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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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