The Hoosier Lottery had another record-breaking year, with revenue exceeding expectations, according to preliminary and unaudited fiscal year 2019 figures presented to the State Lottery Commission on Tuesday morning.
Lottery sales reached $1.34 billion in the latest fiscal year, up from $1.27 billion in the previous year. About $312.2 million of that will be returned to the state—about $6 million more than last year.
Revenue from instant tickets, jackpot draw games and non-jackpot draw games were all higher in 2019 than in 2018.
Mega Millions, in particular, saw higher sales than expected thanks to the jackpot reaching $1.6 billion in October, making it the biggest lottery prize in U.S. history.
“It’s nice to see one record after another,” Hoosier Lottery Commission Chairman William Zielke said. “Really great year.”
As a result of the sales, private lottery operator IGT Indiana will receive a performance incentive bonus of $11.2 million. That’s up from $9.1 million last year.
This marks the second year in a row that IGT Indiana, formerly Gtech Indiana, has met the incentive threshold since contracting with the state in 2012.
The 15-year contract between the Hoosier Lottery and IGT Indiana outlines minimum net income amounts IGT Indiana must hit in order to avoid paying a penalty and net income amounts that would trigger an incentive payment.
The company missed the minimum income targets in 2014 and 2015, prompting the state to revise the contract in 2015 and lower the income requirements.
IGT Indiana then avoided penalties in 2016 and 2017 by hitting the minimum net income requirements, but it did not hit the incentive income targets, so it did not receive a bonus.
Ticket sales in fiscal year 2018 generated a “provider net income” of $318.2 million—$18.2 million higher than the $300 million minimum threshold for IGT Indiana to both avoid paying a penalty and receive its first incentive bonus.
In fiscal year 2019, provider net income—total revenue minus prizes paid out and game and provider expenses—hit $327 million, which is well above the minimum income target of $300 million and incentive mark of $305 million.
Under the agreement, IGT Indiana receives half of the excess income and the Hoosier Lottery receives the other half.
The lottery covers prize payouts and operating expenses, but otherwise all surplus revenue goes to the state, which is supposed to use the proceeds to reduce residents’ automobile excise taxes, support state pension funds and finance other projects.
Early fiscal-year 2020 projections show the lottery will reach $1.32 billion in sales next year, slightly lower than this year, as they expect jackpot draw game sales to drop.
“It’s a relatively conservative look at where we expect jackpots to be,” Carrie Stroud, chief of staff for the Hoosier Lottery, said.
The lottery is estimating a $1 million incentive payment and $304 million surplus to the state next year.
Next year, the minimum income target stays at $300 million, but the incentive mark increases to $310 million.
Hoosier Lottery Commission members also heard a brief update on where things stand with online ticket sales—something IGT Indiana is researching—but formal recommendations on that aren’t expected for another eight months.
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