Missouri Lottery says game choices affect funding

JEFFERSON CITY, Mo. -- A decline in the amount of Missouri Lottery proceeds provided to education is partly because of the types of Lottery games people chose to play, a Lottery official said.

Despite record high sales figures, the Lottery transferred $21.5 million less to education during the 2014 budget that concluded June 30 than during the previous year. That led Gov. Jay Nixon to seek a review of the agency's operations.

The Lottery's chief operations officer, Gary Gonder, said in an email the discrepancy between rising sales and declining education funding is attributable partly to differing profit margins and prize payouts in Lottery games.

Scratch-off games comprise about two-thirds of the Lottery's sales and typically have a higher percentage payout in prizes -- and thus transfer a lower percentage to education -- than more profitable games such as Powerball.

Gonder said despite the overall increase in Lottery sales, Powerball sales actually declined in 2014, accounting for about half of the reduced transfer amount to education. He noted there were fewer large Powerball jackpots in 2014 than during the 2013 budget year.

"Fewer big jackpot runs tend to negatively impact sales of all lottery products," Gonder said.

The Lottery had sales of nearly $1.16 billion during the 2014 budget year, marking its fifth straight year of growth and the fourth consecutive year it set a new high for revenues. Yet the amount of Lottery proceeds transferred to education declined to $267 million this past year from a high of nearly $289 million in 2013.

A similar situation occurred in the 2007 and 2010 budget years, when Lottery sales increased but education transfers decreased. However, the gap between sales growth and diminished education funding was not as large in those years as it was in 2014.

A 1992 voter-approved amendment to the Missouri Constitution requires all Lottery proceeds not used for prizes or administration expenses to go to public schools and higher education.

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