Gaming the lottery
Professor leads team of journalists, students to investigate global lottery industry
Playing the lottery is a part of everyday life for many people around the world — a person stops at a gas station or convenience store and purchases anything from a $2 scratch-off ticket to a Powerball ticket that could be worth hundreds of millions of dollars.
Money has been spent, tickets scratched or numbers drawn, and life simply goes on for most people who miss out at winning big, while some lucky people find riches. But for a select few, like Massachusetts resident Clarance Jones, their luck doesn’t seem to run out.
Jones, for example, won the lottery more than 7,000 times between 2011 and 2016 to the tune of $11 million. How is it possible that some individuals can win the lottery numerous times, while others rarely take home any winnings?
Jeff Kelly Lowenstein has been investigating the lottery industry since 2013.
Jeff Kelly Lowenstein, assistant professor of communications, has collaborated with more than 40 students and journalists from 10 different countries since November 2016 to investigate this question and others related to the global lottery industry.
The investigation has gained so much international attention that Kelly Lowenstein was invited to speak about his team’s findings as a panelist at the Global Investigative Journalism Conference in South Africa in November.
Two multimedia journalism students, McKenna Peariso and Eric Deyo, traveled with Kelly Lowenstein to the conference to learn the value of investigative journalism.
There, they networked with investigative journalists from around the world and participated in the event’s student newsroom, working alongside students from South Africa and Germany to provide news coverage of the conference.
Investigating the infrastructure
Kelly Lowenstein said his team’s project is exploring uncharted waters because previous lottery investigations have focused on state or national levels, while this investigation is global.
“Our investigation has proven that there’s an organized system behind what you think is just an ordinary part of daily life,“ he said. “The scale is massive.”
Eight gaming companies play an outsized role in the global industry. One of the largest is International Game Technology (IGT), which Kelly Lowenstein said has a presence in 100 countries, including the U.S.
Those companies heavily fund a nonprofit lobbying association based in Switzerland called the World Lottery Association.
“This association espouses that it is very committed to responsible gambling and says on its website that its members all give at least half of their proceeds to charity,” said Kelly Lowenstein.
“Meanwhile, they get regional industry leaders together at a World Lottery Summit every other year to plan how they can extract more money from the world’s lottery players who, research has shown, are disproportionately poor people.”
After examining the public financial records of IGT, Kelly Lowenstein said a team member found the company was taking steps to avoid paying millions of dollars in taxes. While he said there is nothing to suggest that this practice is illegal, it is a dynamic that prior lottery research has not scrutinized.
Another primary piece of this global investigation involved tracing where money goes after people pay for lottery tickets.
For example, in Mali, West Africa, a reporter found that the lottery is supposed to help Mali’s residents but his research found that the ruling political party was holding “lavish parties” funded with money from the lottery, Kelly Lowenstein said.
“We’re not trying to disband the lottery, but I do think there is something significant to look at around how the system operates as it disproportionately impacts people who have fewer resources,” said Kelly Lowenstein.
Cheating the system
The key point of investigation in the U.S. regarding the lottery industry was the possibility that an individual can be so lucky as to win the lottery multiple times in a given lifetime.
Well, the answer may not boil down to luck as much as one might think.
An analysis through the investigation of more than 11 million records of lottery winners from 35 states and the District of Columbia found that more than 1,700 people won a significant number of lottery prizes.
“Basically, we found that there were individuals winning the lottery from 50 up to thousands of times, all with prizes over $600,“ Kelly Lowenstein said. “It’s hard to describe how low the odds are of this happening.”
For the investigation, a statistician from the University of California, Berkley explained that every resident in Massachusetts would have to spend at least $250 million to have a 1-in-10 million chance of winning as often as Jones did.
Kelly Lowenstein and his team collaborated with PennLive, a media outlet in Pennsylvania, on a national investigation examining repeat winners. The group analyzed previous news coverage to identify common techniques used to win the lottery multiple times.
These techniques included theft, cheating, money laundering, and “ticket cashing,“ which is when a person has someone else cash-in a winning ticket to avoid having debts deducted from the winnings.
“Our investigation has proven that there’s an organized system behind what you think is just an ordinary part of daily life. The scale of it is massive.” — Jeff Kelly Lowenstein
Some states, including Massachusetts, have developed lists of frequent lottery winners in order to track suspicious activity — Jones now finds himself on that list.
If an individual claims six or more lottery prizes of $1,000 or more during the course of any consecutive 12-month period under the Massachusetts policy, the state’s lottery executive director has the authority to suspend that individual’s ability to claim additional prizes for a certain period of time.
Connecticut is now considering adopting the Massachusetts policy after Kelly Lowenstein’s team shared its findings. Additionally, Pennsylvania’s auditor general is examining frequent winners and New York had its first-ever arrest for frequent winning and suspended seven stores from selling lottery games.
From local to global
The genesis of the investigation dates back to 2013 when Kelly Lowenstein worked at the Chicago Tribune’s Spanish-language newspaper as a database and investigative editor and began researching the state’s lottery industry.
He found that there was one zip code in a heavily Latino neighborhood that had 76 locations where residents could purchase lottery tickets, and there were none in a wealthier zip code in a suburban Chicago neighborhood.
“If you surround people with the opportunity to buy something, and that something could change their lives, it’s their choice to buy a lottery ticket, but it’s a choice that’s influenced by the environment around them,” he said. He dug deeper working alongside students in 2014 when he taught a course at Columbia College in Chicago. In 2015 the investigation started going global. Kelly Lowenstein worked with students and faculty at two universities in New Zealand to examine the country’s lottery industry while he was serving as a Fulbright Specialist.
From left are Jeff Kelly Lowenstein and students McKenna Peariso and Eric Deyo at a journalism conference in South Africa.
After obtaining public records from New Zealand’s lottery officials, they found the same scenario they discovered in Chicago: low income neighborhoods had many more places to play the lottery than richer communities.
The investigation picked up steam in 2016 when Kelly Lowenstein enlisted a group of investigative journalists at the African Investigative Journalism Conference. His pitch for the project: “Let’s expose the existence, architecture and impact of the global lottery industry.”
In the fall of 2016, Kelly Lowenstein recruited Grand Valley students to research the lottery industry in Michigan. The students in his advanced reporting techniques course assessed the places where people played the lottery and the demographics of those areas.
Students found that there are more lottery outlets and higher levels of per-person expenditures in low-income communities than in wealthier areas of West Michigan.
Peariso said there is an “absolute need” for this type of investigative journalism in the world today — a sentiment that spawned as a result of her experience at the Global Investigative Journalism Conference.
“I will always remember the stories I heard at this conference about some journalists being killed because of the people they exposed or those who continue to stand up to their governments who attempt to censor them,” said Peariso, from Lake Orion
“These stories made me realize how important it is for me to utilize the privileges I have been given to help these journalists report the kinds of stories that make real change.”
Deyo said that attending the conference changed his approach to his craft, and he will apply this new direction to his studies at Grand Valley.
“I used to be somewhat apprehensive about pursuing an investigative story,” explained Deyo. “This experience has given me the confidence to do what it takes to uncover wrongdoings and bring injustice to light.”
Involving the global community
While Kelly Lowenstein’s team has gone public with their findings, the investigation will continue. He said he is currently working with colleagues from the University of Bobes-Bolyai in Cluj, Romania, as well as communicating with journalists from England, Kenya and Germany about advancing the project.
Kelly Lowenstein hopes to involve the global community in the conversation about the lottery industry. To do this, Open Up, a nonprofit civic technology organization in South Africa, developed a tool that allows people to search how much money different organizations have received from the South African lottery in the past 16 years.
“I think what this tool is going to do is show that there are a lot of questionable practices and that a lot of people, when they play the lottery, trust that it’s fair and that the money is going to good causes,” said Kelly Lowenstein.
To access the tool, and for more information about the investigation, visit gamingthelottery.org.