Following a 2017 PennLive investigation, auditors have raised questions about suspiciously frequent prize claims in South Carolina’s lottery.
South Carolina’s Legislative Audit Council released an audit on Thursday that found 18 people claimed 50 or more prizes greater than $500 between 2008 to 2017. Based on statistical analyses, auditors said those patterns were “highly improbable” and may indicate claimants purchased tickets through transactions not authorized by state law.
Andy Young, audit manager, told PennLive the agency’s audit was spurred by PennLive’s 2017 investigation and media reports in other states about improbable win patterns.
PennLive found that small groups of players in many states, including Pennsylvania, have claimed lottery prizes greater than $600 at a rate that can’t be readily explained by luck or frequent playing.
“It turned out to be the case that we had similar patterns,” Young said.
The South Carolina Legislative Audit Council consulted Philip Stark, a statistician at the University of California Berkeley, to conduct its analysis. PennLive relied on Stark for its own analysis.
The agency concluded that South Carolina’s most frequent prize claimants may be engaged in ‘discounting’. Discounting is a practice where players resell winning tickets to others at a discounted rate to avoid having their winnings withheld by the lottery to settle debts, like past-due taxes, student loans, child support, or other court-ordered payments.
The agency views the practice as illegal. In addition, it notes in a summary report, “the buyers may be seeking to launder money earned from criminal activity”.
The agency recommended that the lottery adopt a formal, statistical methodology for assessing and investigating frequent prize claiming in the future. The agency also recommended that the South Carolina legislature separate responsibility for investigating lottery-related misconduct to another agency.
South Carolina’s Lottery, like all U.S. lotteries, is responsible for selling lottery tickets in addition to ensuring retailers and player comply with state laws. Young said that, based on his agency’s research, that dual role creates a potential for conflicts of interest.
“Our view is that when you’re responsible for both, if you find misconduct that may affect sales, you may be less likely to investigate it,” Young said.
The report points to a scandal in Ontario, Canada in 2007, where store clerks and owners were secretly stealing winning prizes from lottery players. State investigators found that lottery officials ignored unusually frequent claims for years because they feared investigations would dampen sales.
South Carolina isn’t the only state to look deeper at frequent winning in response to PennLive’s reporting, which was produced in collaboration with the Columbia Graduate School of Journalism and several out-of-state media outlets.
In 2017, after reporters presented an analysis of frequent winning to officials in Massachusetts, officials opened criminal investigations and implemented a policy to withhold prizes from people who claimed large prizes with suspicious frequency.
In April, Clarance Jones, a Massachusetts man that PennLive identified in 2017 as the nation’s most frequent prize claimant, pled guilty to federal charges. Jones bought millions of dollars worth of winning tickets from other players in order to help them avoid paying taxes.
The Pennsylvania’s Lottery, meanwhile, says its stance on frequent winning has largely remained unchanged since 2017.
In its reporting, PennLive found that more than 200 people claimed more than 50 Pa. Lottery prizes greater than $600 between 2000 to 2016. An analysis by Stark – the Berkeley statistician – found many of those win tallies improbable.
Ewa Dworakowski, a spokeswoman for the Pa. Lottery, said Monday that the lottery investigates retailers who claim prizes frequently and checks to see if frequent winners are related to those retailers.
However, it views frequent wins by the general public as simply the result of frequent playing.
“Other than cross-checking against the retailer database, we do not investigate claims by the general public,” Dworakowski said. “We have no reason to do so as they are not subject to lottery policies, regulations, or procedures.”