Division of the Lottery

 

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Office of the New York State Comptroller

Taxpayers' Guide to State and Local Audits

Division of the Lottery
Administration of Video Lottery Terminal Revenues


Issued: July 12, 2012
Link to full audit report 2010-S-56

Purpose
To determine whether video lottery terminal revenues are adequately controlled, accurately reported, used only for their intended purposes, and have improved racetrack attendance and handle. Our audit covered the period April 1, 2008 through March 31, 2012.

Background
The historical mission of the New York State Division of the Lottery (Lottery) is to raise revenue for education by administering Lottery games. In 2001, the State legislature approved the installation of Video Lottery Terminals (VLTs) at the State's horse racing facilities (Video Lottery Terminal Facilities [VLT Facilities]) to complement the Lottery's pre-existing games of chance. In addition to providing additional funds for education, the VLT revenues are to provide much needed financial assistance to the racetracks. VLTs in New York State are currently located at nine of the State's racetracks. The VLTs pay bettors prizes averaging a minimum of 90 percent of credits played, the dollar amounts received from the bettors. The remaining VLT revenues ("net win") are paid to education; the respective VLT Facility operators for purses, marketing and capital projects; and the Lottery, to cover its costs of administering the VLT program. The VLT operators also retain a percentage of net win as a commission for administering the VLTs. The 17,270 VLTs operating at the nine VLT Facilities as of March 31, 2012 have collected a total of $81.2 billion in credits played, and distributed more than $3.7 billion to education and the associated VLT and racetrack facilities.

Key Findings

  • VLT revenues are adequately controlled, accurately reported, and distributed in compliance with the enabling legislation.
  • Marketing and capital project funds retained by VLT Facilities were spent appropriately, with the exception of $13,917 in unsupported marketing expenditures at Batavia.
  • We are unable to determine whether the VLT revenues used to enhance racetrack purses have aided racetrack attendance and handle.

Key Recommendations

  • Continue to monitor VLT Facilities' use of funds earmarked for marketing and capital projects and recoup such funds as appropriate.
  • Work with racetrack officials and industry professionals to develop performance measures to assess the benefits of diverting millions of dollars in VLT Facility revenues to their companion racetracks.

Link to full audit report (2010-S-56)

Other Related Audits/Reports of Interest
Division of the Lottery: Controls and Accountability Over Video Lottery Revenue Report 2006-S-4


State Government Accountability Contact Information:
Audit Director: Frank Patone
Phone:(212) 417-5200; Email: StateGovernmentAccountability@osc.state.ny.us
Address: Office of the State Comptroller; Division of State Government Accountability; 110 State Street, 11th Floor; Albany, NY 12236