Lottery Breaks Sales and Dividend Records in FY14; Proceeds to State Come in Less Than Budgeted

The Kentucky Lottery announced today in a board of directors meeting that sales for Fiscal Year 2014 were $858.9 million (including $15.6 million in free tickets). This breaks the old sales record established in FY13 of $846.6 million by 1.4%.

Those sales led to record-breaking profits returned to the Commonwealth. A total of $225.5 million was earned for the college scholarship and grant programs funded by the Kentucky Lottery, breaking the old record of $223.8 million. However, the Lottery was $4.5 million below what was budgeted by the Commonwealth for FY14 dividends. Unclaimed prizes, which are directed by law to the KEES scholarship reserve fund, were $8.1 million versus $9.2 million in FY13. In addition, the Commonwealth received $2.3 million in taxes withheld from prizes.

Scratch-off ticket sales were down slightly to $521.5 million versus their record-level $522.2 million in the last fiscal year. Draw game sales fell to $307.8 million, a decrease of 5.1% from sales of $324.4 million in FY13.

“Powerball was the primary factor which led to the decline in draw game sales in the past fiscal year,” said the KLC's Executive Vice President and CFO Howard Kline. “With the lack of major and sustained jackpots for the year, Powerball sales in Kentucky dropped $25.4 million. Our Mega Millions game helped make up part of that shortfall. That game exceeded last year's sales by $12.7 million, which was strong but not enough to make up the losses from Powerball.” Combined FY14 sales for Powerball and Mega Millions in Kentucky were $119.4 million, versus $132.1 in in FY13.  This is a $12.7 million or 9.6% decline.

Sales of the new Keno game were a bright spot in FY14. The game generated $29.4 million since its launch in November, up from the anticipated $28 million budgeted for FY14. As a result of the cost of launching the Keno game, operating expenses were up slightly in FY14 to $27.3 million from $26.4 million in FY13.

“We're actively engaged in taking steps to improve our sales performance,” said the Lottery's President and CEO Arch Gleason. “We're making changes to our scratch-off program which we feel will bolster sales. We also continue to recruit new Keno retailers with the focus being on expanding sales of the game, and a new multi-state game set to be launched in October should significantly add to overall draw game sales.”

"For 16 out of the past 21 years, we've broken sales records. We've also broken dividend transfer records in 16 years out of the past 21,” Gleason said. “Our dividends to the state – while also record-breaking – weren't as high as we wanted. It was a tough year in several respects, but we continue to work toward sales and dividend improvement. That's what the Commonwealth expects from us, and that's what college students receiving our scholarship and grant funds expect from us.

According to the Kentucky Higher Education Assistance Authority (which administers Lottery-funded college scholarship and grant programs), since 1999 the Kentucky Lottery has funded $2,209,374,268 in college scholarship and grant programs for 569,542 students. The Lottery is the sole funding source for the KEES scholarship program, and also funds the need-based College Access Program and Kentucky Tuition Grants.

Since inception, the Lottery has sold $15.53 billion in tickets, returning $4.16 billion to the Commonwealth. Winners have received $9.35 billion in prizes, and retailers have been paid $976.1 million. Operating expenses have been held to 6.7% of sales (the FY14 operating expense level was 4.9%).

In other business, the board approved:

  • A lease extension for the Prestonsburg regional office and warehouse space;
  • An amendment to the agreement with Camelot Global Services (North America) for retailer operations assessment and related services;
  • Continuation of the employee incentive comp plan;
  • A new appointment to the retirement committee, and;
  • Rules and regulations for ten scratch-off tickets.

The next meeting of the KLC’s board of directors will be September 26. The meeting will begin at 9:30 AM EST, and will be held at the KLC headquarters at 1011 West Main Street in Louisville. Committee meetings will begin at 8:30 AM EST.