Prize Payments for Lotteries

APLA / WLA Seminar Cambodia April 2013

Innovative New Games and Channels and their Risk Management

•  Prize Payments for Lotteries

Prize Payments for Lotteries

•  Evolution of prize payment systems –  Offline prize validation –  Online prize validation –  Introduction of barcodes

•  Risk factors: Lotteries exposed –  Player fraud –  Retailer fraud

•  Latest solutions –  Weaknesses? –  Solutions

Phase 1

•  OFFLINE validation of prizes •  VOID IF REMOVED number /

paper validation list •  All winning tickets returned to

lottery for checking •  Phone authorisation # required

for retailers to pay prizes of $50+

•  RISK to lottery & retailers –  “Cut & paste”

Late  1970’s  /1980’s  

1990’s   2000’s   2010’s  

Phase 1

•  OFFLINE validation of prizes •  Solution: Retailer codes

–  Code letters with list behind counter for retailers to check when small prizes claimed

Late  1970’s  /1980’s  

1990’s   2000’s   2010’s  

Phase 1

•  OFFLINE validation of prizes •  Solution: Retailer codes

–  Code letters with list behind counter for retailers to check when small prizes claimed

Late  1970’s  /1980’s  

1990’s   2000’s   2010’s  

Phase 2

•  Introduction of ONLINE VALIDATION of prizes –  Growing range of games –  Introduction of higher priced tickets –  More complex with multiple games on

tickets

•  BARCODES on tickets, used together with concealed digits under scratch panel

•  RISK reduced for lottery –  Risk of keying errors –  Busy retail periods vulnerable

1970’s  /1980’s   Late  1980’s  /1990’s   2000’s   2010’s  

Phase 3

•  Introduction of Bingo, Crossword & other Extended Play games

•  Required On-line validation of prizes –  Too difficult for retailers to sight check –  Not all lotteries had this facility

•  Advanced retailer code system –  2-part “void if removed” code system

1970’s  /1980’s   Late  1980’s  /1990’s  

Mid  1990’s  /2000’s   2010’s  

Phase 3

•  Introduction of Bingo, Crossword & other Extended Play games

•  Required On-line validation of prizes –  Too difficult for retailers to sight check –  Not all lotteries had this facility

•  Advanced retailer code system –  2 part “void if removed” code system

•  RISK? –  Potential for retailer fraud

1970’s  /1980’s   Late  1980’s  /1990’s  

Mid  1990’s  /2000’s   2010’s  

Phase 4

•  Introduction of Failsafe™ barcodes –  Player ticket checking devices in stores

•  Fast & accurate validation for retailers

•  Enabled players to check their own tickets

1970’s  /1980’s   Late  1980’s  /1990’s   2000’s   2010’s  

Fraud exposed!

•  CBS program “The Fifth Estate” –  Oct 2006

•  Retailer fraud exposed •  Players being tricked by retailers •  Validation systems being abused! •  Instant games as well as on-line/terminal games

1970’s  /1980’s   Late  1980’s  /1990’s   2000’s   2010’s  

Fraud exposed!

•  “The report by the fifth estate added that over 200 lottery retailers in Ontario have won major prizes from 1999 to 2006”

1970’s  /1980’s   Late  1980’s  /1990’s   2000’s   2010’s  

Fraud exposed!

•  Ontario Lottery (Canada) under microscope –  Player apathy/trust created vulnerability –  Multiple techniques in use

•  Tickets switched behind counter –  Retailer prize codes created vulnerability –  Poor systems & lack of management

control

•  Not just Ontario –  Other US & Canadian lotteries –  Australia

1970’s  /1980’s   Late  1980’s  /1990’s   2000’s   2010’s  

Solutions

•  Strengthened security –  Signature panel on front of ticket

•  Instant & on-line games

1970’s  /1980’s   Late  1980’s  /1990’s   2000’s   2010’s  

Solutions

•  Strengthened security –  Signature panel on front of ticket

•  Instant & on-line games

1970’s  /1980’s   Late  1980’s  /1990’s   2000’s   2010’s  

Solutions

•  Strengthened security –  Signature panel on front of ticket

•  Instant & on-line games –  “Scratch & Scan”

•  Intuitive for players

1970’s  /1980’s   Late  1980’s  /1990’s   2000’s   2010’s  

Solutions

•  Strengthened security –  Signature panel on front of ticket

•  Instant & on-line games –  “Scratch & Scan”

•  Intuitive for players

1970’s  /1980’s   Late  1980’s  /1990’s   2000’s   2010’s  

Solutions

•  Strengthened security –  Ticket checkers for players –  Customer facing terminal

displays –  Sounds from terminal for

winning tickets –  Terminal freeze if prize of

$10,000 or more. Lottery calls & speaks to winner immediately while still in store

1970’s  /1980’s   Late  1980’s  /1990’s   2000’s   2010’s  

Solutions

•  Strengthened security –  Position of Failsafe™ barcodes –  Must be obvious if revealed

1970’s  /1980’s   Late  1980’s  /1990’s   2000’s   2010’s  

Solutions

•  Strengthened security –  “Prize Check”

1970’s  /1980’s   Late  1980’s  /1990’s   2000’s   2010’s  

Solutions

•  Strengthened security –  “Scratch to Cash”

1970’s  /1980’s   Late  1980’s  /1990’s   2000’s   2010’s  

Solutions

•  Player “Self-Check” system –  No scanner required –  Can check tickets at home

1970’s  /1980’s   Late  1980’s  /1990’s   2000’s   2010’s  

Solutions

•  Player “Self-Check” system

1970’s  /1980’s   Late  1980’s  /1990’s   2000’s   2010’s  

Future

•  Complex designs & large no of games –  Design “wants” v security

“needs”

1970’s  /1980’s   Late  1980’s  /1990’s   2000’s   2010’s  

Future

•  Complex designs & large no of games –  Design “wants” v security “needs”

•  Second Chance Draws –  integrity of process for entries & prize

draws

1970’s  /1980’s   Late  1980’s  /1990’s   2000’s   2010’s  

Future 1970’s  /1980’s   Late  1980’s  /1990’s   2000’s   2010’s  

Future

•  Higher priced games •  High payouts...

“State attempts to stop use of lottery tickets for money laundering” - Israel