SC

South Carolina Lottery Slammed By Auditors

When will state lawmakers give up their hypocritical monopoly on gambling?

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In the interest of full disclosure, I have never been a fan of the South Carolina “education” lottery. For starters, it is a government-enacted, government-run, government-protected gambling monopoly – one “conservative” Palmetto State politicians profit from and, therefore, are disinclined to surrender.

“Sanctimonious state lawmakers continue to rail against the ‘evils’ of gambling while they simultaneously run a state-sanctioned gambling ring,” I noted last fall.

By clinging to this hypocritical monopoly, these two-faced elected officials are depriving the state of a much larger influx of cash – and jobs. My news outlet has called for the lifting of this prohibition on multiple occasions – in multiple ways – but so far lawmakers have failed to heed this counsel. Indeed, they continue cracking down on the competition.

The other reason I loathe the lottery? It has utterly failed to improve public education in the Palmetto State. If anything, the national standing of South Carolina’s government-run schools has actually gotten worse since it was enacted.

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When it was first approved by South Carolina voters a quarter century ago, pro-lottery politicians used yellow school buses emblazoned with the slogan “Lottery = Education” to sell the measure. Accordingly, most voters assumed the money collected by the program would be routed to the classrooms of their local K-12 schools. Instead, it has gone almost exclusively toward state’s bloated, duplicative, increasingly “woke” system of higher education.

Which, incidentally, should have been privatized decades ago …

This week, the lottery came under the microscope of the S.C. Legislative Audit Council (SCLAC), an entity which conducts “independent, objective performance audits of state agencies and programs” at the request of lawmakers.

According to a “limited review” of the lottery, it has failed spectacularly in monitoring the integrity of its operations – notably as it relates to allegations of retailer misconduct. Five of South Carolina’s forty-six counties had never been on the receiving end of an undercover compliance visit, according to the audit (.pdf) – while another thirteen counties had not had a single undercover compliance visit since 2019.

Lottery officials originally claimed only one county – Hampton – had not received an undercover compliance visit.

“Failing to frequently conduct undercover retailer compliance visits and failing to ensure that every retailer has been visited for an undercover retailer compliance visit over a period of time may limit the agency’s ability to detect, and possibly prevent, retailer misconduct,” auditors concluded.

The lottery also fails to “adequately document the actions it takes to address retailer misconduct, nor does it use a centralized case management system to track retailer misconduct investigations.”

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According to the audit, the agency was “unable to provide evidence that (it) tracked any conditions it imposed” in connection with “suspected retailer misconduct, contract compliance violations, and reports of missing lottery tickets.”

Indeed, lottery officials could not cite any follow-up action in “nearly half of the lottery retailers (which were) investigated for reports of missing tickets or suspected retailer misconduct,” according to the audit.

“Not tracking or enforcing the conditions the agency imposes to address retailer misconduct jeopardizes the integrity of the lottery,” auditors concluded.

Speaking of lax oversight, lottery officials have implemented precisely two of the forty (40) recommendations SCLAC auditors advanced in reports published in 2018 and 2019.

In a lengthy response to the audit, lottery officials rebuked its findings as “disheartening and inaccurate,” referring to SCLAC’s processes as “fundamentally flawed” and its report “replete with factual errors that directly lead to inaccurate findings and recommendations.”

“It is impossible for (us) to identify all of the misconceptions in this report in the space permitted,” lottery officials wrote.

South Carolina has an estimated 4,170 lottery retailers. According to the agency, it has delivered more than $7.8 billion in revenue to the state – of which $6.5 billion has gone to higher ed and $1.1 billion has gone to K-12. To view the audit findings – and the agency’s response – click the link below.

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THE AUDIT …

(SCLAC)

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ABOUT THE AUTHOR …

(Travis Bell Photography)

Will Folks is the founding editor of the news outlet you are currently reading. Prior to founding FITSNews, he served as press secretary to the governor of South Carolina and before that he was a bass guitarist and dive bar bouncer. He lives in the Midlands region of the state with his wife and seven (soon to be eight) children.

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11 comments

SCEL Please Play Fair February 21, 2024 at 4:25 pm

In the past, under the Disqus platform, when I raised the following questions my comments were deleted from FitNews. I got the feeling Fits, or one if its staff, was protecting SCEL from the questions I raised. Let’s try again.

Back around 2006, 2007, 2008, and perhaps a year or two before or after, SCEL’s CASH5 online game regularly produced winners of respectable prizes of between $100,000 and $500,000. It was not unheard of to see winners getting I one or more prizes of $100,000 or $200,000 in a week. Depending on the multiplier (Power Up Option), you might see regular prizes each month or two of $400,000 or $500,000. There would be at least a few $400,000 or $500,000 prizes each year. People did win decent prizes regularly and SCEL made good money for whatever purpose the proceeds went to.

Around 2008 or later, the guy whose name I forget, over SCEL, left SCEL for a similar job in Alabama. A woman was hired as his replacement. Almost immediately, she started greed-based changes. There was a SC specific online game, the name of which I forget, with a growing jackpot following each drawing where there was no jackpot winner. The final jackpot for this game was rather high, I believe $500,000 or more. The game was being discontinued as SCEL was bringing in a new online game that had a similar name and they wished to avoid confusion, as their story went. Conveniently, the last drawing resulted in no jackpot winner and instead of a second chance drawing or similar, SCEL under the woman’s “greedership” simply pocketed the jackpot.

Back to CASH 5; SCEL pulled several dirty tricks to take customers’ money and pay as little as possible out in winnings. Please bear in mind that CASH 5 was bringing in good money on 2006 and 2007 or they wouldn’t have kept it running as long as they did. One was taking the game from three days a week to seven. Let’s say you have $21 a week in your budget to spend on tickets to play CASH 5. With three drawings a week, you could buy seven sets of numbers (seven plays) each day there was a drawing. With seven plays on each of the three days, your odds of hitting a winning set of numbers per drawing were more than double what your odds would be by playing three plays or sets of numbers on each of seven days. But it gets worse.

I cannot prove this, but I know in my heart that somehow SCEL now manipulates the drawn numbers and multipliers for CASH 5 drawings. Back in and around 2007, there were quite a few $100,000 prizes each year. For the last seven or more years, there might at most be two, if that, in most years. I seem to recall at least one recent year with NO $100,000 prizes being awarded. IF a $100,000 CASH 5 prize is won, it is usually for a set of numbers with no multiplier selected (Power Up Option). On the exceedingly rare occasions that a multiplier (Power Up Option) is involved with a winning number, the multiplier is only 2, making the big prize $200,000. While there have been even much, much, rarer $300,000 prizes, prizes of $400,000 or $500,000 are mostly unheard of. Remember, back around 2006-2008, these were fairly common, at least once every 2-3 months or more often. When the exceedingly rare 4, 5, or 10, multipliers appear, there is no $100,000 jackpot for those drawings, meaning the winner of a game with a 10 multiplier won a whopping $3,000. I imagine computer technology has advanced to the level where in the 15 minute dead time, when no tickets are sold from 6:45 until the drawing, they can select or otherwise manipulate which numbered balls pop up in the drawing and minimize their losses, er, payouts to players. In any game of chance, obviously, the house must win most of the time. Otherwise there would be no reason for the house to provide the game. That said, SCEL was making good money before the new female boss introduced her brand of greedership to SCEL. She left the head position over a decade ago but remained as a board member for some time. Not sure if she is still affiliated with SCEL, but the spirit of abject greed she introduced to SCEL lives on.

I wish SLED or more likely the FBI would examine practices at SCEL and report them to the public. They don’t appear to have been above board for quite a while

Reply
Pay Up February 21, 2024 at 4:53 pm

That’s a lot of words for “The house always wins.”

I mean you could, as Sick Willie says, end the gubmint monopoly on gambling, then some private lottery corporation could pull the next McDonald’s Monopoly game scam.

Or we could just open up to casinos. Any game with a computer chip can dictate hard coded win ratios. Any non-technological game can be manipulated in all kinds of ways, and remember, even if you beat the system, they can kick you out at any time.

Gambling is a scam. Playing is what makes you the mark. You’re playing a shell game, and only fiddler crabs should be betting their house on those. Why waste FBI resources to save the stupids from themselves?

Reply
Pay Up February 21, 2024 at 4:54 pm

Meant to say hermit crab. You get the picture.

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SCEL Please Play Fair February 21, 2024 at 5:16 pm

Ah, good to see SCEL employees or their families weighing in. :-)
Yes, why not let them continue underhanded dealing in an already questionable game?

Reply
CongareeCatfish Top fan February 22, 2024 at 9:33 am

You can go all the way back to the first SC lottery commissioner (Kevin Geddings under Gov. Mike Easley) and find questionable, or unethical, or illegal conduct with every head of this agency. The current one seems to be clean though. For now.

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SCEL Please Play Fair February 22, 2024 at 12:27 pm

You are speaking of the North Carolina Lottery. South Carolina’s is far from clean.

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Katie Top fan February 22, 2024 at 8:13 am

The lottery is my retirement plan, so I need my scratch offs. In my home state, they use lottery money to give taxpayers a rebate on their property taxes.

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Chris Drummond Top fan February 22, 2024 at 9:10 am

Hmmm… I guess this is why the former head of the lottery stepped down and disappeared!

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SCEL Please Play Fair February 22, 2024 at 1:26 pm

The first one, and I forget his name, ran a great game. The house made money, as it is supposed to, and a fair number of players won life-changing amounts of money with which to buy or pay off a house, buy or pay off a new vehicle, and similar. The guy got a better offer to work for Alabama, I believe, and went there. The female who replaced him, stereotypically introduced greed to what had been a good system. She ruined a good thing. She stepped down as head but remained on the SCEL board. It has steadily gone to hell ever since.

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CongareeCatfish Top fan February 22, 2024 at 9:43 am

While throwing money at the problems of education, particularly k-12 education doesn’t necessarily guarantee better outcomes, it usually does result in better quality teachers and longer teacher retention. Higher Ed though are the ones who can offer legislators swanky dinners and parties, complimentary tickets to athletic events, and scholarships to their relatives. Pretty much every higher ed entity in this state either has a legislative affairs employee, a lobbyist. or both. Lottery funds need to be redirected towards K-12, where we will as a State incur a much higher return on investment. I wish our own Sec. of Ed would speak out on this.

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George Johnson Top fan February 22, 2024 at 10:01 am

You really can’t blame the education lottery for the fact that public K-12 education effectiveness has eroded in SC. And it’s not just legislators misdirecting the returns on the lottery. The erosion of public education and the funding and management thereof dates to the start of the Republican stranglehold on both legislative bodies and all statewide offices, especially education superintendent, currently populated by a genuine DeMint wingnut. Republicans in our state care only about privatizing education by any means possible (and some that aren’t).

Reply

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