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PROBLEMS with an INSTANT SCRATCH LOTTERY GAME: an Analysis of Why the OLGC's Tictactoe Game Was Exploitable

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PROBLEMS with an INSTANT SCRATCH LOTTERY GAME: an Analysis of Why the OLGC's Tictactoe Game Was Exploitable PROBLEMS WITH AN INSTANT SCRATCH LOTTERY GAME: An analysis of why the OLGC's TicTacToe game was exploitable A REPORT PREPARED BY FSS CANADA CONSULTANTS INC. JULY 2003 froidevaux srivastava 2003, R. Mohan Srivastava NOT TO BE COPIED WITHOUT COPYRIGHT HOLDER'S PERMISSION schofield For further information on this report, or to obtain additional copies, please contact FSS Canada Consultants Inc. at either of the following locations: In Canada: In the United States: Address: R. Mohan Srivastava Address: Douglas R. Hartzell 2179 Danforth Avenue, #302 5782 Golden Eagle Drive Toronto, Ontario Reno, NV 89523 Canada M4C 1K4 U.S.A. Phone: (416) 693-7739 Phone: (775) 846-5811 Fax: (416) 693-5968 Fax: (775) 201-0256 E-mail: [email protected] E-mail: [email protected] ii froidevaux srivastava 2003, R. Mohan Srivastava NOT TO BE COPIED WITHOUT COPYRIGHT HOLDER'S PERMISSION schofield EXECUTIVE SUMMARY This report presents an analysis of the flaw discovered by R. Mohan Srivastava in TicTacToe, one of the instant scratch games offered by the Ontario Lotteries and Gaming Corporation (OLGC) and printed by Pollard Banknote Limited. This flaw effectively resulted in all of the cards being \marked" in the sense that one could, prior to playing a ticket, quickly predict with a very high success rate whether or not that ticket was a winner, using information readily visible on the face of the card. Since lottery customers in Ontario are allowed to inspect the cards prior to purchase, and to pick and choose the cards that \feel lucky", this flaw in the TicTacToe game entailed that anyone who knew the trick would have had a much higher chance of buying winning tickets than the general public. Furthermore, if the trick became widely known soon after the game was released to the market, its use by the general public could have caused the OLGC to incur a financial loss, paying out more in prize money than was recovered in ticket sales. After Mr. Srivastava contacted the Ontario Provincial Police and the OLGC and demon- strated to them the fact that winners could be separated from losers, the OLGC pulled the remaining unsold TicTacToe tickets from the market and began an internal review process to better understand how the problem occurred. This report is intended to aid this review process by providing a detailed analysis of the flaw, its likely causes and the factors that could have contributed to it being a much bigger problem if knowledge of the card-reading trick became widely known and practiced before the OLGC became aware of the problem. Conclusions The principal conclusions of this report are given below; further explanation and other supporting information can be found in the main text of the report. 1. The OLGC's version of the TicTacToe game could have been exploited using a vi- sual/mental procedure for separating unplayed cards into likely winners and likely losers. This procedure: • had a very high success rate, with 85 to 90% of its predictions being correct, • was able to accurately predict the likely prize amount, and • could be executed within two minutes or less for each card. 2. The flaw in the TicTacToe game was likely the result of a problem with the soft- ware used to implement the creative concept. Even though the software did produce cards that conformed to the creative concept design, it did so in such a way that the information printed on the face of the card could be used to exploit the game. iii froidevaux srivastava 2003, R. Mohan Srivastava NOT TO BE COPIED WITHOUT COPYRIGHT HOLDER'S PERMISSION schofield EXECUTIVE SUMMARY iv 3. There are other instant scratch games that also have card-specific information printed on the face of their tickets and that could be exploited in a similar manner. Preliminary examinations of a few of these games indicates that some of them definitely do have a similar flaw. 4. Several aspects of the lottery industry contribute to the severity of the problem: • a growth in the type of instant scratch game that uses card-specific information to make the instant scratch games more engaging and interesting; • a game development process that often involves borrowing popular games from other jurisdictions and tweaking their game mechanics; • a lack of industry-wide standards needed to support statistical quality assurance and quality control; • a retail culture in which customers are allowed to pick and choose their own cards and that permits customers to trade in unplayed cards; • a distribution mechanism that could allow cards deemed to be likely losers to be returned to distributors along with unsold tickets; and, • a lack of legal remedies to prevent anyone from attempting such exploitation or from disseminating information about the flaws in instant scratch games. While none of these, by itself, caused the problem, they would all have contributed to a significant loss of lottery revenue, and an even more significant loss of public trust in the lottery system if the trick for reading the cards had been widely used to skim the TicTacToe game's prize money. 5. The specific problem with the TicTacToe can be corrected, as can similar problems with other instant scratch games that use similar game mechanics. Recommendations The principal recommendations of this report are given below; the final section of the main text of the report discusses the reasons for these recommendations in greater detail, and provides a brief summary of some other possible solutions that were considered but that did not form the basis for a specific recommendation. 1. The lottery industry should not treat the problem identified with the TicTacToe game as a fluke, a one-off problem that requires no specific response because it is never likely to occur again. Problems similar to the one revealed in the TicTacToe game have already been identified with other instant scratch games currently on the market. An entire category of instant scratch games is at risk: those that use tickets with unique information visible on their face prior to being played. With these types of game already being among the most popular and successful on the market, their market share is likely to increase. Problems similar to the one discovered in the TicTacToe game are likely to occur again unless the industry takes specific preventative steps. froidevaux srivastava 2003, R. Mohan Srivastava NOT TO BE COPIED WITHOUT COPYRIGHT HOLDER'S PERMISSION schofield EXECUTIVE SUMMARY v 2. The lottery industry should continue to use instant scratch games that provide card- specific information, but should take steps to ensure that they are printed in such a way that this information cannot be used to significantly increase the odds of winning. 3. All instant scratch games with card-specific information should be accompanied by a report on the various aspects of the game mechanics | e.g. the number of playing boards, the range of numbers (or symbols) used and the size of the scratch list | and the tolerances within which these can be acceptably adjusted. Since there are few printers that serve a much larger number of lottery jurisdictions and since printers currently assume responsibility for the details of the actual implementation of the creative concepts, it makes sense that printers take the lead in doing the analysis of game mechanics and for preparing documentation that can be used to make sure that variations of the game do not become exploitable when key parameters are modified. 4. Lottery organizations should carefully consider the pro's and con's of changing the industry's current practices regarding who determines what exactly gets printed on instant scratch tickets. Introducing a technical services group to handle this task, one that specializes in customized software development for lottery applications and that liaises with other contractors chosen to handle other aspects of bringing a game to market | the printers and the auditors, for example | would help to make sure that games cannot be exploited because of unforeseen probabilistic flaws. 5. State and provincial lottery jurisdictions should lead an effort to strengthen the lottery industry's quality assurance procedures by establishing industry-wide standards for statistical properties that warranty the integrity and fairness of instant scratch games. 6. State and provincial lottery jurisdictions should lead an effort to introduce statistical quality control procedures for continuous, real-time verification that instant scratch games are not being exploited. 7. The lottery industry should study the advantages and drawbacks of removing the ele- ment of consumer choice from instant scratch lottery games. Specifically, they should gather data from any existing studies of consumer response to ticket dispensing ma- chines and commission new studies if existing studies are inadequate or inconclusive. 8. State and provincial lottery organizations should focus on restoring and maintaining the integrity and fairness of all instant scratch lottery games. They should not duck the problem by imposing restrictions on retailers; such restrictions would correctly be perceived as a concession that some instant scratch games can be exploited. 9. In lottery jurisdictions where consumers are allowed to choose their instant scratch tickets, retailers should not be allowed to return unsold tickets that were not originally distributed to them. 10. State and provincial lottery jurisdictions should investigate the legal remedies at their disposal to mitigate or prevent exploitation of instant scratch games. froidevaux srivastava 2003, R. Mohan Srivastava NOT TO BE COPIED WITHOUT COPYRIGHT HOLDER'S PERMISSION schofield CONTENTS EXECUTIVE SUMMARY iii Conclusions . iii Recommendations . iv INTRODUCTION 1 Background . 1 A cautionary note . 1 Organization of the report . 2 1 GAME MECHANICS 4 Different types of instant scratch games . 6 Information unique to each card . 6 One scratch list with multiple playing boards .
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