The Missouri State Auditor, Scott Fitzpatrick, has published a report on specific operations of the state’s lottery commission, covering a two-year period that ended on June 30, 2022.
The report, which isn’t limited to just these two years, outlines its audit objectives, which include:
- Assessing the lottery’s internal controls over key management and financial functions
- Examining the lottery’s compliance with specific legal provisions
- Evaluating the lottery’s economic aspects as well as its management practices and procedures.
After scrutinizing these areas, the report concluded that internal controls exhibited deficiencies. But, there was no significant noncompliance with legal provisions.
However, the report states there is a need for improvement in management practices and procedures.
How the Missouri Lottery faired with advertising expenditure
As the year went by, the state legislature reduced the Missouri Lottery’s advertising budget. It now stands as one of the state-sponsored lotteries with the lowest budget.
The report showed that from the period of 2018 to 2019, which had a ad budget of about $17.5 million, it had taken a deep dive to as low as $800,000 in 2023. However, the reduction in advertising expenditure caused an increase in the lottery’s proceeds, which contributed to education.
For the fiscal years 2018 to 2023, lottery advertising was:
- Around $16 million for 2018 and 2019
- Over $4 million in 2020
- Approximately $1.5 million in 2021
- $400,000 in 2022
- 2023 came close to $400,000
Only 2023 had a budget for responsible gambling, which was close to $400,000 as well.
The audit recommendation included that the lottery should continue to collaborate with the legislature to evaluate the impact of advertising and sponsorship expenditures on sales.
In response to this recommendation, Executive Director for the Missouri State Lottery Commission, Lester Elder stated that it ought not to be a recommendation as it is something that the lottery is already doing.
Elder stated in the Missouri State Auditor’s November 2023 report:
“Advertising and marketing is the best practice for any business, organization or even non-profit. This is especially true when considering the highly competitive retail environment with Lottery offered alongside thousands of other consumer goods.
Most competing brands spend 10-13% of total sales on advertising. Lottery advertising plays a key role in maintaining the current customer base and helping to attract new customers, just as any billion-dollar business would do.”
What the auditor said about purchasing approvals
The Missouri Lottery has a guideline that requires all purchases above $100 to be sent in for approval to the requestor’s supervisor before the purchase. The audit discovered instances where these criteria were not consistently met, posing a risk of unauthorized purchases.
In this regard, Elder supported the recommendation and said the lottery has “implemented changes to purchasing guidelines and the requisition form effective July 1, 2023, to facilitate compliance.”
Missouri State Lottery contributes towards education
The Missouri State Lottery Commission contributed $333,392,723 million to education in 2018. This figure steadily increased to $386,422,562 million in 2023. Although the highest contribution to education thus far is in 2021, with $397,155,502 million.
“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 Fitzpatrick.