Auditor General DeFoor says Pa. Lottery needs to strengthen oversight of frequent winners

HARRISBURG (WJET / WFXP /YourErie.com– On Monday, Auditor General Timothy L. DeFoor released a performance audit of the Pennsylvania Department of Revenue’s security measures for the lottery and agency policies on sexual harassment.

In the announcement, Auditor General DeFoor made 32 recommendations on how the Lottery can make improvements.

“The most important finding of our report shows that Lottery has security measures in place designed to prevent or detect illegal or fraudulent activity by retailers selling lottery products, but not by anyone who plays the lottery,” said DeFoor. “When you take a closer look at Lottery data, like we did, it’s easy to identify these players. The point is that Lottery has the data and does not use it.

The audit specifically found 17 non-retail players with 50 or more winnings over $ 600 each from July 1, 2017 to March 2, 2020. In nearly three years, these players had 1,344 claims totaling nearly 2.7 million. of dollars.

The lottery collects information on players who file claims over $ 600 for tax purposes, but does not use this data to analyze winning patterns. The analysis would help determine if someone is claiming prizes for a banned player or has engaged in illegal activity, such as avoiding paying taxes or paying child support. The lottery would then be able to refer the matter to an appropriate law enforcement agency.

“The Lottery has stated that it does not have the legal authority to investigate these frequent and winning claims from people who are not retailers,” DeFoor said. “Lottery officials may partner with the Pennsylvania Inspector General or the Attorney General to investigate these allegations. If they are unable to do so, we recommend that the General Assembly intervene and give lottery officials the power to do so through legislation.

Retail winners

The audit found that although lottery employees, household members, and some state government officials are not allowed to play the lottery, retailers and their spouses are free to play.

One of the 17 winners examined is the spouse of a retailer who filed 88 winning claims, and the retailer filed 42 winning claims during the same period. Under the current system, the retailer’s claims would be flagged for review, but not their spouses.

A key recommendation from the audit is that the General Assembly pass legislation requiring retailers who sell lottery products to the same standards as lottery and revenue employees.

Other issues found in the audit regarding the lottery:

  • The lottery makes site visits to retailers identified as having frequent winning claims, but the documentation of the visits needs to be improved and the process needs to be formalized in writing. Information collected during site visits is used to determine whether the retailer or possibly any of its employees are engaging in activities that are potentially illegal, unethical or in violation of lottery rules;
  • Lottery failed to ensure that its information system contained every winning claim over $ 600 and failed to ensure that the reports used to monitor retailer activity were prepared and functioning as intended;
  • Found weaknesses in the retailer win reports used by Lottery’s security division to monitor retailers for frequent winnings and prohibited activity; and
  • Due to poor internal controls, staff oversight of retailers may not be valid and management decisions made based on reports may not be appropriate.

The audit also examined whether the agency’s policy on sexual harassment is comprehensive, followed and whether all employees are trained on it. The audit also aimed to determine whether any sexual harassment complaints had been filed and resolved and where the money was coming from to pay them.

The audit revealed:

  • Revenue failed to ensure that all of its employees received the required training in preventing sexual harassment;
  • Income Sexual Harassment Prohibition Policy, the governor’s decree and OA management guidelines relating to the prohibition of sexual harassment should be reviewed and updated; and
  • The Administration Office (OA) for Equal Employment Opportunity should continue to conduct thorough investigations into all allegations of sexual harassment and continue to maintain detailed records of the investigations with each step documented, including results of each survey.

The performance audit covers the periods from July 1, 2017 to January 26, 2021.

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