The Hot Lotto Fraud / Scandal
Has anyone ever managed to pull off a lottery scam and walk away with the winnings? Yes, and we’re going to tell you all about Hot Lotto scandal in this blog post. We’ll also go into detail about how it was discovered, the subsequent investigation and the outcome of the trial.
What is the Biggest Lottery Scam Ever?
The biggest lottery scam in history happened in the US and became known as the Hot Lotto scandal. The perpetrator was Eddie Tipton and it came to light in 2015. In a strange turn of events, he never successfully claimed his biggest win, but the jackpot in question is where the suspicion began. Tipton admitted to defrauding more than $24 million from various states over the course of many years. So, how did he do it and stay undetected for so long? We will tell you exactly how the biggest lottery scam in the world began to unravel.
The Start of the Hot Lotto Scandal
The story of the Hot Lotto Scandal begins in Iowa, two days before Christmas in 2010 when a middle-aged man walked into a QuikTrip shop and purchased slips for the Hot Lotto. The Hot Lotto was a multi-state lottery that took place in 14 states plus Washington, DC and involved picking five numbers and a Hot Ball sixth number.
The winning ticket was announced on 29th December, and it was the one purchased by this man. He had beat the odds and correctly matched all five numbers and the Hot Ball number. The only problem was that he didnāt come forward to claim the $16.5 million prize and it remained unclaimed for nearly a year.
Phone Call from Philip Johnston
The Iowa Lottery kept reminding people to check their tickets and see if they were the winner. There were, naturally, many false claims, from people who’d ‘misplaced’ the winning ticket. But then things got interesting, a man called Philip Johnston called claiming to be the winner and he gave the correct serial number from the winning ticket.
The Iowa Lottery team were suspicious, but they had a secret weapon, something they hadn’t released to the general public, which was CCTV footage of the man who bought the winning ticket from the QuikTrip store. After nearly a year of fake claims, they were using this to screen people.
From the footage, they knew that the winner was a middle-aged man, heavy set, and they could also see what he was wearing. So, they asked Johnston what he’d been wearing when he purchased the ticket. He answered wrong.
Johnston rang back later and ‘came clean’. He said he was actually a lawyer representing the winner who wanted to stay anonymous. The problem was staying anonymous when claiming lottery winnings is not allowed in Iowa, so Johnston was told the winner would have to come forward himself if he wanted the jackpot.
The Belize Company
The next twist in this story comes just days before the deadline for claiming the jackpot was about to expire. Two lawyers turned up at lottery headquarters and they had the winning ticket in hand. They said they were trying to claim it on behalf of a company in Belize. Again, they would not reveal the identity of the ticket holder.
They wanted the money to be paid to a trust in Belize, and things get even stranger when it was discovered that this company was owned by Philip Johnston. The same man who had first phoned and claimed he was the winner, then the lawyer working for the winner.
The Iowa Lottery reiterated that the ticket purchaser himself had to come forward if he wanted the money. The lawyers wouldn’t reveal his identity and they walked away. This raised suspicions even more, in the whole lottery history people had never seen anything like this, and they began to wonder, whose anonymity was worth losing $16 million?
The lawyers withdrew the claim, the deadline passed and the money was released back to the lottery.
Investigation into the Scam
Things went quiet after this, and nothing happened for two years until the case file ended up on the desk of a fresh-faced district attorney. He started an investigation, unsure if a crime had even been committed. This investigation involved making the CCTV footage public and asking people to come forward if they recognised the ticket purchaser.
It was hard to see his face in the footage, but that wasn’t what ended up giving him away. People immediately recognised the distinct voice. Colleagues of a man called Eddie Tipton instantly knew it was him, and it was clear why he was not coming forward himself to claim the winnings.
Eddie worked as the information security director at the Multi-State Lottery Association (MUSL). As an employee of the MUSL it was against the law for him to participate in the lottery. Plus, he didn’t just work for the lottery – his job was physically writing the programme that picks the random numbers on the winning ticket.
When confronted, Tipton first claimed he was away in Texas on the day the ticket was bought, so he couldn’t have been in Iowa. It didn’t take long to prove this was a lie and he was charged with fraud. It was alleged that Tipton installed malware on the RNG computer to rig the outcome in his favour.
The Trial and Sentencing
Tipton’s trial began in July 2015. At this point, the team still didn’t know for sure how he’d rigged the game, and Tipton was offered multiple plea deals to confess, but he refused. This was unusual and only made sense later when it became clear that this was not the only time he’d rigged the lottery.
As Eddie’s trial was underway, the police received a phone call asking if they were aware that his brother, Tommy Tipton, had also won the lottery 10 years previously. What are the chances that two people from the same family win the lottery? Pretty low.
This was all the police needed to begin investigating lottery winners in other states and see if any had any connection to the Tipton brothers. This lottery scam was found to have happened, not once, but multiple times across multiple states – Iowa, Colorado, Wisconsin, Kansas and Oklahoma.
Winnings that had been claimed by people somehow connected to Eddie were discovered, a friend of his, a girl he’d met on a dating app, and the suspicious jackpots were always announced on the same date just in different years. After this mounting evidence was presented, Tipton finally revealed his lottery secrets.
He confessed to writing code that would make these random numbers predictable to him. His code decreased the number of winning combinations dramatically, so he could ‘guess’ the winning numbers. It was programmed to work on just three days of the year, and these days coincided with national holidays, which meant Eddie could be away from his office and out buying lottery tickets.
Perhaps unsurprisingly, on 20th July 2015, Eddie Tipton was found guilty on both counts – two counts of fraud (for illegally entering the lottery as an employee and for then trying to claim the prize money through fraud) and sentenced to 25 years in prison. His brother spent 75 days in prison for his involvement.
The Aftermath
The brothers were ordered to pay the money back, but as you can imagine, most of it had been spent. Now The Hot Lotto no longer exists, and the last draw took place in October 2017.
This lottery scam also spurred further legal action from a legitimate jackpot winner. Larry Dawson won $6 million on the Hot Lotto a few months after Tipton’s winning ticket. Dawson sued the Iowa Lottery and MUSL in 2016, claiming that because of Tipton’s rigged ticket the jackpot had been reset to $1 million.
He argued that if the Iowa Lottery hadn’t recognized this scam ticket, his jackpot could have reached $16 million. This case was ultimately resolved out of court with a settlement from MUSL.
If you enjoyed this outrageous story, then you are going to love our other blog post discussing the biggest casino scams in history.
Frequently Asked Questions
This brings us to the end of our post about the biggest lottery scam of all time, and what a tumultuous story it’s been. If you want to know more about this, please check out our list of frequently asked questions below. Each answer includes helpful links.
1ļøā£ What is the biggest lottery scam?
The biggest lottery scam of all time was committed by Eddie Tipton and took place over many years. He was eventually caught and charged with two counts of fraud. This case went to trial and he was found guilty and is still serving his sentence.
2ļøā£ What is the biggest unclaimed lottery prize?
It seems wild to think of people not claiming a jackpot, but it happens more often than you'd think. In the UK lottery winners can choose to remain anonymous, but unclaimed prizes happen. A famous one happened in June 2012, on the EuroMillions. The jackpot was Ā£63.8 million, and no one ever came forward to claim it, so the money went to charity.
3ļøā£ How many unclaimed Lotto tickets are there?
The number of unclaimed lottery tickets is always changing, but the National Lottery has a very helpful page on its site showing you the number of unclaimed tickets. At the time of writing, there are seven waiting to be claimed. The man behind the biggest lottery scam, Eddie Tipton, left trying to claim his winning ticket until the time was nearly up.
4ļøā£ How far back are lottery tickets valid?
The validity period for lottery tickets depends on which lottery you are entering. Eddie Tipton only had about a year to come forward on the Hot Lotto. The National Lottery UK gives people 180 days to come forward, and if not, the money goes to charity.
5ļøā£ How are big lottery winners paid?
Again, it depends on the lottery. In the US, players sometimes have the choice of being paid in one lump sum or having it spread throughout their lifetime - this is often called annuity. The same often happens in Canada. On the EuroMillions, in the UK, the method of being paid varies depending on the amount you have won.