Investors in GTECH Holdings Corp. (GTK) became skittish late last week when the company announced it was investigating a possible scam involving lottery scratch tickets that they distribute in Taiwan.
The tickets, that have a bar code to determine whether they are winners, are made by the Pollard Banknote Ltd. of Winnipeg, Manitoba, Canada. GTECH said the Taiwan government had received information that the bar code used on the ticket had been cracked by outsiders.
Sources indicated that the Taiwanese regulators suspect someone decoded the algorithm on some scratch ticket bar codes thus enabling them to tell them without scratching which tickets were winners.
GTECH said it had notified other customers about the problem as part of a “regular compliance regimen we go through in the event we encounter a concern” a company spokesman said.
Although GTECH doesn’t manufacturer the tickets, its scanners, at ticket sellers’ locations, reads the bar code and transmits the information to a centralized computer for authorization to make a payout.
Wall Street reacted negatively to the story pushing the price of GTK down from its weekly high of $26.21 to Friday’s closing of $23.70 a share.