LOTTERY CEO COMMENDS OMBUDSMAN
FOR RELEASING REPORT

Rich, Lottery CEO Since February, Pledges To Review And Implement Some Changes

DES MOINES, Iowa – Iowa Lottery CEO Terry Rich on Tuesday commended the state Ombudsman's Office for quickly releasing its report on the lottery so that public discussion of it can begin immediately.

"This is an extremely serious issue, one we believe must immediately be brought to Iowans' attention so we all can have an open, frank and timely discussion about consumer protection issues in our state," Rich said. "I called last week for the Ombudsman's Office to immediately release the report and I'm pleased to see that has now happened."

After spending more than two years in a process that involved the staff time of about two dozen state employees, the end result is an Ombudsman Office report that "did not uncover a case of large-scale fraud" involving Iowa's lottery, supporting the Ombudsman's original assessment that "the vast majority of Iowa retailers and clerks are honest, reputable and do not engage in fraud or theft."

"That's good news for anyone who has ever played an Iowa Lottery game," Rich said.

Rich said the lottery respects the work by the Ombudsman's Office and any other inquiries into any aspect of Iowa's lottery.

"The job of the Ombudsman's Office is to offer opinions and suggestions, much like is done during an audit," Rich said. "After reviewing that input, our job as regulators is to separate out the facts, evaluate the risk and reward, and act in the best interests of the citizens of Iowa. Our decisions must be based upon what is reasonable, practical and fiscally responsible. And it is vital that the process also involve input from the public and our state's lawmakers."

Rich said the lottery agrees with or has already implemented many of the concepts in principle outlined in the report but disagrees with some of the findings due to concerns regarding player security; game security; and undue governmental intrusion, red tape and impractical business application in the retail environment.

"It's easy for the Ombudsman's Office and me to second guess what happened in the past," said Rich, who became Lottery CEO in February. "It also would be easy to simply agree with all of the recommendations from the Ombudsman's Office and start putting in place new requirements and restrictions, some of which in my opinion would be massively ineffective. We will make those improvements that bring about effective change."

For example, the Ombudsman's Office mentions self-checkers in its report. The lottery has been looking at ticket checkers for years. As with any technology, products get better and prices decrease over time. Rich said that he believes self-checkers will be a viable option for installation in Iowa retail locations in the near future.

He also cautioned that while the devices may be a convenience for players and retailers, they will not overcome all security concerns regarding lottery ticket redemption. Rich said that during recent security checks by the Minnesota Lottery, self-checkers were in use in some of the locations where retail employees are accused of defrauding customers.

Rich said he finds the report from the Ombudsman's Office to be a validation of unannounced security checks conducted this year by the Iowa Lottery, which have shown that ticket validation in general is being conducted smoothly in Iowa. All prizes were properly paid during the lottery's checks at 140 retail locations in Iowa.

"I think that shows the effectiveness of the lottery's system to date and the seriousness with which we take security-related matters," Rich said. "There is one sure bet when it comes to the Iowa Lottery: If you are trying to scam the system, watch out. We are watching and we will track you down."

Rich said it also is important that no one paint with a broad brush when referring to any retailer issues. The problems that exist elsewhere may not exist in Iowa, he said, and the vast majority of retail employees are hard-working and conscientious in their jobs.

"In any system, however, there is always room for improvement," he said. "At the lottery, we constantly strive for improvement and welcome the suggestions from the Ombudsman's Office as another tool we can use in that process. While we question some of the conclusions reached by that office, we thank them for helping us to remind all players to be responsible and protect themselves against even the possibility of fraud."

Rich said he remains concerned that the dealings of the Ombudsman's Office with the lottery have left the public with the unfortunate impression of government bickering and fingerpointing.

"I believe that government should lead by example and when offices argue, it leaves a less-than-flattering impression of how government works," he said. "I look forward to working with the Ombudsman's Office to renew our efforts toward a harmonious working relationship."

Rich reminds Iowa Lottery players to sign any tickets they purchase, thereby identifying the tickets as their personal property, and ask for a receipt for any ticket that is checked or cashed. He also encourages anyone with concerns about the Iowa Lottery, its products or operations to contact the lottery at 515-725-7900 or e-mail the lottery at Wmaster@ialottery.com. Anyone with a security-related concern should contact the Lottery Security Department directly at 515-725-7888 or e-mail Joe Diaz, the lottery’s Vice President of Security, at jdiaz@ialottery.com.

Rich, a self-described numbers guy, said statistics show that lottery products remain an extremely secure form of entertainment. He said that in calendar year 2008, the lottery's Security Department handled 182 inquiries compared to more than 148.1 million transactions that year for the sale and cashing of lottery tickets in Iowa. In other words, 99.99999877 percent of those transactions had no security-related inquiry associated with them.

"Another way of putting it is to say that the odds of anyone having a security-related concern about the sale and cashing of lottery tickets in Iowa is about 1 in 813,936," Rich said. "You have a better chance of being struck by lightning (1:700,000) or freezing to death (1:423,582) than you do of having a security-related concern about a lottery ticket in Iowa. We will work hard to address security issues to prevent them from re-occurring and we will continue to keep our system secure in the future."