Audit: Stores buy lottery tickets from skittish winners
Detroit — Some Michigan stores that sell lottery tickets are hitting the jackpot by buying winning tickets from desperate players at a discount, according to auditors who are urging a crackdown on the illegal practice.
Lottery players who owe back taxes or other debts don’t want the state to learn their identity. So they’re probably selling winning tickets back to retailers for less than what they’re worth, the audit found.
An audit released Tuesday said 37 store owners turned in winning tickets worth nearly $3.6 million in 2012 and 2013. One retailer collected 107 prizes worth $346,312 last year.
Six store owners didn’t report $509,211 in lottery winnings on their 2012 tax forms. No stores were named in the report.
“We recommend that the (Lottery) Bureau sufficiently identify and investigate lottery retail owners who repurchased winning lottery tickets, likely at a discount,” the Office of the Auditor General said.
A message seeking comment wasn’t immediately returned by a lottery spokesman. But in response to the audit, officials said 11,000 businesses sell Michigan lottery games, and discounting is an issue “for virtually all state lotteries.”
Nonetheless, it is pledging to be more aggressive by automatically investigating any retailer that turns in more than 20 tickets a year worth more than $20,000. The Lottery Bureau also told auditors that it will ask winners to disclose how they got a ticket.
Officials said 13 retailers were “disciplined” during the audit period.
The Lottery Bureau deducts taxes from winning tickets worth at least $5,000. In a separate finding, auditors said the state could collect millions of dollars if the minimum amount was dropped to $600, especially if people aren’t reporting the income on tax forms.
The agency said it would seek an opinion from the attorney general on lowering the threshold.