First lawsuit in state lottery-fixing scandal seeks millions
RYAN J. FOLEY
Feb. 03, 2016
DES MOINES, Iowa (AP) — It was one of those dreams-come-true moments that lotteries love to promote when "Lucky Larry" Dawson smiled as he claimed a $9 million jackpot, surrounded by his kids and grandkids. Five years later, the Iowa man has become the first plaintiff in litigation that threatens to cost state lotteries millions of dollars following an insider jackpot-rigging scandal.
A Des Moines law firm filed a lawsuit Wednesday on Dawson's behalf seeking to declare that his Hot Lotto jackpot in May 2011 should have been nearly three times as big, had the previous one not been fixed. It's the first in what could be several lawsuits filed by players who claim they were ripped off playing games allegedly rigged by Eddie Tipton, former security director of the Multi-State Lottery Association.
Tipton has been convicted of rigging a $16.5 million jackpot in December 2010 by tampering with the random number generator that draws the Hot Lotto winning numbers at the association headquarters in Urbandale, Iowa, and then buying the six-number combination himself. He's awaiting trial on charges alleging that he fixed jackpots worth millions in Colorado, Wisconsin, Kansas and Oklahoma between 2005 and 2011 and worked with associates to buy tickets and claim prizes.
Dawson's lawsuit claims the 2010 jackpot should have rolled over and created a $25.5 million pool for the jackpot that he won months later. Instead, the jackpot reset to the Hot Lotto's base of $1 million before building up to the $9 million prize he claimed. The lawsuit asks a judge to declare Dawson the winner of the additional $16.5 million, which translates to $10 million in the lump sum cash option he'd take, plus interest.
"He needs to be made whole. The entire integrity of the lottery run by this organization nationwide is at stake here," said Dawson's attorney, Jerry Crawford, who didn't rule out filing additional lawsuits.
The Iowa Lottery, named as a defendant along with the lottery association, vowed to fight the claim, saying Dawson "was paid the jackpot to which he was entitled."
"It is impossible to rewrite history. No one can know what would have occurred in this case had any event in it been changed," CEO Terry Rich said.
The association, which runs Powerball and includes 37 state and territorial lotteries, didn't return messages for comment.
The Iowa Lottery didn't pay the jackpot allegedly fixed by Tipton after lawyers who tried to claim it on behalf of a trust refused to identify who purchased the ticket. That money was returned to 16 states that participated in Hot Lotto as an unclaimed prize, which the lawsuit calls an improper financial windfall that resulted from the states' inability to operate a fair and secure game.
Tipton was charged last year and fired after colleagues identified him as the person seen on gas station surveillance video buying the winning ticket in Des Moines.
Dawson — a financial adviser nicknamed "Lucky Larry" for his golf game — purchased his winning ticket at a gas station near his Webster City home. He said he bought $19 in tickets for every bi-weekly drawing so he could cover all 19 "Hot Ball" options, after reading a book claiming to have the secrets to winning lotteries.
Dawson and his wife have used their windfall to expand the family business and support charitable causes. They believe their prize should have been bigger and hope "this action will help make sure this doesn't happen to other people," Crawford said.
The lawsuit alleges lax security measures, saying the association's random number generators built by Tipton lacked fraud prevention capabilities available in other models. A surveillance camera system for the draw room also repeatedly malfunctioned after its 2008 installation.
It's alarming that Tipton was only caught because the gas station recorded and saved the video of the ticket purchase, said Nicholas Mauro, another attorney for Dawson.
"I cringe to think about what is left to be discovered with how many rigged games were out there," Mauro said.
Tipton attorney Dean Stowers said the Iowa attorney general's office, which will defend the lottery, "walked into the lawsuit" by zealously pursuing Tipton despite lacking evidence that he tampered with the computers.
"I've never seen anybody doing anything so blatantly foolish," said Stowers, whose client is appealing his conviction. "To put into question your own games without really fully thinking through the liability issue, I find it to be just amazing."