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FLASH: Tennessee Lottery audit won't investigate drawing errors

Oct 3, 2007, 12:02 pm

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Tennessee Lottery

Out-of-control situation gets worse 

Legislators shocked to learn investigation won't study why errors occurred

The Tennessee Lottery hired an outside auditor after a computer issue affected the Cash 3 and Cash 4 games in August, but the auditor will not examine why the system failed.

Lottery officials previously said KPMG would be paid about $90,000 to look into the problem that kept repeat numbers from being drawn for those games for more than three weeks in August.

But a letter obtained by The Tennessean under an open-records request shows that KPMG has been asked to determine only whether the computers now are working properly.

The co-chairmen of a joint legislative committee set to review the audit in early November said that was not what they were told the auditors were going to review.

"What's the sense of doing the audit?'' said Sen. Bill Ketron, R-Murfreesboro, one co-chairman. "That just doesn't make sense to me. I thought the whole purpose was about what happened, what created the glitch."

"If that's all they are going to do, then to me it's worthless," said Rep. Ulysses Jones Jr., D-Memphis, the other

The lottery's internal auditor will look into "operational issues" related to how the glitch happened, lottery spokeswoman Kym Gerlock said.

"It has always been our intent to thoroughly review the issue that occurred with the Cash 3 and Cash 4 random number generators and to ensure they are working properly, and that is precisely what we are doing,'' Gerlock said.

Gerlock made that basic statement several ways in response to questions about why KPMG would not address the origin of the mistake, or how to prevent it from happening again.

More data sought

Lottery officials have said the game became flawed when a computer programmer entered the wrong letter — a "u" for unique instead of an "r" for repeat. As a result, repeat numbers were blocked, even though players could still buy tickets with repeat numbers.

The internal audit was prompted by James H. Ripley, a Sevierville attorney who heads the 3-year-old lottery's audit group.

He asked for an investigation into the error and whether fraud could have been involved. That work is continuing, Gerlock said.

Ketron called an internal audit of the glitch "the fox guarding the henhouse."

He said he planned to send state Comptroller John Morgan a letter today asking him to look at the contracts for the computerized system. The senator said he wanted to know the circumstances that led the lottery on July 28 to switch from a system in which numbered balls popped up in transparent containers to a computer-run system that picked the numbers.

"I had a lot of phone calls from people inside and outside the state who are questioning the honesty of this new computer system,'' Ketron said.

Jones said he would send lottery director Rebecca Paul Hargrove a letter by Friday asking for more information about the KPMG audit. He said an internal lottery audit would only raise more suspicions.

Lottery officials have blamed the coding error on an employee of lottery vendor SmartPlay International Inc., which was paid $221,300 to supply two number-picking computers.

Mike Calabrese, a lottery player from Gallatin, said he cut back on playing Cash 3 and Cash 4 when the lottery made the switch from the ball-drop system.

"I do not like the computerized version,'' he said. "I just don't trust it."

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