State of Arizona Office of the Auditor General



Arizona State Lottery Commission (June 2002, Report No. 02-02)


The Arizona State Lottery Commission’s statutory purpose is to “oversee a state lottery to produce the maximum amount of net revenue consonant with the dignity of the State.” In fiscal year 2001, the Lottery earned $272.7 million from ticket sales.  Beneficiary funds, such as the State General Fund, Local Transportation Assistance Fund, and State Heritage Fund received nearly $78 million of these revenues. Although the Lottery has made improvements to increase sales, declining online ticket sales have offset increases in instant-ticket sales.  Sales for online games like The Pick tend to vary with jackpot levels, a factor which is outside of the Lottery’s control. To further improve sales, this report recommends that the Lottery explore more options to maximize sales, such as greater use of instant-ticket vending machines, adding pull-tab instant tickets to its mix of game play-styles, and offering higher denomination instant-ticket games. The Lottery should also improve its compliance inspection program by developing a systematic plan for inspecting retailers each year, tracking the results of inspections to identify common problems, and modifying compliance checklists to enhance monitoring of underage wagering. Finally, the Lottery can enhance recent operational improvements by ensuring that it distributes monies earned from two Lottery games to the State Heritage Fund consistent with statutes, and adopting additional accounting procedures for Lottery-specific transactions. 

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