Lottery fraud scandal set to end with multimillion-dollar settlement
In the Hot Lotto fraud scandal, Eddie Tipton manipulated the number generating system for several lottery games, guaranteeing him and associates millions of dollars in payouts in rigged games.
July 22, 2019
Lottery officials are nearing a final settlement agreement in a class-action lawsuit for thousands of lottery players who bought tickets for rigged drawings in the Hot Lotto fraud case, broken by now-Auditor Rob Sand several years ago.
Eddie Tipton, information security director for the Multi-State Lottery Association during the lottery fraud, rigged the random number generator (RNG) system for the association in several states across the Midwest and Great Plains.
The rigging of the RNG allowed Tipton and associates to predict winning numbers on certain days, guaranteeing them jackpot prizes.
This settlement would establish a $4.3 million fund to refund those who bought tickets in rigged games in what was the largest lottery scam in U.S. history, and to pay for their attorneys’ fees and other fees related to the case. A judge still has to approve the settlement agreement, though.
Tipton was convicted of fraud and tampering — and Robbie Rhodes, who won a $783,000 prize in the Wisconsin lottery in a rigged game before transferring funds to Tipton — plead guilty and testified against him in a plea agreement with prosecutors.
Tipton was sentenced to up to 25 years imprisonment in Iowa for fraud, though the tampering charge was overturned based on a statute of limitations issue, according to court records. Tipton was also ordered to repay $2.2 million for seven winning lottery tickets.
Though not a party to the settlement, the Iowa Lottery issued a statement from CEO Matt Strawn on the settlement.
“The work by Iowa officials — including those at the Iowa Lottery — to unravel the Hot Lotto mystery and identify the facts in the Eddie Tipton case — was instrumental in arriving at the point where there can be a settlement for affected players,” Strawn said.
Strawn added it is their “understanding” that once the settlement is approved, a website will be set up to allow impacted players to submit claims online, or download claim forms to mail-in, and the Iowa Lottery will share information on the website “as soon as it is available.”
