TORONTO - Ticket sellers and other lottery insiders in Ontario hit jackpots totalling $198 million over the past 13 years, according to a new report, and lottery officials are turning the findings over to police to see if any winnings were fraudulent.
Ontario Lottery and Gaming Corp. has been trying to rebuild and enhance security in recent years after the province's ombudsman accused unscrupulous retailers of collecting tens of millions of dollars in "dishonest" winnings - and OLG of letting them get away with it.
Deloitte and Touche conducted a forensic audit of the corporation's winners database for the period of 1995 to 2008 and found that the $198 million in prizes claimed by lottery insiders made up 3.4 per cent of the total prizes claimed at OLG prize offices.
Prizes of more than $990 have to be claimed at the prize offices instead of retail locations. Before November 2003 that amount was $300.
The ombudsman report followed an investigation citing a statistician who said lottery retailers had won more prizes in recent years than mere chance would normally allow.
However, the Deloitte report would not make that statement as they couldn't compare how many tickets insiders bought compared to how many they won.
"Ticket data identifying ticket purchases by insiders and non-insiders is not available," the report said.
"Therefore, we are unable to comment if our calculation of insider wins is a disproportionately high winning percentage."
Lottery insiders include retailers, their family members, and OLG employees.
OLG's chief executive officer, Kelly McDougald, said the corporation has made a lot of changes, particularly since the ombudsman's report.
"This is a very different OLG," she said.
"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."
The report and the data behind it are now being turned over to the Ontario Provincial Police, McDougald said. All insider wins have been directly investigated by the police branch of the Alcohol and Gaming Commission of Ontario since Jan. 1, 2008, and they have since laid several charges.
The report detailed six types of potential frauds that could be committed by insiders.
Deloitte notes most are on the decline, but potential instances of ticket tampering appear to be on the rise and OLG has not put any controls in place to mitigate the risk of ticket tampering.
Ticket tampering is defined as a retailer trying to determine the value of an instant ticket before activating it.
"This is a fraud against both the OLG and the lottery player as these tickets never reach the general public, and therefore, the public could potentially be deprived of the opportunity to win," the report said.
Deloitte says normal activity would be two instant tickets validated within one hour of activation of the instant ticket pack.
Between late 2005 and 2008 the analysis found more than 24,000 instances where 12 or more instant tickets from the same pack were validated within one hour of the pack being activated.
That happened at nearly 27 per cent of the retail locations across the province during that time period.
Another fraud risk is trying to guess hidden codes that indicate a winning instant ticket. The first five digits of the nine-digit code are visible and the last four are hidden under the scratch surface.
In some cases, the report suggested, retailers would try to guess the four digits. Deloitte found more than 9,000 lottery locations where there were four or more tries to enter the digits.
In one extreme case, a lottery device was used 1,455 times over several days to guess the code on a single ticket. The person was eventually successful in guessing the code, though it just turned out to be a $5 ticket, the report said.
The six types of potential frauds that could be committed by insiders detailed in the report are: keeping "free play" tickets, misrepresenting winnings to players, scanning a losing ticket while keeping a winning one, claiming a player's winning ticket for them at a prize office, ticket tampering and trying to guess hidden codes that indicate a winning instant ticket.
While ticket tampering is on the rise, most of the other potential frauds are decreasing, the report said. In recent years the OLG has implemented a number of security measures to combat fraud.
Lottery terminals now freeze for all wins of more than $5,000, retailers have to use a special "retailer button" that identifies them as insiders, and all original tickets must be returned to the customer.
All tickets also have to be signed by the customer, and there are more terminals that allow players to check their own tickets.