate,” Tyson said, “and where we have had concerns we have addressed it.”
Stam isn’t convinced. He said he is also looking to recruit a colleague to put up a bill preventing retailers and clerks from buying tickets at their own stores.