Eddie Tipton: The Programmer Who Rigged the Lottery

Sometimes you hear about a lottery scam that is so ingenious you are not sure whether you should admire the perpetrator or be disgusted. The story of Eddie Tiptop is one of the scams that falls neatly into this category. Eddie worked alongside his brother, Tommy, and his associate, Robert Rhodes, to scam lotteries spanning from 2005 all the way into 2010. This is the story of Eddie and the clever—but equally dishonest—way he made his millions.

WHO IS EDDIE TIPTON?

Eddie had a job that was sought after by all security specialists. He worked as the director of information security for the Multi-State Lottery Association (MUSL)—a company that organized and ran multiple lotteries around the US. He had a great job that allowed him access to places that almost nobody on earth would ever gain access to—including the secret ‘draw room’ of the MUSL. The only thing that did not work in his favour was that it was illegal for Eddie to play in any lottery because he was an employee of the MUSL. In effect, he would never see his name on any lottery winners lists.

EDDIE’S CONS

Eddie started his con back in 2005. Initially he started small, using his knowledge as a programmer to write software that would allow him to predict the outcome of certain lotteries. None of the cons that Eddie ran between 2005 and 2007 (of which there were only five or six) resulted in overly jaw dropping jackpots. In fact, it seemed as if Eddie was playing it safe the whole time.

However, Eddie’s final con—or at least, the one that ended his fraudulent streak—occurred when he tried to defraud the popular Iowa Hot Lotto after the jackpot amount rose to $16.5 million on December 29, 2010. After hacking the security cameras and causing them only to record a few seconds every minute, Eddie used his position in the MUSL to enter the secret draw room that held the server that contained the random number generators used by the lottery to draw winning numbers. He entered the room under the pretence of manually adjusting the server’s clock to reflect daylight savings.

However, rather than just adjusting the clock and then leaving, Eddie secretly inserted a thumb drive into the server that installed a root-kit software on the server. This root-kit allowed Eddie to determine the winning numbers of an upcoming draw before automatically deleting itself without leaving any trace that it was there.

HOW THINGS WENT WRONG

Eddie’s software ran without a glitch, and he was soon the holder of the winning $16.5 million ticket. However, he held onto the ticket for almost a year—just before the claiming window for the ticket was about to expire. It was at this point that he offered to pay a Canadian resident, Phillip Johnston, to claim the ticket by pretending it was his.

Johnston’s claim was ultimately rejected after he failed to successfully convince the lottery that he was the owner since he wasn’t even able to identify where the ticket had been bought. And so, Eddie moved onto plan B. He hired New York lawyer Crawford Shaw to claim the ticket on behalf of a Belize-based shell company, Hexham Investments Trust. Shaw’s claim was rejected after he refused to identify the owners of the trust due to the fact that anonymous claims were not permissible in Iowa.

Shaw eventually arrived in person to claim the prize accompanied by the winning ticket. However, the signed ticket had a simple spelling error on it. Rather than reading Hexham Investments Trust, the ticket had Hexam Investments Trust written on it. Shaw’s claim was again rejected, but this time the MUSL became suspicious of the claims that kept being brought forward. They soon launched an investigation into who actually purchased the ticket in the first place.

Knowing where the ticket was purchased, the MUSL soon requested CCTV footage from the convenience store in question. Much to their surprise, when the footage arrived it showed one of their own employees purchasing the ticket—one Eddie Tipton. While Eddie had tried to disguise himself with a hoodie and a peak cap, the footage from two differently angled cameras as well as the accompanying voice on the footage was all they needed. During the course of 2015, Eddie was arrested, tried, and found guilty of defrauding the lottery and illegally playing in a lottery game. He was initially sentenced to ten years in prison.

ADDITIONAL INVESTIGATION

Even after Eddie had been convicted, the MUSL continued their investigation into any lottery that Eddie, his brother, or Rhodes may have been involved in playing. Their forensic investigation into the random number generating computer revealed code that was still there that affected two previous lotteries. The first was a Colorado lottery that resulted in Tommy Tipton winning a jackpot of $568,990. The second was a Wisconsin draw that resulted in a limited company owned by Robert Rhodes winning $783,257.

These findings led to the arrest of Rhodes in 2017. He agreed to testify against Eddie and his brother in return for lesser sentencing. Rhodes was eventually sentenced to six months’ house arrest and fined $409,000.

EDDIE’S FINAL TRIAL

After Rhodes agreed to testify against him, Eddie found himself back in court under charges for tampering with the lottery draws in 2005 and 2007. In June 2017, he pled guilty to installing a hack that allowed him to predict the lottery numbers in the random number generator back in 2005. He also admitted that he had helped fix lotteries in Colorado, Oklahoma, Wisconsin, Kansas, and Iowa on the condition that the winners of the lotteries shared their winnings with him. Because of these incidents, lottery organizations began reevaluating how lottery numbers are drawn and put in safeguards to avoid similar situations in the future.

He was finally sentenced to 25 years in prison with the possibility of parole after three to four years. His brother Tommy managed to get off easy and was only sentenced to 75 days in prison followed by a 15-month parole period. Between Tommy and Eddie, the two also had to pay back $3 million in fines.  

WAS IT WORTH THE PRICE?

Of all the lottery scams we've heard of, Eddie Tipton's is no doubt one of the craftiest. While there is no public figure on the amount that he and his associates managed to obtain through defrauding various lotteries over all those years, it is estimated to total more than $24 million. This may seem like a decent amount of cash, but 25 years’ imprisonment and a fine of $3 million makes all that effort seem somewhat redundant in the end—even if he can gain parole after a few years.

Say what you will about Eddie, but despite the ultimately unfavourable outcome, his scam and execution were certainly much more successful than that of another infamous scammer, TV host Nick Perry, who masterminded the Pennsylvania Lottery Scandal of 1980.