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Auditor Fitzpatrick releases audit of Missouri State Lottery Commission

Report highlights increased lottery proceeds despite decreased advertising spending

11/08/2023 - Jefferson City, MO

A new report released by State Auditor Scott Fitzpatrick details how the Missouri State Lottery Commission (Lottery) has seen lottery proceeds increase significantly in recent years despite diminished funding for its advertising budget.

"The best way to measure the success of the Lottery program is by the amount transferred to support public education each year, and the fact is revenue to education has skyrocketed while advertising expenditures have plummeted. Allocating taxpayer resources responsibly and to the benefit of Missourians is a solemn task, and I hope the Governor and the General Assembly find this report informative," said Auditor Fitzpatrick.

The comprehensive audit notes the Lottery has seen funding for its advertising budget decrease by approximately $16.7 million since 2018 while transfers of Lottery proceeds to education have increased by more than $53 million in the same period of time. For Fiscal Year 2023, the lottery had an advertising budget of just under $800,000 but transferred approximately $386.4 million to education.

The audit points out that Missouri's current advertising budget of 0.02 percent of sales is the smallest advertising budget of any of the 45 states (plus the District of Columbia) that sponsor a lottery. The national average advertising budget is 1.07 percent,  and the eight states contiguous to Missouri average 1.31 percent of sales.

The audit explains that while Lottery officials cannot determine if the reduction in advertising had a definitive impact on sales, they say market studies have already begun to show reductions in overall awareness of the Lottery and in the public's perception of Lottery activities. The audit recommends the Lottery continue to work with the Legislature to evaluate the impact of advertising and sponsorship spending on Lottery sales.

The report also found the Lottery had a conflict of interest when it entered into a sponsorship agreement in 2021 with a not-for-profit entity while the Lottery's Community Relations Manager, who was responsible for overseeing sponsorships, was a member of the not-for-profit entity's board of directors. Another finding notes the Lottery is at increased risk of potentially improper purchases because it does not always use purchase requisitions as required by its established purchasing procedures.

The audit gives the Missouri State Lottery Commission a rating of "good." A previous audit of the Lottery in 2020 gave the Commission a rating of "excellent," the highest available.

The complete audit of the Missouri State Lottery Commission can be found here.