fiscal year 2015 annual report | kentucky lottery corporation

fiscal year 2015 annual report | kentucky lottery corporation
Measuring success
in degrees
the klc’s net income-which funds college scholarships
and grants in the commonwealth-reached a record
$231.1 million in fy15
Fiscal Year 15 was yet another record-breaker for the Kentucky Lottery.
We’re pleased to report sales for the fiscal year were $899.1 million (including $12.2 million in free tickets). This tops the old
sales record established in FY14 of $858.9 million by $40.2 million.
As I near the end of my term as your governor, it’s amazing to look back over the impact the Kentucky
Lottery has made in the lives of students across the Commonwealth during my administration.
Through my eight years in office, the Kentucky Lottery has been able to provide $1.5 billion
in college scholarships and grants to some of our state’s best, brightest and most-deserving
students. All told, the lottery has provided $2.4 billion in assistance since their scholarship and
grant programs first started in 1999.
This much-needed help has enabled us to keep our students right here at home to attend
college, with the hope they’ll stay in Kentucky after graduation. If we keep our best and
brightest young people here in the Commonwealth, this better-educated workforce helps grow
our overall economy.
Research shows this trend is happening. Our state’s Jeff Green Scholars – students with a
4.0 GPA and high college placement exam scores – are staying in Kentucky to attend college
in unprecedented numbers. In fact, while these students are highly recruited by some of our
nation’s best colleges and universities, three out of four of them are choosing to stay in the
Commonwealth to attend college. That’s a win for all of us.
I congratulate and thank the Kentucky Lottery’s Board of Directors, retailers, management and
staff for yet another record-breaking year. And keep up the good work – we’re counting on you.
Instant ticket sales were key drivers in this performance, rising $38.9 million from FY14 to a record-breaking $560.5 million. This
tops the old record level set in FY13 by $38.3 million. Draw game sales held nearly steady at $338.6 million, rising $1.3 million
from FY14’s level of $337.3 million. Keno sales showed the most dramatic increase of any draw game – up 60.9% - to $47.3
million in its first full year of sales.
These record sales led to record prizes paid to players of $556.3 million, as well as record retailer commissions of $55.9 million.
Even while breaking these records, a dramatic sales dip to our large jackpot games caused us to not meet the budget goal set
for our revenues. A total of $236.1 million was transferred to the state in FY15, breaking the old record of $226.1 million by $10
million. However, this was $10.9 million below what was budgeted by the Commonwealth for FY15 dividends.
So in essence, the things we can control did extremely well last year. It’s the things we can’t control – namely the Powerball and
Mega Millions jackpots – that kept our dividends from rising to the level we’d hoped.
Our board of directors has approved an aggressive budget for FY16. It includes a sales projection of $972 million, an 8.1%
increase over FY15’s sales mark. This includes $600 million in sales of instant tickets and $369 from draw games. Our work is
cut out for us, and we’ll do our very best to succeed. We know you’re counting on us.
Sincerely,
Sincerely,
June Hudson
Chair
KLC Board of Directors
Arch Gleason
President and CEO
Kentucky Lottery Corporation
Steven L. Beshear
KLC Board of Directors (as of 6/30/15)
kylottery.com
June Hudson
Chair
Jan Buddeke
Director
David Ingordo
Director
Benham J. Sims III
Vice Chair
Jodie Haydon
Director
Ted Richardson
Director
Todd Hollenbach
Kentucky State Treasurer
Lisa Haydon
Director
2015 KENTUCKY LOTTERY ANNUAL REPORT | 3
Instant
Tickets
Instant ticket sales rose to their highest level in KLC history in FY15 - $560.5
million, which is $38.9 million more than FY14 and $38.3 million more than the
previous record set in FY13.
The key factor for this increase was the launch of the Game Day Thursday
program. Instead of a twice-a-month new game launch pattern the KLC had
followed for years, Game Day Thursday allowed for a single once-a-month new
game launch schedule. This transition allowed games to better develop a player
base and was well-received by both retailers and players.
In addition, a new scorecard program helped ensure ticket displays and point-ofsale materials were optimized. This has placed an increased emphasis on using
Plan-O-Grams at retailers across the state. These helped create visual continuity
at retail locations, which in turn helped grow sales. In FY16, retailers will be able
to win prizes based on their scores.
Ticket price points ranged from $1 to $25. The $5 price point was where the
most physical tickets were sold while the $25 price point registered the largest
sales increase (97%) from the previous FY. Several new licensed property
games were introduced, including Frogger, the Las Vegas Game Show
Experience and Muscle Car Money.
BARDSTOWN MAN ‘BLOWN AWAY’ BY
$175,000 LOTTERY WIN
W
hen asked how he felt about winning $175,000 on a Kentucky Lottery scratch-off ticket, Eddie
Mattingly of Bardstown told lottery officials that he was blown away. “I just couldn’t believe it,” he
said.
On his way home from work, Mattingly stopped at 150 One Stop in Bardstown to buy a lottery
ticket. “I had $20 in my wallet so I thought I’d try my luck,” Mattingly said. It was a $20 Big Money
Doubler ticket that brought him just that.
Mattingly scratched off several multiplier symbols on his ticket allowing him to multiply the prize amounts. After doing
the math, he realized that he’d won the game’s top prize.
He scanned the ticket using a self-ticket checker at his local retailer just to make sure he was seeing it right. Since he
was in such disbelief, he also asked the store clerk to check the ticket. Mattingly said the clerk’s eyes got “real big!”
Next Mattingly called his wife, Tracy, to see if she was home. “He asked me where I was and I told him I was on my
way to the hospital to see my dad and that I’d be home afterwards. That’s when he said, ‘I think you need to come
home; it’s important.’”
Handing Tracy the ticket he said, “I think this should help with our finances.” Tracy looked at the ticket and began
shaking. The couple has plans to pay off bills, get new vehicles and take a vacation.
kylottery.com
2015 KENTUCKY LOTTERY ANNUAL REPORT | 5
draw
POWERBALL:
Powerball sales in Kentucky continued a downward trend, slumping $14.6
million (18.3%) to $65 million. This was due to a lack of a sustained large
jackpot run during the year and reflected a trend seen by Powerball states
across the nation. Changes for the game during FY16 will be designed
to increase the amount of secondary cash prizes while helping grow the
jackpot to larger levels.
games
While Kentucky did not have a jackpot winner in FY15, there were eight
players who won the game’s $1 million second prize by matching the five
white ball winning numbers but not the Powerball.
Draw games offered by the KLC in FY15
were Pick 3, Pick 4, Keno, Kentucky
Cash Ball and 5 Card Cash. The KLC
also participated in the multistate games
Powerball, Mega Millions, Lucky for Life
and the Monopoly Millionaires’ Club
(which was suspended nationally several
weeks after launch and replaced in KY by
a $5 instant ticket).
MEGA MILLIONS:
Mega Millions sales dipped $6.6 million (16.6%) to $33.2 million. Much
like Powerball, the game suffered due to a lack of sustained jackpot runs
through the fiscal year.
Played like Powerball (players select five white balls from 1 to 56 and one
“Mega Ball” from 1 to 46), the game also has an add-on “Megaplier” feature
which acts as a prize multiplier. Drawings are on Tuesday and Friday nights.
While no one in Kentucky hit the Mega Millions jackpot in FY15, there were
two players who won the game’s second prize of $1 million.
Overall draw game sales for the year grew
$1.3 million to $338.6 million, the secondhighest number in KLC history. This
growth was fueled primarily by a 60.9%
increase in the first full year of Keno sales,
which added $47.3 million to the overall
effort. The best-selling draw game was
Pick 3, which saw sales of $131.3 million.
PICK 3 AND PICK 4:
Pick 3, which continues to be the most widely played KLC draw game,
saw an increase in sales from the previous year. Sales for the game ended
FY15 at $131.3 million, a $5.8 million (or 4.6%) increase. The KLC’s other
daily draw game, Pick 4, saw sales slightly drop $300,000 to $38.5 million.
This is a 0.8% decrease from the previous fiscal year.
KEno:
FY15 Another Record
Breaking Year
Keno sales showed the most dramatic increase of any draw game - 60.9% to $47.3 million in its first full year of sales. Keno is played similarly to a lottostyle game where players try to match numbers drawn every five minutes
by the lottery. The Lottery randomly draws 20 numbers between one and
80 for each drawing. Players choose how many numbers (or “spots”)
they wish to try to match per draw, and win cash prizes depending on the
number of spots they play and match.
● Record sales - $899,122,000
● Record proceeds to KENTUCKY CASH BALL:
the Commonwealth - $236,101,000
Kentucky Cash Ball sales in FY15 held steady to its FY14 mark at $10 million.
During the year, seven players won the game’s top prize of $200,000 on a $1
wager, and three won $100,000 on a 50 cent wager. Drawn six nights a week,
Cash Ball is a four-plus-one number game similar in play to Kentucky’s Powerball.
● Record instant ticket sales - $560,494,000
● Record prizes to players - $556,276,000
● Record commission to retailers - $55,857,000
kylottery.com
EFFECTIVELY MANAGING OPERATING EXPENSES
Operating expenses for FY15 were
$28.8 million, only 3.2% of sales.
5 CARD CASH:
Instead of the numbers players usually get for one of the draw games like Pick
3 or Powerball, the 5 Card Cash ticket contains five card symbols. Rather than
trying to match numbers, players try to match card symbols to win.
Sales of the game ended the year at $7.7 million. This was $600,000 less
(or 7.2%) than sales of the game in FY14. There was one winner of the
game’s top prize of $100,000.
THE MILLION DOLLAR
PHONE CALL
Patricia Pearson of Villa Hills didn’t have that
“eureka” moment many lottery winners have
when they discover they’ve won – instead
she learned she may be the winner after a
phone call.
When lottery officials went to the AmeriStop
Food Mart in Villa Hills to execute security
precautions after the Powerball drawing,
they watched the surveillance video of the
purchase with store manager Paul Gabis.
Later in the afternoon, after watching the
video several times, Gabis realized he knew
the winner.
While he knew where Pearson lived, Gabis
didn’t have her phone number. He called the
management company of her condominium
complex and asked if they could get in touch
with her so she could call the store.
“At first I thought he was calling because
I’d been trying to sell my condo for the past
year and had a sign up at the store,” Pearson
said. “I thought he was calling to tell me to
take it down. Instead, Paul said, ‘You won
the lottery!’”. He then asked her to read
the numbers on her ticket. The first five
numbers matched, and then she gave him
the Powerball number which was 26. “That’s
when Paul told me I’d won a million dollars.”
2015 KENTUCKY LOTTERY ANNUAL REPORT | 7
LUCKY FOR LIFE/DECADES OF DOLLARS:
The multistate game Lucky for Life went on sale in Kentucky in March 2015. The game drawing is
similar to that of Powerball, in which players must match five numbers drawn from 48 in the game’s first
machine and one number drawn from 18 in the Lucky Ball machine.
The $2 game has one of the most exciting prizes ever offered by the Kentucky Lottery – the top prize is
$1,000 a day – EVERY day – for life. The game offers a second prize of $25,000 a year for life, as well as
eight other cash prize levels.
Lucky for Life, which is sold in 16 states, saw $3 million in sales for the three months of FY15 it was
available. It replaced the Decades of Dollars game. When discontinued in March, Decades of Dollars
had generated $1.7 million in sales.
While Kentucky had no top prize Decades of Dollars winner in FY15, there were 18 other winners of the
game’s $10,000 second prize. Kentucky also had 21 players win Lucky for Life at the $5,000 prize level.
SOLID WASTE EMPLOYEES ‘CLEAN UP’
WITH $1 MILLION MEGA MILLIONS PRIZE
Employees at Waste Municipal Utilities are usually
concerned with making sure their customers’
trash is picked up. A morning in July turned out
to be quite different for four coworkers.
When John Stone of Winchester arrived at
work, he told Carrie Taylor (also of Winchester)
who purchases lottery tickets for the group,
that she’d better check their tickets - someone
in Winchester had won $1 million. As she was
looking them over, her eyes immediately went
to the last line on the ticket because the first
number had matched the winning number.
As she continued to check the numbers she discovered that they’d matched all of the first five
numbers. “I had to put the ticket aside and call for John to come take a look,” Taylor said.
After Stone checked the numbers they felt confident that they were holding the winning ticket.
Next, they began to notify everyone else in the group.
David Fultz of Denniston was offsite when he got the call from Taylor. “I didn’t know what to think.
She sounded crazy and told me to call her as soon as I could,” Fultz said.
While they hadn’t told anyone about their win, their co-workers were beginning to figure it out.
“People were starting to get word that a ticket had been sold across the street but it wasn’t until
the four of us left together that they suspected it was us,” Stone said.
All of their cellphones were blowing up with text messages while they claimed their ticket at
lottery headquarters. Many of them were well wishes from co-workers.
“This is going to make everyone more comfortable,” Stone told lottery officials. “We all just want
to be debt free.”
kylottery.com
Richard Wells of
Covington was one
of seven Kentucky
Lottery players to
win $200,000 playing
Cash Ball in FY15.
FY15 Product Line Share of Sales
CASH.BALL MEGA.MILLIONS POWERBALL
3.7%
7.2%
LUCKY FOR LIFE
1.1%
0.3%
MONOPOLY
MILLIONAIRES’
CLUB, 0.1%
DECADES OF
DOLLARS
0.2%
product share
FY 2015
$1 Games
3.9%
$2 Games
7.4%
KENO
5.3%
5 CARD CASH
0.9%
PICK 4
4.3%
$3 Games
3.9%
$5 Games
18.9%
PICK 3
14.6%
$25 Games
5.8%
$20 Games
8.7%
$10 Games
13.7%
2015 KENTUCKY LOTTERY ANNUAL REPORT | 9
People Really
Do Win!
The KLC awarded $556.3 million in cash prizes in FY15, up $32.5 million (or 6.2%)
from the previous year. That’s 61 cents for every dollar spent by players. Since inception,
Kentucky Lottery players have won more than $10 billion in prizes!
Here are just a few of the players who shared in more than a half billion dollars last year!
kylottery.com
2015 KENTUCKY LOTTERY ANNUAL REPORT | 11
“
Name:
Jazzmine Lynk
School:
Bellarmine University
YEAR GRADUATED:
May 2015
Major:
Political Science
From:
Morganfield, KY
RECEIVED:
KEES/CAP/KTG funds
kylottery.com
Being the first in my
family to attend
college, I had no
idea as to
how I would
be able to pay
for Bellarmine. The
Kentucky Lotteryfunded scholarship
and grants
made my dreams
of attending
Bellarmine
University become a
reality.
”
Measuring success
in degrees
K
entucky Lottery proceeds have now
surpassed $2,400,000,000 for college
scholarship and grant programs.
Lottery dividends started being transferred
away from the Commonwealth’s General
Fund on a gradual basis in Fiscal Year 1999.
Through FY15, the $2,406,244,123 in proceeds
have gone to fund need-based and merit-based grants and
scholarships, along with a reserve fund for the programs.
All told, 659,308 students across the Commonwealth have
received a lottery-funded college scholarship or grant since
FY99. The awards are distributed by the Kentucky Higher
Education Assistance Authority (KHEAA).
Lottery revenue funds the need-based College Access Program
(CAP) and Kentucky Tuition Grants (KTG), along with the popular
Kentucky Educational Excellence Scholarship (KEES) program.
In fact, 95 cents of every non-loan student aid dollar awarded
by the Commonwealth comes straight from the sales of lottery
tickets. And the results are tangible – according to KHEAA, data
from the KEES program indicates more of Kentucky’s best and
brightest students are staying in Kentucky to attend college.
All unclaimed Kentucky Lottery prize money goes into the
KEES Reserve Fund to help maintain the financial stability of
the program. Around $9 million annually is projected to go into
this fund, and it has received approximately $118 million since
this practice started in FY03.
The first $3 million in Kentucky Lottery proceeds each
year goes to the University of Kentucky’s “Read To
Achieve” program and the Collaborative Center for Literacy
Development, with a total of $48 million going to these
programs since FY00.
“KEES, CAP and KTG are 100% funded by the Kentucky
Lottery, without which many students would not be able
to pursue the career of their dreams,” said Dr. Carl Rollins,
KHEAA’s executive director. “We are thankful for the
Lottery’s proceeds and support its continued efforts to fuel
imaginations and fund education.”
Name: Jonathan Priddy
School: University of the Cumberlands
Year Graduated: 2011
Major: Communications with a minor in Theatre Arts.
From: Stanford, KY
RECEIVED: KEES Funds
“
While in high school, I was told that it was
going to be hard for me to go to college
because I came from a low-income family.
My dream after high school was to attend
a liberal arts private school in Kentucky.
Being the recipient of KEES, CAP, and KTG
allowed for my dream to come true.
KENTUCKY’S BEST AND BRIGHTEST
STAYING HOME
W
Data from the Kentucky Higher Education Assistance Authority show this is
happening. There’s a special designation our state’s best and brightest students
can achieve by being named a Jeff Green Scholar. This means a student has
a 4.0 GPA along with high college placement exam scores. These are the students every university
wants to attract, and they are highly recruited by some of the nation’s best colleges.
” “
Name: John Bergman, Jr.
School: Thomas More College
Year Graduated: 2010
Major: Two Bachelor’s Degrees –
History and Political Science
From: Falmouth, Kentucky
RECEIVED: KEES, CAP and KTG
hen the KEES, CAP and KTG programs were established, one of the primary goals was to encourage
Kentucky’s highest achieving students to stay in the Commonwealth to pursue their degrees.
This in turn would potentially create a better educated workforce, which would
then help grow the level of economic prosperity for our entire state.
But an interesting trend has developed – in large numbers, they’re now staying home in Kentucky
to attend college. In fact, for the last two years, three out of every four Jeff Green Scholars were
enrolled in a Kentucky institution. This is an all-time high.
Thank you, Kentucky
Lottery, for helping
fund my education!
”
Name: Lorynn Deitz
School: Murray State University
Year: Sophomore
Major: OSHA
From: Murray, KY
RECEIVED: KEES funds
15
FIRST-EVER LOTTERY COMMERCIALS ABOUT
‘WHERE THE MONEY GOES’
F
or the first time in its 25 year history, the Kentucky
Lottery can advertise where proceeds from the sale
of its games were spent in FY15.
This had never happened before because it
would’ve been against the law.
When the state’s General Assembly put together
the governing legislation for the Kentucky Lottery
back in 1989, a floor amendment was passed which stated, “…
government programs and services shall not be mentioned in
advertising or promoting a lottery”. Kentucky thus became the
only state in the U.S. to prohibit the mention in advertisements
of the programs where lottery funds were directed.
Over the years, several attempts were made through the General
Assembly to overturn the ban, but none became law. Finally,
through the latest state budget bill, the restriction was lifted.
TV ads began running in August in seven markets across the
state featuring the story of Molly Anderson, a recent University
of Kentucky graduate and now a special education teacher with
the Fayette County Public Schools. The commercial featured
how Anderson’s KEES scholarship helped her go to college
and fulfill her lifelong dream of being a teacher.
Research conducted by the Kentucky Lottery has shown the
public wanted to know where Lottery proceeds were spent in the
Commonwealth. Eighty three percent of Kentuckians surveyed
said they didn’t feel like they received enough information on how
proceeds are spent, and 89% felt the Kentucky Lottery should be
able to advertise how proceeds are distributed.
Top Schools Where Grants and Scholarships Were Used in FY15:
SCHOOL
GRANTS / SCHOLARSHIPS
AMOUNT
University of Kentucky
13,639
$25,371,977
University of Louisville
10,095
$17,837,345
Eastern Kentucky University
9,967
$15,859,331
Western Kentucky University
9,351
$15,677,902
Morehead State University
5,758
$9,718,802
Top Counties Where Students Received Grants and Scholarships in FY15:
COUNTY
GRANTS / SCHOLARSHIPS
AMOUNT
Jefferson
19,855
$31,936,085
Fayette
7,341
$12,114,122
Kenton
3,979
$6,577,038
Boone
3,616
$6,060,201
Warren
3,192
$5,251,756
kylottery.com
“I owe it to the
Kentucky Lottery
funded KEES and
CAP money for
helping me to
pursue my dreams.
Without that
money, I would
not have been
able to afford my
undergraduate
education in
psychology.
”
Name:
Allison Simpson
School:
Brescia University
Year:
Senior
Major:
Psychology
From:
Muhlenburg County, KY
RECEIVED:
KEES/CAP funds
2015 KENTUCKY LOTTERY ANNUAL REPORT | 17
PROMOTIONS
RETAIL COMMISSIONS IN FY15 WERE A RECORD-BREAKING
$55.9 MILLION, BEATING LAST YEAR’S MARK BY
$3.1 MILLION (OR 5.9%). THE AVERAGE KLC RETAILER
SOLD $253,883 IN TICKETS AND EARNED $15,786.
WINCHESTER MAN ON THE OTHER SIDE OF THE NEWS:
There were 14 statewide second-chance promotions
conducted by the KLC during FY15. Players could enter by
going to the KLC’s website and submitting information from
non-winning instant or draw game tickets.
GRAND PRIZE WINNER FOR 25th ANNIVERSARY SECOND-CHANCE PROMOTION
Popular promotions included:
● A draw game promotion featuring Keno where players entered to win a trip to Las Vegas and attend the iHeart Radio Music Festival.
● An instant ticket promotion where players entered to win a trip to Las Vegas and participate as a contestant in the $1,000,000 Las Vegas Game Show Experience.
● Nine monthly promotions where players entered game-
specific, non-winning draw game tickets for a chance to win exciting prizes such as concert tickets and gift certificates.
The Keno “Power Hours” promotion doubled or tripled
a player’s winnings if the words DOUBLER or TRIPLER
appeared on the tickets. The promotion led to a 10.6%
sales increase during the promotion and 11.4% sales
increase after promotion.
● A holiday instant ticket promotion where players entered to win one of 12 cash prizes ranging from $100 to $5,000.
●
Johnnie Beavers of Bowling Green strategizes during The
Price is Right, one of six featured game shows in the Las
Vegas Game Show Experience.
C
hristopher Woosley of Winchester works as a
news photographer for Channel 18 in Lexington
where he’s normally capturing the news. Instead,
he became the news when he was the grand
prize winner of the Kentucky Lottery’s 25th
Anniversary second-chance promotion, winning
$25,000.
“I was driving when I got a call on my cellphone from a
number I didn’t recognize so I let it go into voice mail,” he
told Lottery officials. He began to play the message back but
hung up before listening to the entire message. “I had to call
back to see what was going on. I eventually had to put my
phone on speaker so she could repeat to my co-worker that I
was the winner of the grand prize,” he said.
A statewide promotion where players submitted Monopoly Millionaires’ Club tickets to collect Monopoly Lottery Properties for a chance to win a trip to Las Vegas and up to $1 million on the MMC game show.
● A draw game promotion featuring Keno awarding one player the title of Festival Fanatic for the Kentucky Derby Festival.
● A draw game promotion where players entered $2 Lucky for Life tickets for a chance to win a VIP Experience during the July Race Weekend at the Kentucky Motor Speedway.
kylottery.com
More than $3.3 million was
given away in FY15 through
the Ultimate Second
Chance promotion. This
program is designed to
award a top prize for a
ticket from a drawing
in which only nonwinning scratch-off
tickets are eligible. There
were 65 drawings conducted during the
fiscal year, with the largest prize awarded of $460,000.
The KLC’s Winner Wagon participated in more than a
dozen fairs and festivals across the Commonwealth,
reaching more than 1.5 million people. The Winner
Wagon also experienced a makeover to update its
graphics, lighting and marquee sign.
Bill Dollinger of Louisville was the Grand Prize winner in the
Start Your Engines with Kentucky Speedway promotion. The
Grand Prize consisted of a variety of VIP experiences during
July Race Weekend at the Kentucky Speedway, which
included the “Best Seats in the House” and a Pace Car Ride.
The Points for Prizes store closed Feb. 26,
2015. Any unused points as of the next day
expired and were converted into entries
into a Store Closing Drawing for store
merchandise and cash. In addition, nonwinning scratch-off tickets with the Points
for Prizes logo submitted after Feb. 27
were entered into a series of Points for Prizes Closeout
Cash drawings. Separate drawings were held and cash
prize amounts awarded for each of these games.
2015 KENTUCKY LOTTERY ANNUAL REPORT | 19
Choices: There’s Always a Right One
Nine years ago, the KLC launched “Choices – There’s Always A Right One.”
The in-school addiction prevention exercise is designed to inform youths
about the dangers of addictions that can come from alcohol abuse, drugs and
gambling. The program is geared toward students in grades six through nine
and has been distributed to approximately 180 middle schools throughout
the Commonwealth. It has also been placed in each of the state’s 13 Regional
Prevention Centers which use it in community awareness presentations.
MARTY GIBBS RECEIVES industry
LIFETIME ACHIEVEMENT AWARD
P
ublic Gaming Research International (PGRI) presented a 2015 Major Peter J. O’Connell Lottery
Industry Lifetime Achievement Award to Marty Gibbs, executive vice president and chief operating
officer of the Kentucky Lottery.
In 1993, she accepted a job as senior vice president of
finance and administration of the Kentucky Lottery. Just
six weeks into her term, the governor demanded the
resignations of all board members and the majority of management
members due to a state auditor’s report which found conflicts of
interest, questionable procurements and financial practices and abuse
of expense accounts. Gibbs directly appealed to the governor – she
had not been part of the problem and wanted to be part of the solution.
He in turn appointed her acting president, a position she held until the
hiring of Arch Gleason as president & CEO Aug. 31, 1993.
Shortly after his hiring, Gleason promoted Gibbs to the position of
executive vice president & COO. “Marty’s work in what was truly the
darkest days of the Kentucky Lottery helped the organization not only survive but thrive,” Gleason said.
“She helped me and our board steer the ship through a major crisis of public trust.”
“I am so fortunate to be surrounded by an amazing group of folks here in Kentucky,” Gibbs said. “They’ve made
me look good over the years, and they’re the reason I’m so fortunate to receive this lifetime achievement award.”
Recipients of the award are recognized for having distinguished themselves with their service to the lottery and for
their important contributions to the success of the lottery industry and the causes it supports.
kylottery.com
The Right Way to Run a BusinessCorporate Social Responsiblity
Kentucky Council on Problem Gambling:
The Kentucky Lottery is a founding member of the Kentucky
Council on Problem Gambling (KYCPG). The council was
formed in 1995 to educate the community about problem and
compulsive gambling, offer training to counselors interested in
treating gambling disorders and offer financial assistance for
treatment to those wanting help.
1-800-Gambler:
Managed in conjunction with the KYCPG, the 1-800-GAMBLER
hotline in staffed 24-7 by professionals trained in problem and
compulsive gambling issues. Anyone with any sort of gambling
problem can call the number for information, guidance and
referrals to treatment programs and Gamblers Anonymous.
Responsible Gaming Education Week
and Problem Gambling
Awareness Week:
These events raise community
awareness of issues related
to problem and compulsive
gambling, as well as
emphasizing that there is help
available for those suffering
from this addiction. A KLC staff
member has been involved with
the planning and execution
of the Responsible Gaming
Education Week campaign for
the 11 years it has existed.
Play Responsibly Retailer Elements:
• “Play Responsibly. Remember, it’s just a game.” This
message, including the 1-800-GAMBLER hotline number,
is placed on ticket vending machines, ticket dispensers,
all point-of-sale materials, game brochures, game cards,
television advertising, print advertising, and outdoor and transit
advertising. “Play Responsibly” appears on instant scratch-off
and draw games tickets and play slips. The message is also
used in all 30-second radio spot advertising, and the logo is
used on 30-second TV advertising.
• The KLC’s website contains “Play Responsibly” information
accessed directly from the home page. It also contains links
to the National Council on Problem Gambling site and the
1-800-GAMBLER site.
• Brochures with the Gamblers Anonymous questions and the
1-800-GAMBLER hotline number are placed in all retailer play
centers. Stickers with the hotline number are placed in various
point-of-sale locations in lottery retailers acknowledging they
have been informed of the KLC’s “Play Responsibly” program,
that materials with the 1-800-GAMBLER hotline number are
permanently located in their store, and that they are aware of the
KLC’s policy regarding the prohibition of play by anyone under
the age of 18.
• Retailers are required annually to sign a form acknowledging
they have been informed of the KLC’s “Play Responsibly”
program, that materials with the 1-800-GAMBLER hotline
number are permanently located in their store, and that they are
aware of the KLC’s policy regarding the prohibition of play by
anyone under the age of 18.
YEAR-LONG RESPONSIBLE PLAY
BILLBOARD CAMPAIGN LAUNCHED
The Kentucky Lottery launched the first full-year “Play
Responsibly” billboard campaign in its history in FY15.
Billboards all across the Commonwealth shared the message
along with the 1-800-GAMBLER phone number. In total, more
than 150 billboards landed more than 36 million impressions.
The campaign is slated to be continued in FY16.
2015 KENTUCKY LOTTERY ANNUAL REPORT | 21
Over the course of the fiscal year the KLC received numerous requests from charitable organizations throughout the state
in need of support. More than 60 entities were supported through items such as scratch-off tickets to be given away as door
prizes or prize packages made up of lottery-related items to be raffled off at silent auctions. Feedback from organizations
has always been very positive, with many of them saying the lottery donation is one of the most popular items of their event.
KLC Recognized
21st Straight Year
for Financial Excellence
For two straight decades, the KLC has achieved the highest form
of recognition in the area of governmental accounting and financial
reporting. For FY 14, the KLC once again earned the Certificate of
Achievement for Excellence in Financial Reporting from the Government
Finance Officers Association of the United States and Canada. The
award recognizes organizations that demonstrate a spirit of full
disclosure and clearly communicate their financial story. The KLC was
the second lottery in North America to receive this award, and only one
other U.S. lottery has received this designation more often than the KLC.
KLC
K
Cares For The Community
entucky Lottery employees pride themselves on
caring for their community and helping those
in need. In FY15, employees have continued
to reach out to others by supporting various
charitable and community-based organizations.
Over the course of the year, employees personally
raised funds for local schools, Big Brothers Big Sisters,
Ronald McDonald House and March of Dimes, just
to name a few. This year the KLC’s March of Dimes
Walk team was recognized for being ranked 7th for a
corporate team raising approximately $4,900. The KLC
is in a position where it cannot directly give to charitable
causes, however employees have embraced corporate
fundraising campaigns for the Metro United Way and
Fund for the Arts. In FY15, KLC employees raised more
than $60,000 for these two nonprofit organizations alone.
larry smith
lung cancer fund
Larry Smith joined the Kentucky Lottery in May
of 1989, just one month after lottery tickets went
on sale. In 2011 he lost a courageous battle
against lung cancer at the age of 62.
Larry’s tremendous service to the KLC
was only surpassed by his service and
dedication to his country. While he didn’t
speak in much detail about his time in the
In addition to financial contributions, the KLC works
with the American Red Cross to host a blood drive on
a quarterly basis. KLC employees donated 99 units of
blood in FY15. According to the American Red Cross,
this could help save the lives of nearly 300 people.
The KLC implemented a program called KLCares in
2006. The program focuses on serving the community
through group volunteerism. Thanks to the generosity of
KLC employees and employees of IGT, they “adopted”
nine families, for a total of 23 children from an area
school, providing them with toys and clothes at Christmas.
Employees also collected clothes, shoes and toiletries for
the KLC neighbors at the Healing Place, along with pet
supplies that were donated to the Humane Society.
Army, he took great pride in his tour of duty
through South Vietnam and Cambodia.
Unfortunately, he came in contact with
Agent Orange used during his time at war,
attributing to his lung cancer.
After Larry’s death, his Kentucky Lottery
co-workers, friends and family wanted to
do something in his honor. They launched
the Larry Smith Lung Cancer fund, with
the goal of providing successful cancer
prevention through early detection,
screenings, and improved prognosis through
more effective treatments. For five years now,
the main fundraiser for the fund has been the
annual “Hammertime” golf scramble.
The Larry Smith Cancer Fund is donating
$50,000 toward a new early detection
mobile screening unit which is a direct
result of funds made from past golf
scrambles. This new mobile screening
unit will take the place of the portable
mammography unit at the University of
Louisville’s James Graham Brown Cancer
Center. The new screening unit will provide
breast cancer testing and screenings for
six additional forms of cancers.
Financial Statements
Kentucky Lottery Corporation
STATEMENTS OF NET POSITION
June 30, 2015 and 2014
(dollars in thousands)
$3,775 2,376 6,538 35,177 67 711 48,644 2014
$10,272
2,758
13,929
29,347
67
703
57,076
15,068 247 6,689 5,126 27,130 75,774 LIABILITIES
Current liabilities
Accounts payable, accrued expenses and
compensated absences, current portion Due to the Commonwealth of Kentucky Estimated prize liability, current portion
Total current liabilities
21,013
314
7,098
5,631
34,056
91,132
7,101 3,278
27,820
38,199 5,094
246
35,239
40,579
Noncurrent liabilities
Accrued compensated absences, less current portion 1,020
Estimated prize liability, less current portion
15,697 Total noncurrent liabilities 16,717 Total liabilities
54,916 996
22,778
23,774
64,353
NET POSITION
Net investment in capital assets
Unrestricted
7,098
19,681
Net position
Operating revenues Instant games
Draw games
Less instant tickets provided as prizes
Total operating revenues 6,689 14,169 $20,858
$26,779
2015 2014
$560,494
338,628
(12,192)
886,930
$521,558
337,301
(15,601)
843,258
Direct costs
Prize expense Instant games
Draw games Total prize expense
Commissions to retailers Vendor expense
Ticket costs
Total direct costs
372,186
184,090 556,276 55,857 7,680 7,479 627,292
342,365
181,419
523,784
52,765
7,432
6,661
590,642
Gross profit 259,638
252,616
Operating expenses
Advertising and promotion Salaries, wages and benefits Contracted and professional services Depreciation Other general and administrative Total operating expenses
Operating income
Noncurrent assets
Investments at fair value, less current portion
Prepaid PowerPlay License, less current portion Capital assets, net Deposits with Multi-State Lottery Association Total noncurrent assets
Total assets kylottery.com
2015 ASSETS
Current assets
Cash and cash equivalents, unrestricted Cash and cash equivalents, restricted Investments at fair value, current portion
Accounts receivable, net
Prepaid PowerPlay License, current portion
Other
Total current assets
Kentucky Lottery Corporation
STATEMENTS OF REVENUES, EXPENSES
AND CHANGES IN NET POSITION
For the years ended June 30, 2015 and 2014
(dollars in thousands)
9,291 13,952 1,966 1,326 2,251
28,786 8,948
13,178
2,046
1,221
1,926
27,319
230,852 225,297
(236,101)
716 (1,572) 184 (236,773)
(226,127)
801
(2,284)
210
(227,400) Change in net position (5,921)
(2,103)
Net position at beginning of year
26,779
28,882
Net position at end of year $20,858 $26,779
Non-operating income (expense)
Payments to the Commonwealth of Kentucky
Investment income Interest expense
Other income Total non-operating expense
The Corporation has adopted GASB Statement 31, which requires investments
to be presented at fair value, resulting in a decrease of income of approximately
$921 in 2015 and a decrease in income of $1,571 in 2014, when compared to the
historical cost method.
The above financial information was derived from the annual audited financial
statements. The financial audit for the year ended June 30, 2015 was performed
by Crowe Horwath, LLP. A copy of the complete annual report can be downloaded
at www.kylottery.com or obtained by writing: Kentucky Lottery Corporation, PR
Dept., 1011 W. Main Street, Louisville, KY 40202 or by calling (502)560-1677.
2015 KENTUCKY LOTTERY ANNUAL REPORT | 23
KLC Executive Staff
Vice Presidents:
Arthur “Arch” L. Gleason, Jr.,
President & CEO
Church Saufley,
Human Resources
Margaret “Marty” Gibbs,
Executive Vice President & COO
Howard B. Kline,
Executive Vice President & CFO
Chip Polston,
Communication, Public
Relations and Social
Responsibility
Senior Vice Presidents:
Rick Kelley,
Finance and Administration
Steve Casebeer,
Marketing & Sales
Kate Leverette,
Marketing
Gale Vessels,
Internal Audit &
Information Security
TH Morris,
Systems Development
Bill Hickerson,
Security
Mary Harville,
General Counsel &
Corporate Secretary
Gary Ruskowski,
Information Technology
For More Information:
Regional Offices:
Headquarters and
Louisville Regional Office:
1011 West Main Street
Louisville, KY 40202
(502) 560-1500
Bluegrass
Fortune Business Center
961 Beasley Street,
Suite 110
Lexington, KY 40509
(859) 299-0684
Western
114 Madison Square Drive
Madisonville, KY 42431
(270) 825-0205
Brenda Wilkerson,
IT Operations
Pete Ramsey,
Sales
Maggie Garrison,
Corporate Controller
Eastern
5311 KY Route 321
Suite 7
Prestonsburg, KY 41653
(606) 886-9883
KYLOTTERY.COM