Mass. Lottery downgrades profit forecast

BOSTON (SHNS) – Expectations of Lottery profits earmarked for local aid to Massachusetts cities and towns have been reduced by $35 million for the remainder of this year and next year due to budget cuts made by Gov. Charlie Baker and the Legislature to close a mid-year shortfall.

Treasurer Deborah Goldberg and Lottery Executive Director Beth Bresnahan briefed the Lottery Commission Tuesday on the impacts of the $1.7 million cut made in February to the Lottery’s $97 million budget.

Bresnahan said the Lottery needs to cancel three instant tickets scheduled for release later this year, costing the state $12.4 million in profits in fiscal 2015 and another $22.5 million in fiscal 2016.

With over 70 percent of Lottery sales coming from instant tickets, officials said net profits for the budget year that ends on June 30 are now expected to total $935.4 million, down from $947.8 million.

“All the conversations about cuts have said it will have no impact on local aid. This is local aid,” Goldberg said. “I’m concerned about this and hoping to speak with people in the Legislature.”

Baker and leaders in the House and Senate made a point of showcasing how local aid would not be cut as part of the plan to close a $768 million midyear budget gap, but in order to make good on payments to cities and towns budget officials will have to find a way to make up the difference for any lost Lottery profits.

Goldberg said she asked the administration and the Legislature to avoid cuts to the Lottery, which she said is already operating on a tight budget. She said she’s worried about budget levels for fiscal 2016 too.

Based on the emergency budget cuts this year, Bresnahan said the Lottery has downgraded its profit projections for fiscal 2016, which is the largest single source of local aid revenue, from $920 million to $897.4 million.

The new treasurer said she hopes to speak with House budget chief Rep. Brian Dempsey and Senate Ways and Means Chairwoman Karen Spilka about making sure the Lottery isn’t level funded at its post-cut budget, which could further erode profits.

“If the conversation is we don’t want to impact local aid and local communities and we want to hold them harmless, sometimes I think the connection is lost,” Goldberg said.

Bresnahan said the Lottery planned to trim $1.3 million from its administrative budget, which includes printing costs for a $1, $2 and $5 instant scratch ticket. The agency also cut $138,000 for planned technology upgrades, $100,000 from its advertising budget, and $300,000 for KENO and Jackpot Poker, costing a potential $12 million in lost KENO revenue.

Tim McMahon, a Lottery commissioner, shared Goldberg’s and Bresnahan’s concerns about having to cut back on advertising games and jackpots.

“If you don’t market, you don’t generate sales. Plain and simple,” he said.

Lottery sales in January were up $18 million over the same month last year, with instant tickets accounting for $7 million of the growth. Sales just last week, however, were down $10 million from 2014 and Bresnahan said there is concern over how badly the continuous snowfall of the past three weeks will impact overall sales in February as people hunkered down at home and had their normal routines disrupted.

“Obviously, we’re going to be concerned about February. It’s going to be a tough month,” Goldberg said.

The commission also approved new rules for the multi-state Lucky for Life game in an attempt to boost interest and improve sales, increasing lower-tier prizes and improving the odds of winning the top grand prize – $7,000 a week for life – to one in 30.8 million.

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