Iowa Lottery reviews security after Eddie Tipton $14 million fraud case

Local News

CLIVE – The dream of hitting it big and winning millions of dollars is what keeps people playing the lottery in Iowa and around the country. 

That dream was shared by Eddie Tipton – an ordinary man with a very sensitive job – the former security director with the Multi-State Lottery Association.

In 2010, Tipton’s ambition to strike it rich and his access to sensitive lottery information collided when he bought a Hot Lotto ticket choosing numbers he knew would hit it big. Tipton hacked his hacked his company’s computerized drawing system and rigged the numbers to win the $14 million jackpot.

Terry Rich, CEO of the Iowa Lottery, said, “Well this, hands down, was a breach of trust. It was an employee who was hired by a vendor organization who took advantage of a secure key that he had to try to perpetrate fraud on the Iowa lottery.”

That vendor organization is the Multi-State Lottery Association, a non-profit association separate from, but owned and operated by, its member lotteries. More information on the association is online here: http://www.musl.com/

Rich said it’s his priority to hold up the integrity of the lottery games in the wake of the Tipton case. “It’s important to note that in Iowa, we never paid [Tipton]. We knew it was a mystery from the beginning and we never paid,” said Rich.

According to Rich, the Iowa Lottery is very careful about who it pays. After buying his ticket in 2010 with rigged numbers, Tipton tried to get a friend and an investment firm to collect the winnings, but it didn’t work.

“Part of our process is to make sure the person coming in to claim the prize is the person who bought the ticket to begin with,” said Rich.

With millions of dollars up for grabs, employees at the Lottery know they are a huge target for scammers. Hale Strasser, Vice President of System Operations at the Iowa Lottery, said security has to evolve every day because potential thieves keep trying different methods.

Strasser said, “You can never rest on your laurels and go ‘Hey, we’re secure.  We’re good to go.  Firewall’s patched, we’re done’ and put your feet up.  You cannot do that.”

Even though Tipton’s strategy of collection millions in winning ultimately failed, his tactic of manipulating the numbers at the Multi-State Lottery Association worked.

Local 5 was given exclusive access inside the Multi-State Lottery facility where the numbers are randomly selected by computers – or Random Number Generators (RNGs) – for many lottery drawings across the country. 
 
Multi-State Lottery officials said the RNGs that were manipulated have been replaced and a host of new security procedures have been implemented since the Tipton scandal.
 
Sue Dooley, Lottery drawing director, said, “Each of us have a unique 6 digit code to get inside this room, and there are only four of us that have that.”
 
Additionally, the computers inside the facility are not connected to any outside network and they cannot be accessed remotely. The Iowa Lottery says they’re continuing to focus on security because they know now – more than ever – they have to prove their security to customers everyday.
 
“It’s an optional purchase, they don’t have to buy one.  They have to think that it’s fair, that it’s secure and that they can win,” said Rich.
 

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