Lottery Retailers in Michigan Stealing Tickets

CLINTON TOWNSHIP — When a customer brought a Keno ticket to Nick’s Party Stop in Clinton Township, retailer Don Kallo ran the ticket through his lottery terminal, declared it a loser and tore it in half.

Kallo, the spouse of store operator Linda Kallo, then took the torn ticket — a $2,517 winner — to the Michigan Lottery Bureau to redeem it.

Suspicious lottery officials investigated and learned Kallo hadn’t purchased the ticket, as he claimed, records show.

“It was determined the ticket had been purchased by a customer who had been told by Mr. Kallo the ticket was not a winner and ripped the ticket,” according to lottery records obtained by the Free Press under Michigan’s Freedom of Information Act.

The state suspended the store's lottery license for two weeks in 2016 and placed the store on probation until Dec. 18 of this year, during which time Don Kallo is not allowed to operate the store's lottery terminal.

Nick’s Party Stop on Cass, which also uses the name Nick's Party Store, is one of 269 Michigan lottery retailers — out of a total of nearly 11,000 — to have their licenses suspended or revoked since 2016, records show.

Most suspensions result from retailers getting behind on money they owe the Michigan Lottery from ticket sales, which just set a record of $3.3 billion for 2016-17, resulting in a $920-million boost to the state's School Aid Fund.

Another major concern is a prohibited practice known as "discounting" — retailers buying winning tickets at a discounted pricefrom players who want to prevent the state from seizing all or part of their prize to pay debts such as back child support.

Only a handful of the suspensions were for cheating, like Kallo was accused of doing.

"This truly is an aberration," said Jeff Holyfield, a spokesman for the Michigan Lottery.

"Our retailers ... really are focused, just as we are, on keeping customers happy."

Still, even a few incidents can erode player trust essential to the success of a lottery. Like other states, Michigan devotes considerable efforts to making sure bad operators are disciplined and, if necessary, rooted out.

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Retailers have strong incentives to keep their licenses in good standing. The 6% commissions paid to retailers on ticket sales just hit a record total of $248 million, based on preliminary numbers for the fiscal year that ended Sept. 30. Retailers also get 2% commissions on prizes they redeem. Lottery sales also bring in customers who buy other items, Holyfield said.

Still, the occasional retailer goes astray.

In Battle Creek this year, officials found that Capital One Gas manager Devinder Singh Ghotra had been scratching off tiny areas from instant game tickets to determine whether the tickets were winners, then selling the losing tickets to customers and keeping the winners, presumably for purchase by himself or an associate.

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