The Ups and Downs of Lottery Scams – from Rags to Riches and Back
Generating fortunes, spreading wealth between good causes, winners, and the taxman, lotteries are destined to create temptation. Here we look at three lottery fraudsters who had their hands on life-changing money after almost committing the perfect crime. However, greed won them a trip to jail.
Three Lottery Fraudsters Who Almost Got Away with Their Jackpot Prize
Lotteries are big business around the globe. They generate substantial sums for good causes, charities, community groups, and other non-profit organisations. In some countries, particularly the United States, the taxman also benefits.
It is estimated that US state and local governments collect $25-$30 billion in revenue annually through lotteries. That figure represents well over half of all gambling revenue in America.
Globally, lottery play is so widely accepted that most people do not consider a ticket purchase a gamble. Of course, lotteries make a few people rich – a relative few in terms of the number of people who purchase tickets.
Some will no longer need to worry about paying off a mortgage or getting up for work on Monday morning. A tiny fraction will become richer than their wildest dreams.
The World’s Biggest Lottery Win
Won in 2022, the world’s biggest lottery jackpot prize was $2.04 billion. The lucky ‘Powerball’ ticket holder was Edwin Castro, a 30-year-old mechanic from California. As is a common practice in North America, he had the option of taking the prize in instalments or as a one-off payment.
He chose the second option, which left him with $997.6 million after taxes. Amusingly, Joe Chahayed, the 74-year-old owner of the service station that sold Castro his winning ticket, received a $1 million bonus!
Edwin Castro, an elusive individual, has reportedly spent around $75 million of his winnings on a collection of luxury mansions, including one in the Hollywood Hills. He has also acquired a small fleet of Porsche cars.
2025 Is the Year for Euro Millionaires
In March 2025, Europe paid out its biggest-ever lottery jackpot prize when an anonymous Austrian EuroMillions ticket holder collected a ceiling €250 million prize. Three months later, this record win was replicated when an Irish resident struck gold in a EuroMillions draw.
The popularity of lotteries is such that most of the UK’s licenced gambling sites accept lottery bets based on the results of lotto draws from around the world. Betfred has reported two six-figure winners who staked just £1 on the outcome of the Irish Lottery.
In 2019, Betfred took another hit when a London restaurant boss, who headed a six-man syndicate, collected £1.1 million for selecting winning numbers in the bookmaker’s twice-daily 49’s Lottery. The winning numbers were chosen because they featured on a friend’s London-New York British Airways flight ticket!
How Old Are the Lotteries?
The history books show that the UK’s first National Lottery draw took place in 1994. Ireland staged its first National Lottery draw in April 1988, but it had a national sweepstake since 1930. The New Hampshire Lottery is the oldest US lottery. It was first drawn in 1964.
Remarkably, the first modern government-run US lottery draw was made in Puerto Rico (an unincorporated territory of the United States) 30 years beforehand. Rest assured that for every year there have been lottery jackpots on offer, people have been trying to find a way to beat the system.
Over the years, there has been no end of skullduggery, and fraudsters have devised ingenious ways to ‘win’ big. We will likely never know if the perfect undetected crime has been executed.
However, on more than one occasion, fraudsters have pulled off a significant coup only for their crime to be exposed after its orchestrators had collected and started to spend the jackpot winnings. One of the more ingenious scams became known as the 1980 Pennsylvania Lottery scandal.
666 the Daily Fixed Number
On April 24, 1980, six million people watched three balls, labelled 6, emerge from three individual blower-style lottery machines. The draw concluded that day’s edition of the Daily Number, Pennsylvania Lottery’s three-digit game.
Viewers may have thought the sequence was eerie, but they had no idea something sinister had unfolded before their eyes. However, one week later, after discovering unusual betting patterns and tip-offs from disgruntled illegal bookmakers, alarm bells rang loudly.
An official investigation was launched, and in September 1980, Pennsylvania’s State Governor announced that a Grand Jury had confirmed that the Pennsylvania Lottery was rigged.
This was the 1980 Pennsylvania Lottery scandal’s fixed draw. It looks harmless enough, doesn’t it? pic.twitter.com/8LcUajKJ1X
— Sports & Betting History by BestBettingSites (@BettingSitesCom) July 30, 2025
The Inside Job by the Man on the Box
Enquiries revealed a simple method was used to fix the draw, and, like most bank robberies at the time, a ‘man on the inside’ was vital. That insider was Nick Perry, the news, weather and Daily Number announcer at WTAE-TV, where draws were conducted.
His accomplices were WTAE’s art director Joseph Bock and a stagehand, Fred Luman. Such was Perry’s standing within the station that Edward Plevel, a lottery official, gave the presenter a key to the room where the lottery machines and their numbered ping-pong balls were stored.
Bock’s job was to replicate the balls used in the draw but to weigh them down slightly so they could not be blown up the lottery machines’ pipes. This was achieved by injecting paint into the balls using a hypodermic needle.
Luman was tasked with replacing most of the genuine balls with bogus ones. However, numbers 4 and 6 were not replicas, meaning they were the only ones that could appear at the top of the machines and be ‘drawn’.
Lucky Numbers on Trial
With only numbers 4 and 6 capable of being drawn, there were only eight possible combinations for the Daily Draw. 444, 446, 464, 466, 644, 646, 664 and the eventual ‘winning’ combination 666.
Ahead of the draw, three of Perry’s friends, Peter, James and Jack Maragos, spread out across Philadelphia to buy the tickets based only on the possible combinations involving numbers 4 and 6.
Seven men faced charges when investigators joined the dots – primarily by trawling through phone records. Ultimately, hoping for lenient sentences, Joe Bock and Fred Luman agreed to testify for the State. The Maregos brothers turned in State’s evidence in exchange for immunity.
However, Nick Perry and Edward Plevel insisted on a trial. After ten days in court, the Jury found both guilty of rigging the Pennsylvania State Lottery. Plevel received a sentence of 2-7 years in state prison. Perry was sentenced to 3-7 years, fined $3,000 and ordered to pay $35,000 in restitution.
Much of the $1.8 million ($7.02 million today) in ‘winnings’ collected by the Maragos brothers was recovered. But, in the spirit of “it’s not the winning but the taking part,” the screenplay for the 2000 black comedy film Lucky Numbers was inspired by the scandal.
Print Me a Winner in Pennsylvania
Seven years after Perry and Plevel’s conviction, the Pennsylvania State Lottery was subject to a second attempted major scam. This time, the prize was $15.2 million, and the ‘winning’ ticket holder had his hand on the enormous cheque for a very short time.
Once again, the attempted fraud was an inside job. Henry Rich, a computer whiz working for ControlData Corp (the company that supplied computers to the lottery), was responsible for maintaining the servers used by the Pennsylvania State Lottery, and he was also the mastermind of the fraud.
With access to the lottery’s mainframe, the 33-year-old began looking through files in search of large unclaimed jackpots. Unearthing an unclaimed $15.2 million jackpot, he printed out a ticket with the numbers matching the unclaimed ticket purchased nine months beforehand.
Paper Rich Lottery Winner
The bogus ticket was then handed to an accomplice, Mark Herbst, a clerk at a video store. He took the forgery to Pennsylvania State Lottery headquarters to claim the prize.
Following a review, officials approved the ticket for payment, and Herbst agreed to a press conference where he was interviewed and filmed clutching a ‘show cheque’ for the media.
However, within 90 minutes of the gathering, lottery officials found an irregularity with Herbst’s ticket. Herbst claimed he had bought his ticket in a Mall in Bucks County. However, the serial number of the ticket’s paper only matched the paper assigned to the City of Scranton.
Investigators confronted Herbst, who quickly admitted that he was approached to claim the prize by a customer of the video store he worked in, Henry Rich. Rich was ultimately sentenced to 5-10 years in state prison. Mark Herbst received 2-4 years.
Random Busting Code That Made Millions
The most ingenious and partially successful lottery fraudster, Eddie Tipton, helped friends and family claim $2.2 million in lottery winnings across four US States. His lottery fraud was one of US history’s most audacious tech-enabled scams, but greed would prove to be his downfall.
Tipton’s role as Information Security Director at the Multi-State Lottery Association gave him access to the internal systems that managed several state lotteries. Abusing his position, he secretly inserted malicious code into the lottery’s random number generator.
In certain conditions, his self-deleting malicious code allowed Tipton to narrow winning numbers down to a small pool of outcomes in draws in the 30 states under the Multi-State Lottery Association’s umbrella.
Those conditions included draws having to take place on either May 27, November 23, or December 29. Additionally, the drawing had to be on a Wednesday or Saturday and take place after 8 pm.
Winning Big in Ideal Conditions
Those planets seemingly first lined up in 2005 when Tipton’s brother, Tommy, won a $568,990 jackpot in Colorado. In 2007, a $783,257 Wisconsin lottery prize was claimed through a company controlled by Robert Rhodes, a friend of Tipton’s.
December 29, 2010, was a Wednesday, meaning his software was once again ready to produce some predictable numbers. It was the day Christopher McCoulskey and Amy Warrick, connected to Eddie Tipton, won $15,402 apiece in the Kansas Lottery.
Their win was small change compared to the winning $16.5 million Iowa Hot Lotto ticket (drawn on the same day) that, in time, would prove to be Tipton’s undoing. Foolishly, he purchased the winning ticket in person and surrounded the jackpot in mystery by not attempting to collect the prize for almost a year.
Before a claim on this massive sum was made (by another third party), a Wednesday, November 23, 2011, Oklahoma Hot Lotto jackpot of $1.2 million was won by Kyle Conn, a Texan business owner, later discovered to be a friend and associate of Tipton and his brother.
Video Killed the Lottery Fraudster
The connection between all these winners was made after people identified Eddie Tipton as the person captured in video surveillance buying the winning $16.5 million Iowa Hot Lotto ticket. It was a prize that was never awarded.
The video was only made public after officials smelled a rat. Years after the Iowa jackpot ticket had become void – and, notwithstanding that Tipton’s day job meant he was not allowed to purchase lottery tickets, investigators rightly suspected he was involved in a far bigger crime.
Ultimately, Tipton came clean and was sentenced to 25 years in prison. He was released on parole in 2022 after serving five years in jail. He has never spoken about the scam since, although the fascinating story was recently recounted in a documentary titled ‘Jackpot: America’s Biggest Lotto Scam‘.
