BACKGROUNDER
Key Findings of the
Deloitte Data Analytic Review of Lottery Transactions
Protecting the Ontario Lottery and Gaming Corporation’s (OLG) integrity
requires that its operations are as transparent as possible.
In June 2008, OLG commissioned Deloitte to analyze more than 13 years of data
– from July 1, 1995 to June 30, 2008 – in the largest analysis of its kind
undertaken and released by a lottery corporation in the world.
Using sophisticated data analysis software, Deloitte’s analysis combined OLG’s
data with census and other available data. The study examined a total of more
than 200 billion pieces of data, providing OLG with insights into how to improve
both player protection and player experience.
Key Report Findings
Deloitte’s analysis provided insights into several areas with regard to behaviours
that could indicate inappropriate activity, and identified opportunities through
enhanced data analysis and structural changes that would help to create value in
our operations, including insider wins, identified atypical behaviours and
organizational structure.
1. Insider Wins
• OLG asked Deloitte to apply a current and broader definition of insider that
included OLG employees, retailers and their families. Deloitte’s data
analytics were able to further identify additional insider wins. Deloitte
determined that $198 million or 3.4 per cent of total winnings were claimed
by Insiders during the 13 year period reviewed. Originally, OLG had
assessed the value at $106 million, or 1.7%.
2. Identified Atypical Behaviours
I. Insider Free Ticket Winners –The report found 1.3 per cent of winning “free”
tickets were claimed by insiders, which amounted to $15.2 million or 4.24 per
cent of total free ticket winnings. Deloitte found that since 2002, the number of
insider free ticket wins declined dramatically.
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II. Potential Misreporting of Winnings to Lottery Players – The report found
50 instances that suggested an insider retained a winning ticket and claimed
it for himself/herself. This occurs when a lottery player has two winning free
play tickets, but the retailer only reports one ticket as a winner.
•
•
•
Free Plays are now printed together (no delay between printing more
than one page). OLG has already eliminated the prompt required for
the retailer to print the second ticket.
Ticket pages are now numbered (i.e. one of two pages) to better inform
customer.
Prize structure for Encore will be changed in April 2009 so that free
tickets are no longer offered.
The report also found 59 instances where a major win over $10, 000 was
processed at a terminal within 1 minute of another transaction. Deloitte noted
that this behaviour declined after OLG implemented a measure where the
terminal freezes after a major win validation.
III. Potential ‘Bait and Switch’ – The report found a 50 per cent decrease since
2005 in behaviour that suggested insiders were substituting lottery players’
legitimate tickets for losing tickets prior to being scanned.
• OLG’s implementation of measures including (a) signing the ticket (b) a
terminal freeze and (c) the requirement to return all winning and nonwinning tickets back to the customer have reduced this occurrence.
IV. Potential Mini Prize Offices – The report identified 444 insiders who
presented $29 million in winning tickets. This behaviour suggested retailers
were paying lottery players for their winning ticket.
• In November 2003, OLG prohibited anyone from claiming a win on
someone else’s behalf and this behaviour dropped to negligible
amounts.
V. Potential Ticket Tampering – Instant tickets must first be activated by a
unique lottery device before being validated. Scratching tickets – and
revealing winners - prior to activation is fraud against OLG. The report found
26.7 per cent of these unique lottery devices were potentially being used for
this fraudulent behaviour against OLG.
OLG has developed a series of data exception reports that will capture any
atypical activity around ticket tampering in addition to implementing tighter
inventory management controls.
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VI. Potential VIRN (Void If Removed Number) Guessing – Instant tickets are
coded with a VIRN number. Attempts to guess a valid code occur in two
ways: 1) multiple codes are attempted against a single ticket; 2) a single code
is attempted against multiple tickets. The report found a significant reduction
in VIRN guessing since 2007, when OLG implemented an exception report
that captured attempts to use different validation codes against a ticket within
the same day.
Incidents of using the same validation code for multiple tickets did not decline.
OLG’s implementation of new barcode technology by January 2010 will
eliminate this behaviour, as there will be no need to enter a verification code.
All anomalous activities identified in the preparation of this report were turned
over by Deloitte to the Ontario Provincial Police for further investigation.
3. Organizational Structure Review
The report confirmed OLG’s expectation that organizational changes are required
to improve player protection and enhance the game playing experience. To
better understand and manage fraud risk, the report recommends the following:
•
Office of Player Protection: establish a Player Protection Transformation
Services Team, responsible for developing and embedding player
protection principles in program, policy, and product design. OLG
established The Office of Player Protection in June 2008 and will introduce
more formalized training.
•
Review of Enterprise Information Skills, Abilities and Software:
Develop an Enterprise Information Management (EIM) strategy to best
use the benefits of data analytics across the entire organization.
In addition, OLG will be training staff to better identify and turn over to the OPP
any potentially suspicious or fraudulent behaviors at the retail level.
OLG has also undertaken a review of the structure of its investigative department
to ensure that it is equipped to deliver on its mandate efficiently and effectively.
-30Please refer to Appendix D of the Deloitte Report for highlights of OLG’s Player
Protection Measures to date or visit our website at www.olg.ca.
For more information, please contact OLG Media Line 1-705-946-6716