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State lottery operator falling short of goal

May 20, 2014

The company that manages the Hoosier Lottery is going to have to sell a lot of scratch-off games and other tickets in May and June if wants to avoid making a payment to the state, the Indiana Lottery Commission learned Tuesday.

Gtech Indiana promised in its 2012 bid to become the lottery's private operator that it would reach net income of $256 million for the 2014 fiscal year, which ends June 30. After subtracting the lottery commission's own expenses, that would mean $248 million would flow to state coffers.

However, Gtech is not on pace to hit that target, according to a presentation Tuesday from lottery commission staff. Its revenue from lottery products through April 30 was $852.4 million and will need to reach $1.06 billion by June 30 in order to reach the goal of $256 million in net income.

To generate about $154 million in revenue in two months would mean that Gtech would have to exceed its budgeted sales figures by 14 percent. It's currently about 3 percent below budget.

If Gtech does not reach the $256 million goal for net income for the state, it will have to make up the shortfall.

Commission staff said Tuesday that Gtech thinks it can hit the target if several favorable trends continue. The company assumes the Powerball and Mega Millions jackpots will continue to roll over, generating higher sales through June 30. The company also expects a recent rise in sales of the game Cash 5 to continue, and for scratch-ticket sales to continue at historic highs.

In October 2012, the commission signed a 15-year management contract with Gtech Indiana—a subsidiary of Rhode Island-based lottery giant Gtech Corp. The company has promised to bring the state $1.76 billion over the first five years.

Net income is supposed to ramp up to $410 million by 2017 and 2018.

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