California LotteryCalifornia Lottery

SECURITY/LAW SECURITY/LAW ENFORCEMENT ENFORCEMENT

DIVISIONDIVISION

BackgroundBackground In 2005, California retailers accounted for In 2005, California retailers accounted for 5%5% of all high tier of all high tier

claims ($+599) but represent only claims ($+599) but represent only .2%.2% of the playing of the playing population.population.

Between 2005-2006, the California Lottery conducted three Between 2005-2006, the California Lottery conducted three high profile theft investigations: $745,000, $535,000 and high profile theft investigations: $745,000, $535,000 and $555,000. Two of the investigations resulted in the arrest of $555,000. Two of the investigations resulted in the arrest of clerks. The third led to a contract termination.clerks. The third led to a contract termination.

A California retailer has claimed 244 high tier prizes for A California retailer has claimed 244 high tier prizes for $462,852. Another received $ 355,594 for 198 claims. Still $462,852. Another received $ 355,594 for 198 claims. Still another retailer filed 182 claims and collected $937,499 in another retailer filed 182 claims and collected $937,499 in prizes.prizes.

California retailers play often and therefore win often; California retailers play often and therefore win often; or – are very luckyor – are very luckyor – obtain winning tickets outside lottery regulationsor – obtain winning tickets outside lottery regulations

ResponseResponse Consumer Protection Strategic PlanConsumer Protection Strategic Plan Retailer and retailer related claims analysis Retailer and retailer related claims analysis

which includes:which includes:•Revised claim form to include retailer related questionsRevised claim form to include retailer related questions•Claims & Player Service collaborationClaims & Player Service collaboration•Increased Field InvestigationsIncreased Field Investigations•Implemented a daily high-tier query alertImplemented a daily high-tier query alert

Enhanced Check-A-Ticket functionality to include Enhanced Check-A-Ticket functionality to include all prizes levels for all lottery gamesall prizes levels for all lottery games

Mystery Shopper Program (Work in Progress)Mystery Shopper Program (Work in Progress) Retailer Redemption Compliance ProgramRetailer Redemption Compliance Program

Retailer Redemption ProgramRetailer Redemption Program

30% retailers - 70% clerks30% retailers - 70% clerks Female operator 4 times more likely to be a victimFemale operator 4 times more likely to be a victim With media – thefts declined, however, retailer complaints With media – thefts declined, however, retailer complaints

doubleddoubled More likely to steal the ticket than underpay the prizeMore likely to steal the ticket than underpay the prize Most claims submitted within 30 days of theftMost claims submitted within 30 days of theft Day of week/time of day was not a factorDay of week/time of day was not a factor Independent stores more likely than corporate storesIndependent stores more likely than corporate stores Random vs target stores – irrelevantRandom vs target stores – irrelevant Region of state irrelevant; however, urban vs rural a factorRegion of state irrelevant; however, urban vs rural a factor

Sting TicketsSting Tickets

Dateline NBCDateline NBC

Request for claimant information made under the Freedom Request for claimant information made under the Freedom of Information Act in February 2008of Information Act in February 2008

Cooperative DA’s in Riverside County and Santa Clara Cooperative DA’s in Riverside County and Santa Clara CountyCounty

Chris Hansen – “To Catch a Predator”Chris Hansen – “To Catch a Predator”

Ride-Along September & December 2008, January 2009 and Ride-Along September & December 2008, January 2009 and March 2009March 2009

Program aired May 3, 2009Program aired May 3, 2009

Current StatisticsCurrent Statistics

Number of Retailers VisitedNumber of Retailers Visited 550550 Number of Attempted TheftsNumber of Attempted Thefts 9898 Prosecutions:Prosecutions:

• Submittals:Submittals: 7272• ConvictionsConvictions 5959• Pending:Pending: 1313• Under Investigation:Under Investigation: 77• Number of cases lost:Number of cases lost: 00

Administrative Sanctions:Administrative Sanctions: 8282

(Contract Terminations/Probations)(Contract Terminations/Probations)

SuggestionsSuggestions

Recognize insider fraud is occurring in places other than Recognize insider fraud is occurring in places other than Canada and CaliforniaCanada and California

Educate and empower the consumerEducate and empower the consumer

Extract the retailer/clerk from the sale and redemption Extract the retailer/clerk from the sale and redemption processprocess

Analyze your claimsAnalyze your claims

Initiate a compliance program – if not criminal oriented then Initiate a compliance program – if not criminal oriented then administrativeadministrative

Questions/CommentsQuestions/Comments