Iowa Lottery officials pledged Tuesday to tighten security of lottery tickets and bolster efforts to obtain restitution from persons convicted of lottery-related crimes.

The officials detailed their plans at a meeting of the Iowa Lottery Board in Clive, where they responded to allegations that security problems persist in the state-run lottery because of a failure to fix weaknesses spotted years earlier. 

A recent investigation detailed cases of Iowa retail employees stealing lottery tickets and cashing in thousands of dollars in illegitimate prize money, as well as situations in which lottery officials failed to reclaim jackpots of as much as $30,000 that were claimed fraudulently. The Iowa Lottery is a member of the Multi-State Lottery Association, whose former information director Eddie Tipton has pleaded guilty in Wisconsin to rigging a lottery game there. He has also agreed to plead guilty in Iowa to a felony charge of ongoing criminal conduct.

Terry Rich, the lottery's chief executive officer, defended the lottery's integrity Tuesday, saying the games have about 130 million transactions annually for ticket sales, prizes awarded and other matters.

"We aren't perfect, but when you look at the overall number, it's pretty good because we work every day to try to improve," Rich said. "But there is always going to be somebody who tries to beat the system and so we balance income with integrity. The protection of the players is always first and foremost in our mind."

Rich said there is no evidence of widespread security problems among Iowa Lottery retailers. But he said he plans to contact trade groups representing Iowa convenience stores and the grocery industry to improve inventory control in an effort to curb theft of lottery tickets by retail employees.

But Rich said he doesn't support the idea of prohibiting employees of Iowa retailers from purchasing lottery tickets. Most Iowa lottery retailers already have restrictions on employees to prevent them from being able to play lottery games while they are at work, he said. Furthermore, Rich said, studies have shown the success of retail employees in winning lottery games is no better than the total adult base of Iowans, with both groups at around 3 percent to 4 percent.

Cameron Coppess, the lottery's vice president of security, said lottery investigators will change their procedures in seeking restitution by working with law enforcement officers and prosecutors at the beginning of a criminal court case rather than the end. The idea is to keep the issue of restitution fresh in everyone's minds, said Rob Porter, the lottery's general counsel.

A common type of lottery fraud involves buyers who give winning tickets to other people to collect the payout in an effort to avoid paying debts to the state. Iowa law requires the lottery to participate in the state's income-offset program, which is used to collect money owed to government institutions, including child support, court fees, and back taxes.

Sixty-eight criminal cases involving the Iowa Lottery were referred for prosecution in the 2016 state fiscal year. The most typical cases involved burglaries and retail employees stealing tickets from their employer's inventory of lottery tickets.

Rich said it's significant to note there have been only two cases since 2009 involving retail employees who have stolen lottery tickets from their employer and then attempted to sell losing tickets to customers. He said security features installed in lottery tickets have made it more difficult to attempt such fraud.

"As a lottery player, if you don't think a retailer is fair and honest, you have the option not to buy there," Rich told a reporter after the meeting. "But the vast majority of our retailers are fair and honest, and we see that because people have confidence in them and our sales continue to go up. And we are an optional purchase. Every time you walk up, you have to make a conscious decision whether it is fair and honest. People vote with their pocketbook, and obviously they are purchasing."

Rich also told the Lottery Board he is looking forward to an end to the case involving Tipton, who is scheduled to appear in an Iowa court on Thursday to plead guilty to a felony charge that will send him to prison. Prosecutors have alleged Tipton was the central figure in a scheme that involved millions of dollars in allegedly fraudulent jackpot games in several states.

Lottery Board Chairman Michael Klappholz, a former Cedar Rapids police chief, said he recognizes that lottery officials can't prevent all instances of fraud. But he added, "I think the question is, 'Are our tactics as sound as they can be?'" 

Coppess, a former assistant police chief in West Des Moines, responded that the Iowa Lottery is trying to take a proactive message to retailers, providing educational information and helping them train employees.  But he also cautioned that "people still make bad choices," and it's unlikely that lottery-related crimes can be reduced to zero.

The Iowa Lottery's fiscal year will end Friday, and Rich said he anticipates the lottery will turn over profits to state government totaling about $78 million. That will be about $10 million less than Iowa Lottery's record-busting profits of about $88 million for the same 12 months last year, which was fueled by a huge year for the multi-state Powerball game that included a mega-jackpot of nearly $1.6 billion.

(Click to display full-size in gallery)A total of 507 employees of retailers that sell Iowa Lottery tickets have won 736 prizes that are $600 or more since Jan. 1, 2012. The total value of those prizes: $4,375,621.

(Click to display full-size in gallery)There have been 164 total arrests for lottery crimes from 2010 to 2016.

(Click to display full-size in gallery)Distribution of Iowa Lottery funds collected from 1985 to present.