Lottery Sets Sales Mark for 2011; Budget numbers include higher sales and dividend projections
June 17, 2010
The Kentucky Lottery Corporation’s (KLC’s) board of directors has approved the corporation’s
operating budget for FY11. The budget includes a sales projection of $797 million - including $54
million in free tickets - with anticipated dividends to the Commonwealth of $214.4 million. The
dividends consist of $205.4 million for scholarships, grants and higher education programs and $9
million in unclaimed prizes to the KEES scholarship reserve fund.
According to the KLC’s Senior Vice President of Finance & Administration & CFO Howard Kline, online game sales - such as Powerball, Mega Millions, Pick 3 and Pick 4 - are anticipated to rise to $321 million, which is a 6.0% increase from FY10’s projected sales. Instant ticket sales - scratch-offs and pulltabs - are budgeted at $476 million (including $54 million in free tickets), a .7% increase over projected FY10 sales.
Kline said cash prizes paid to players should be $438.8 million - or 59.1% of sales - during the year, and retailers should receive approximately $48.3 million in commissions. All told, operating expenses for FY11 are budgeted at $33 million, an increase of less than 1% over the FY10 projected amount.
KLC President and CEO Arch Gleason said the KLC has been able to maintain its profitability thus far for FY10, even in light of sales 5.8% lower than the previous year and what was budgeted. “ Players have been making a switch over the course of the fiscal year from our instant games to our online games, which are our most profitable products,” said Gleason. “While overall sales are lower than we’d hoped, this shift to a more profitable product – as well as our ongoing efforts to control operating costs within a reduced budget – means we should achieve the total dividends of $213.5 million the Commonwealth expects from us for FY10.”
This $213.5 million figure, according to Gleason, is comprised of $200 million from current year profits for scholarship, grant and higher education programs and $13.5 million in unclaimed prizes to the KEES scholarship reserve fund.
FY10 sales through May were $665.7 million, which was $41.2 million less than the prior year and the amount budgeted. Year-to-date income before transfer of dividends however was $196.6 million, which was $10.2 million more than the prior year but $1.1 million less than budgeted.
During the meeting, the board approved:
According to the KLC’s Senior Vice President of Finance & Administration & CFO Howard Kline, online game sales - such as Powerball, Mega Millions, Pick 3 and Pick 4 - are anticipated to rise to $321 million, which is a 6.0% increase from FY10’s projected sales. Instant ticket sales - scratch-offs and pulltabs - are budgeted at $476 million (including $54 million in free tickets), a .7% increase over projected FY10 sales.
Kline said cash prizes paid to players should be $438.8 million - or 59.1% of sales - during the year, and retailers should receive approximately $48.3 million in commissions. All told, operating expenses for FY11 are budgeted at $33 million, an increase of less than 1% over the FY10 projected amount.
KLC President and CEO Arch Gleason said the KLC has been able to maintain its profitability thus far for FY10, even in light of sales 5.8% lower than the previous year and what was budgeted. “ Players have been making a switch over the course of the fiscal year from our instant games to our online games, which are our most profitable products,” said Gleason. “While overall sales are lower than we’d hoped, this shift to a more profitable product – as well as our ongoing efforts to control operating costs within a reduced budget – means we should achieve the total dividends of $213.5 million the Commonwealth expects from us for FY10.”
This $213.5 million figure, according to Gleason, is comprised of $200 million from current year profits for scholarship, grant and higher education programs and $13.5 million in unclaimed prizes to the KEES scholarship reserve fund.
FY10 sales through May were $665.7 million, which was $41.2 million less than the prior year and the amount budgeted. Year-to-date income before transfer of dividends however was $196.6 million, which was $10.2 million more than the prior year but $1.1 million less than budgeted.
During the meeting, the board approved:
- The FY11 retailer incentive program;
- Contract renewals with Goldberg Simpson, LLC for legal services, Affiliated Forensic Labs for scratch-off ticket testing and evaluation, Paul Kramer for assurance and integrity testing of instant and pull-tab tickets, and Schafer Systems/Take-A-Ticket for instant ticket dispensers and accessories, and;
- Game rules and regulations for 19 scratch-off tickets and three
pull-tab tickets.
The board welcomed new member Lee Scheben of Union, KY, a senior vice president of Heritage Bank in Erlanger, KY. The group also acknowledged the service of Larry O’Bryan of Louisville, KY, who left the board in order to fulfill a gubernatorial appointment to the Employers’ Mutual Insurance Authority board of directors.
