Division of the Lottery

Controls Over the Selection and Licensing of Lottery Retailers (Follow-Up Report)

The Division of the Lottery administers games of chance to raise revenue for public purposes determined by the Legislature. Tickets for these games are sold by thousands retailers statewide. Retailers must be licensed by the Division to participate in the games. In audit 2004-S-11, we examined the Divisionís controls over the licensing process and found that certain improvements were needed.

For example, contrary to its own procedures, the Division was not identifying licensed retailers with delinquent tax liabilities. We identified 3,115 such retailers with a combined tax liability of more than $23 million. We recommended that the Division identify and follow up with such retailers. We also recommended that the Division analyze retailersí lottery sales performance to identify retailers that were not selling enough tickets to cover the operating costs associated with their participation in the Divisionís games. When we performed such an analysis, we identified a number of retailers that were not achieving the break-even sales level. When we followed up on these matters with Division officials, we found that they had generally implemented our recommendations.

For a complete copy of Report 2008-F-1 click here.
For a copy of the 90-day response click here.