RALEIGH – A new independent performance audit of the N.C. Education Lottery, done every two years as required by state law, found that its latest performance has been exceptional and cited the lottery’s work for its “prudent cost-benefit approach” to increasing sales and earnings for the state.
“The NCEL’s ongoing performance has been exceptional,” reported the audit. “Of the six U.S. lotteries started since 2002, only the NCEL managed to increase profits every year. In fact, the NCEL is one of only three U.S. lotteries to achieve profit growth every year from 2007-2012.”
The audit, done by Delehanty Consulting LLC, a Wisconsin-based auditing firm with experience evaluating lotteries both across the nation and in the world, reported for the second time, however, that the law restricting advertising reduces the lottery’s ability to increase funding for education. It found that the average dollar invested in lottery advertising in North Carolina generates $31.70 in profits for education.
“Given the NCEL’s return on advertising investment, the advertising limit of one-percent of sales is likely reducing the profits available for education,” auditors wrote. “And, although falling sales would motivate most companies to increase advertising, the NCEL would have to decrease advertising if sales begin to fall. This could exacerbate the decrease in profits available for education.”
A presentation on the 62-page audit was made to the N.C. Education Lottery Commission today at its quarterly meeting in Raleigh. The audit attributed the lottery’s recent success in growing sales and earnings for the state to an increase in prizes paid to lottery players, its investment in advertising and marketing and its expansion of the number of locations where lottery tickets can be sold. Other key findings of the audits included:
- Lottery sales, profits, and number of retailers consistently increased from FY 2008 to FY2012
- Lottery sales increased 60 percent in the last three years
- Sales per retailer increased 48 percent from FY 2008 to FY 20012
- Gaming revenue per employee increased almost 27 percent from FY 2008 to FY 2012.
“In the seven years since the lottery started, it has established a consistent record of high performance that has paid off for the taxpayers as our games produced more than $2.6 billion for education that would not have been available otherwise,” said Alice Garland, executive director of the lottery. “Auditors found that our productivity rose along with our sales and profits. We remain committed to operating our state lottery as efficiently as possible.”