Annual Report 2008

Transcription

Annual Report 2008

Annual Report 2008
Benefiting Idaho public schools and buildings.
Idaho Lottery • P.0. Box 6537 • Boise, ID 83707-6537 • (208) 334-2600
Table of Contents
Lottery history 1-2
Lottery operations 3-4
Governor’s message 5-6
Director’s message 7-8
Commissioner’s message 9-10
Where the money goes 11-12
Scratch for schools 13-14
Scratch™ games 15-16
Lotto games 18-20
Scratch ticket design contest 21
Lottery retailers 22
Charitable gaming in Idaho 23
Sales by county 24
Letter from the auditors 25-26
Management’s discussion & analysis 26-32
Financial statements 33-35
Notes to financial statements 36-38
Idaho Lottery • P.0. Box 6537 • Boise, ID 83707-6537 • (208) 334-2600
$34.75 Million!
Lottery History
The innovation behind creating a Lottery for the State of Idaho found its roots in a 1986 ballot initiative. After the
initiative received a 60% approval by the voting electorate, Idaho’s Supreme Court declared the vote unconstitutional
ruling the State Constitution could not be amended by citizen initiative. In January of 1988, the Idaho Legislature
passed a Constitutional Amendment that appeared on the November general election ballot. On November 8, 1988,
Idahoans approved the Idaho Lottery Act allowing for the establishment, by legislative statute, of the Idaho Lottery
Commission and an Idaho Lottery staff.
The Idaho Lottery Act became law on January 1, 1989 and 200 days later, an industry record for starting a new Lottery,
the first ticket was sold to billionaire tycoon J.R. Simplot on July 19, 1989. Since then $1.7 billion in Lottery products have
been sold in Idaho.
During the first year of operations, the Idaho Lottery introduced and sold 11 different Scratch™ games. From startup, it took four years before the Idaho Lottery introduced its 52nd Scratch™ game. The Lottery introduced 53 new
Scratch™ games during Fiscal Year 2008 alone. In 19 years, 765 different Scratch™ games have been introduced to
Idaho Lottery players.
That first year Idaho Lottery retailers earned a total of $3.7 million in commissions. This year, retailers earned a record
$8.2 million in bonuses and commissions. During that first year of operations, the Idaho Lottery had one winner claim
more than $1 million in a single prize when a Boise woman won $2 million on Super Lotto in February of 1990.
In Fiscal Year 2008, the Idaho Lottery added three new millionaires including the largest winner ever on Wild Card,
a one million dollar winner on Powerball, and the first ever winner on the Idaho $1,000,000 Raffle.
After 19 years in business, the Idaho Lottery
more than doubled our first year sales of
$66.2 million. This year’s innovations in
new game introductions, player services,
and operations yielded the most successful
year in the Idaho Lottery’s history with sales
reaching $137 million.
Since 1989, through innovation and the
promotion of responsible gaming, the
Idaho Lottery has continued to fulfill its
mission by returning $402.3 million to
Idaho citizens for the benefit of public
schools and buildings. Whenever
someone plays the Lottery,
it always pays dividends for Idaho
because “every play pays”.
1
wooh
!
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Lottery Operations
The Idaho Lottery is self-funding, self-governing, and comprised of the Idaho Lottery Commission and Idaho Lottery
staff. The five-member commission is appointed by the Governor and its members each serve five-year terms.
The Commission adopts rules for the agency, approves contracts, and monitors all Lottery operations.
Lottery Director Jeffrey R. Anderson serves at the pleasure of the Governor. As the Director, he is responsible for
overseeing day-to-day lottery operations, including security, marketing, sales, media relations, warehousing and
inventory control, information technology, and fiscal management. Currently, the Idaho Lottery employs 47
staff members.
Under Director Anderson’s leadership, the Idaho Lottery has sought out new approaches designed to expand business
opportunities, increase revenue, and to responsibly grow the annual dividend for the people of Idaho. Such innovative
thinking has led the Idaho Lottery to conduct Strategic Planning Initiatives focused on key areas of operations including
ongoing budget examination, identifying new player opportunities, improving customer satisfaction, enhancing our
retailer base, and evaluating disaster services. The Strategic Planning Initiative moved beyond a traditional marketing
plan to include every facet of Idaho Lottery operations resulting in a comprehensive, directed, and targeted business
plan. This initiative tied into Governor Otter’s strategic planning process for the State’s agencies that is focused on
promoting responsible government, enhancing economic opportunity, and empowering Idahoans.
Going Green:
Usually when someone talks about the Idaho Lottery being green, they’re referring to the money a player may have
won or the size of a huge Powerball jackpot. During Fiscal Year 2008, as a responsible government enterprise, the
Idaho Lottery markedly improved its operating efficiencies and put a new twist on “Going Green”. This improvement
came with some added environmental benefits.
In late March, the Idaho Lottery unveiled its new fleet of 10 Honda Elements. The snazzy new vehicles hit the streets
in every corner of Idaho as they are used by the Lottery’s sales representatives for calling on retail locations.
As part of Governor Otter’s statewide initiative to reduce carbon emissions by Idaho’s fleet, the Lottery has replaced
their fleet of older vans with the ultra-low emission, high mileage Elements. Honda Elements are manufactured
in East Liberty, Ohio and improved the Lottery’s vehicle mileage by 20 percent per gallon over the old vans thereby
reducing the Lottery’s operating expenses.
By reducing operating costs, the Lottery frees up more dollars to benefit Idaho public schools and buildings.
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4
C.L “Butch” Otter
Governor of Idaho
Dear Friends,
Once again, I have the distinct honor of congratulating our Idaho Lottery on another outstanding year.
The $34.75 million dividend to the citizens of Idaho for the benefit of public schools and buildings is a
record for the fifth year in a row. Indeed, the Idaho Lottery has returned $402.3 million since July 1989,
beating my most optimistic expectations for encouraging economic opportunity.
The kind of responsible growth and success the Idaho Lottery has experienced is a credit to the great
work that Director Jeff Anderson and Team Lottery have accomplished. They deserve high accolades.
The high level of security and integrity of the Idaho Lottery promotes responsible government.
The Lottery’s tremendous success is due to continuing innovation, a commitment to fiscal responsibility
and responsible play, and the commitment of our retailer network. That success reaches to every corner
of the Gem State. Idaho’s communities and local businesses benefit economically every time someone
plays the Lottery.
Indeed, empowering Idahoans to improve our public schools, to renovate our public facilities and to
care for our historic buildings is the greatest dividend the Lottery could provide.
Congratulations to the Idaho Lottery for continuing to fulfill its mission for the benefit of all Idahoans!
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As Always – Idaho, “Esto Perpetua”
$34.75
Million Dividend!
C.L. “Butch” Otter
Governor of Idaho
(From Left) Governor C.L “Butch” Otter; Lottery Chairman, Roger Jones; Lottery Director, Jeff Anderson.
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Jeffrey R. Anderson
Idaho Lottery Director
The foundation for innovation begins with exploring new ideas. During Fiscal Year 2008, the Idaho Lottery embarked on a
course of self-introspection to determine what we had done well during our first 18 years and to identify opportunities where
we could responsibly improve our performance. The results speak to our success as we delivered a record-breaking year in
total sales, player prizes paid, retailer commissions paid, and most importantly, our annual dividend.
Adherence to preserving the security and integrity of our games has maintained public confidence in the Idaho Lottery.
It is tantamount to our success. Achieving the results we did in 2008 takes hard work, creativity and innovative ideas.
Team Lottery, which includes our retail and vendor partners, does the work and deserves the credit for our success.
As a mature enterprise, innovations are necessary to keep Idaho Lottery games fresh, exciting, and fun. We continually strive
to provide loyal players with new services, and to improve economic opportunities for our statewide retail partners. During
this past year, we introduced two new Lotto-style games to the players of Idaho, Hot Lotto and the Idaho $1,000,000 Raffle.
We were the first lottery jurisdiction in North America to offer regular players a VIP Club where they earn real rewards for their
purchases. Last year, the Idaho Lottery had the highest number of players in our history win more than $10,000, including
three millionaires.
I would like to extend a note of gratitude to our statewide network of nearly 900 retail locations that offer Lottery products in
their stores and places of business. Without their support and dedication, the entertainment we bring to the people of Idaho
and the benefits of empowering Idahoans through the annual dividend would not be possible.
As the past year shows, ideas lead to innovations which ultimately lead to increased revenues for the benefits of all Idaho
citizens. After 19 years in business and more than $402 million in dividend transfers, the Lottery has proven to be a meaningful
partner in the success of public education and the preservation of Idaho’s state buildings and collegiate campuses.
When the Idaho Lottery is successful, everyone benefits because every play pays. I have the good fortune and truly appreciate
the opportunity to serve the people of Idaho and look forward to my role in leading Team Lottery to continued success for all
Idahoans to enjoy.
Management Team
Sincerely,
Jeffrey R. Anderson
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Director, Idaho Lottery
(Clockwise From Left) Mike Helppie, Deputy Director of Sales; Jeff Anderson, Director; Becky Schroeder,
Deputy Director of Administration; Kym Pratt, Deputy Director Of Marketing; Amber French, Deputy Director of Security.
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Roger Jones
Chairman of the Idaho State Lottery Commission
Continuing the many years of outstanding accomplishments, I am proud to have been a part of the Idaho Lottery’s
most successful year ever! Annually, the Idaho Lottery strives to create new and exciting entertainment offerings
which support a strong annual dividend to the citizens of Idaho. Fiscal Year 2008 closed with another recordbreaking dividend, and during a ceremony held at Nampa High School on Monday, July 7, 2008, I had the privilege
of presenting Governor Otter with a $34,750,000 dividend check!
Idaho Lottery dividend revenues are divided equally between the State Department of Education and the State
Department of Administration, Permanent Building Fund. The monies are used by the State’s 115 public school
districts and 29 charter schools for maintenance and operations projects such as enhancing and rebuilding
playgrounds, making health and safety modifications to school facilities, and upgrading technology resources in
classrooms. This year, the State’s Permanent Building Fund will utilize Lottery dividends on 87 alteration and repair
projects to a variety of State buildings and help to complete four major capital facilities projects. Of these 91 projects,
45 will occur on college campuses or in historical facilities in and around our state.
Providing high quality facilities helps to improve educational environments on all levels and contributes to the overall
maintenance and upkeep of the State’s permanent buildings which are vital assets for building a better Idaho.
The Idaho Lottery proudly supports these important initiatives on behalf of the people of Idaho. The Idaho State
Lottery Commission commends Director Jeff Anderson and Team Lottery for their forward-thinking progress which
led to this fiscal year’s success. Their continued commitment to provide creative entertainment ensures greater
success and ongoing financial resources for the future of Idaho’s schools
and buildings.
Sincerely,
Lottery Commission
Roger Jones
Chairman, Idaho State Lottery Commission
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(Clockwise From Left) Mel Fisher; Lottery Chairman, Roger Jones; David Keyes; Scott McLeod; Lydia Justice-Edwards.
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Where The Money Goes
The economic activity created by the entertainment choices citizens make when playing the Idaho Lottery is returned to local
communities through retailer commissions and bonuses, player prizes, and the annual dividend to school districts. For the
fifth consecutive year, Idaho public schools and buildings benefitted with a record $34.75 million dividend. With this year’s
check, the Idaho Lottery has returned $402.3 million to public schools and buildings in its 19 year history.
In Fiscal Year 2008, players received the highest percentage of payout from Lottery revenue (60%) winning more than
$81 million in prizes. This included a record number of people winning more than $10,000. During the year, the Lottery
had another record with 16 players winning $200,000 or more on Powerball. There were also three jackpot winners on Wild
Card including the largest winner in the game’s history who took home $2.78 million. The Idaho Lottery also had three new
millionaires, one from Powerball, one from Wild Card, and one from the innovative new game the Idaho $1,000,000 Raffle.
The annual dividend to benefit public schools and buildings accounts for 25% of all revenue spent on Idaho Lottery products.
Since the first dividend check of $17,225,000 on July 19, 1990, Idaho Lottery annual dividends have been equally apportioned
between the State Department of Education’s School District Building Account and the State Department of Administration’s
Permanent Building Fund.
The Idaho Lottery boasts a network of approximately 880 retail partners. These Idaho businesses earned a record $8 million
in retailer commissions and bonuses (6%), all of which helps enhance the economic opportunities in Idaho.
Program operations account for approximately 3.7% of the money. This includes the costs associated with providing our Lotto
games such as Powerball, Hot Lotto, Wild Card, and the daily game, Idaho Pick 3. Program operations also covers the cost
associated with printing and distributing PullTabs and the Lottery’s most popular games, instant Scratch™ tickets.
Approximately 3.1% of Lottery funds are used for Lottery administration to support the 47 full-time employees and the Lottery’s
operating costs.
The final 2.2% of Lottery funds, and the smallest amount of revenue, goes for advertising and includes point of sale materials,
promotions, as well as television, print, and radio communications.
This year, both the School District Building Account and the Permanent Building Fund each received a check equal to the entire
1990 dividend check, plus each had an added bonus of $150,000.
Across Idaho, districts are finding innovative ways to meet the challenges of operating modern school facilities while
updating the State’s older institutions. Department of Education dollars are distributed to the State’s 115 school districts and
29 charter schools based on student enrollment and attendance. Lottery dollars are spent in every Idaho community on
school improvement projects like retrofitting fire safety sprinkler systems, replacing broken sewer lines, and installing new
heating and lighting systems in older schools.
Lottery revenue for the Department of Administration’s Permanent Building Fund is 37% of their budget appropriation to
fund two types of projects: alterations and repairs, and capital improvements. In addition to repairing reclaimed water
systems, installing safety elevators, and re-roofing buildings, Idaho’s college campuses will be expanded using
Lottery funds for capital projects like the Boise State University Center for Environmental
Studies and Economic Development and the Idaho State University
Treasure Valley Extension Facilities in Meridian. State facilities
also received upgrades with a new administration building at
Bear Lake State Park, a new pedestrian foot bridge at
Lava Hot Springs, and schematic designs for an Idaho
Law Learning Center at the Idaho Supreme Court.
$17.3 Million!
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(Clockwise From Left) Department of Education, Nick Smith; Governor C.L “Butch” Otter;
Lottery Chairman, Roger Jones; Lottery Director, Jeff Anderson.
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How long is a giraffe’s tongue? If you stacked
cheeseburgers on top of each other, how many
would it take to reach the moon? The answers to
these and 98 other factoids formed the
center-piece of last year’s top instant Scratch™
ticket from the Idaho Lottery, Brainiac.
They came. They scratched. They won a whole lot of cash!
They came from as far away as Salmon. They braved winter roads from Priest River. They filled gymnasiums, ballrooms,
and stadiums on Idaho’s major college campuses. In total, nearly 1,000 people – school administrators, teachers, principals,
cafeteria employees, and parents – from 301 schools competed in one of ten Scratch for Schools venues across Idaho.
After scratching over 111,000 individual tickets, these schools claimed more than $69,000 for their classrooms.
Every participating school sent a team of three players, two “scratchers” and one “team leader”. Each school received 300
“Brainiac” lottery tickets for the mass scratch-off as the schools’ staff scratched furiously for five straight minutes. After the
initial round, top scratching schools advanced to a finals round where they received an additional pack of “Brainiac” tickets
and competed for another five minutes. At the end of each day, one school at each event walked away having scratched
900 tickets!
$1
Factoid:
It would take 5 billion
cheeseburgers to
reach the moon.
Match 3 like
amounts,
win that
amount.
Match 2
like
amounts
and a
“
DOUBLE
”, win that amount.
Bonus:
Get a dollar
amount, win
that amount.
Brainiac was created to appeal to teachers and
educators, while still being entertaining and
BRAIN
fun for core Lottery players. The key element
BONUS
of the game included a special “factoids”
section. Factoid is defined as “an insignificant or
unsubstantiated fact.” Over 100 factoids were carefully selected for their level of entertainment value and length.
The nutty professor in the classroom was illustrated in a fun, charming manner and the chemistry colors were
used to give the ticket that extra spark to make it a top selling game.
Brainiac was 89.6% sold through after only 16 weeks on the market and accounted for a stunning 7.75%
market share of all $1 products launched in Fiscal Year 2008. Based on the game’s success, Brainiac received
international recognition as a finalist for the Best Instant Ticket of the Year by the Lottery industry during the North
American State and Provincial Lottery Association’s annual conference.
Each school keeps all the money they uncover during the fund raising event. The money is then directed towards projects
like safety improvements on playgrounds, books for the school’s libraries, or field trips. One school even purchased atomic
clocks so the school’s bell system would always be on-time.
Highlights of this year’s events included:
• The top winning school was Clearwater Valley Jr./Sr. High in Kooskia who won $1,016 at the Lewis Clark State College Activity Center on February 26, 2008 in Lewiston.
• The most tickets scratched in a single round were 187 by Boundary County Middle School from Bonners Ferry during the Sandpoint Event on February 27, 2008 at the Best Western Hotel.
• The Sandpoint venue was also the luckiest with five schools winning a top prize of $500.
• The most tickets scratched for both competition rounds was 328, a feat completed by Marsh Valley High School from Arimo during the event on February 12, 2008 in Pocatello.
• The Pocatello venue at Idaho State University hosted the largest event ever in the history of Scratch for Schools with 45 competing schools.
In total, 58 schools won more than $300!
Scratch for Schools is one more way the Idaho Lottery furthers its mission of benefiting Idaho public schools and buildings.
Date:
Event Location:
Dollars to Schools:
February 11, 2008
Idaho Falls $7,966
34
February 12, 2008
Idaho State University
$9,250
45
February 13, 2008
College of Southern Idaho
$7,925
36
February 26, 2008
Lewis and Clark State College $8,430
40
February 27, 2008
Sandpoint
$6,529
19
February 28, 2008
Post Falls
$6,197
25
March 10, 2008 Boise State University
$6,919
28
March 11, 2008
Boise State University
$6,867
34
March 12, 2008
College of Idaho
$4,720
22
March 13, 2008 College of Idaho
$5,057
18
Total prizes claimed from events and attendance:
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$69,860
Number of Schools:
301
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Creativity and ingenuity were never more prevalent than in the development of this past year’s Idaho Lottery scratch
ticket lineup. After nearly two decades of selling Scratch™ tickets, the Lottery has turned Scratch™ game development
into a new art form.
When the Idaho Lottery kicked-off operations, they sold their very first instant game, Idaho Match 3. On July 19, 1989 alone,
the Lottery sold more than 840,000 tickets. After 19 years and 765 games later, Scratch™ tickets still continue to provide
the greatest source of revenue for the Idaho Lottery accounting for 62% of the Fiscal Year 2008 total sales.
During that first year in 1989, the Idaho Lottery only introduced 11 new scratch tickets, all $1 games, with top prizes ranging
from $5,000 to $20,000. It would take three years before the Idaho Lottery would debut their first $2 ticket and four years
before the Idaho Lottery introduced its 53rd new scratch game. In Fiscal Year 2008 the Idaho Lottery introduced 10 $2
games. In total, the Lottery introduced 53 games last year in seven different price points ranging from $1 to $15 with top
prizes reaching as high as $250,000.
Scratch™ ticket sales increased for the seventh consecutive year. A continuing trend in recent years show there has been
an increase in the higher-end price points, especially the $10 and $15 games. The $10 ticket sales increased 90% over the
previous year, based largely on the strength of the successful World Poker Tour™ and Wild 10’s. Roughly 51% of the instant
sales were from the $3 and $5 priced tickets. The most popular games for the year included tickets in the Cashword
family of games (Triple Crown Cashword, Blueline Bonus Cashword, Bonus Cashword, Daily Cashword, and Super-Duper
Cashword) and the Bingo/Slingo Family (Idaho Slingo, Bonus Slingo, Ruby Red Slingo, Pot of Gold Bingo).
The Idaho Lottery also featured a strong holiday line up,
featuring five new games including the $2 Merry Money, the
$3 Bingo Bells, the $5 Super Naughty or Nice Cashword, the
$10 12 Days of Winning, and the $15 Xtreme Winter Green.
At the first of the year, the Idaho Lottery introduced the
imaginative American Idol $3 Scratch™ game, tied
directly to the hit television series on Fox network.
American Idol was the first Scratch™ ticket ever from
the Idaho Lottery to feature one of the two top
prizes in a second-chance draw.
In addition to Brainiac (featured in the Scratch for
Schools section) and spring seasonal favorite
Rapid Refund, two of the most successful Scratch™
games this year were the $10 World Poker Tour™
and the $5 Indiana Jones™ and the Kingdom of
the Crystal Skull™.
15
!
wooh
World Poker Tour™
Indiana Jones™
The most exciting card game craze in the United States found its way
into the Idaho Lottery Scratch™ ticket lineup when World Poker Tour™
debuted in March 2008. And players did not have to go “all in” to get
a chance at the $100,000 top prize.
Adventure had a familiar name
in the spring of 2008. The man
with the hat came back. One
of the greatest iconic cinema
figures ever created made a
return to the silver screen on
May 22, 2008, when Indiana
Jones™ and the Kingdom of
the Crystal Skull™ debuted on
movie screens across Idaho.
Idaho Lottery players got to
ride along with the action a
full month before the worldwide
film release from Paramount Pictures
when Indiana Jones™ and the Kingdom
of the Crystal Skull™ – the Scratch™ game from the
Idaho Lottery premiered in Lottery retail locations in late April.
The Texas Hold ‘em style format let players experience all of the exciting action they’d seen on the popular television series. The game
featured hole cards, three flop cards, the turn card and the river card.
Historically the Lottery collected second-chance entries by hand in
draw boxes at the retail locations. The advent of the World Wide Web
created the opportunity to capture second-chance entries via the
Internet through the Lottery’s VIP Club. World Poker Tour™ introduced
Lottery players to a new technological achievement by the Idaho Lottery. In addition to entering non-winning tickets through the web-site
for a chance at the second top prize of $100,000 or winning a set of
World Poker Tour™ chips, all players received the opportunity to enter
their non-winning tickets through the Lottery’s new tele-entry system.
The Idaho Lottery’s second-chance draws incorporated
pioneering technology that allowed anyone with access
to a push button telephone to enter the
World Poker Tour™ promotion.
With nearly 22,000 entries, the
most for any second-chance
promotion in Idaho Lottery
history, 22% were entered
through the tele-entry system.
The flexibility of the tele-entry
system allows the Lottery to conduct
numerous draws simultaneously.
With the advent of one new game,
the second-chance entry system
was modernized for every
future promotion the Idaho
Lottery offers and allows
access to everyone – just like
the old draw boxes in retail
stores, only better!
Just like the blockbuster film starring Harrison Ford, Shia LaBeouf,
Cate Blanchett and Karen Allen, this $5 scratch game had all
the same whip cracking action and swashbuckling excitement.
The game carried a top prize of $50,000 and the ticket facing
featured four different scenes from the actual movie billboards.
In a unique agreement with Lucasfilms LTD, Paramount Pictures
and Fandango®, the Idaho Lottery Scratch™ ticket featured all
of the elements that made the Indiana Jones™ movie series
a success, right down to the iconic fedora hat and snakes.
The most innovative element to Indiana Jones™ and the
Kingdom of the Crystal Skull™ – the Scratch™ game was the second chance entry component. One top prize of $50,000 could be
won instantly while the second top prize was won through a second-chance draw. Players entered non-winning tickets through
the VIP Club web site and the tele-entry phone system. Players
could also win passes to see the movie through a unique partnership between the Idaho Lottery and Fandango®, the nation’s
leading web based movie ticketing destination. In exchange for
forty $25 movie passes that were drawn for monthly, the Idaho
Lottery placed the Fandango® on the back of all 240,000 of the
Indiana Jones™ Scratch™ tickets.
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Lotto Games
When players think about the Lottery, most often they equate it with winning a multi-million dollar jackpot. Perhaps the area
where the most innovations took place during Fiscal Year 2008 was in the development of Lotto-style products.
Although Powerball remains the single largest ticket-selling game for the Idaho Lottery, Wild Card and Idaho Pick 3 continually
have dedicated players. This past year, the Lottery created three new opportunities for players with the intent to create a more
robust Lotto line-up.
On October 1, 2007, the Idaho Lottery introduced Hot Lotto. At the same time, the Lottery introduced “The Works”, a
promotional feature that allowed players to sample every Lotto-style game. Six weeks later, the Lottery also introduced one of
the most popular games of the year, the Idaho $1,000,000 Raffle.
Hot Lotto and the Idaho $1,000,000 Raffle were introduced to give players an opportunity to play for different jackpot amounts.
While Powerball jackpots begin at $15 million, Wild Card jackpots at $100,000, and the most a player can win on Idaho Pick 3
is capped at $2,500, Hot Lotto presents players with the opportunity to play for a guaranteed $1 million, the beginning jackpot
level. The Idaho $1,000,000 Raffle guaranteed a $1 million prize to the winner and the tickets were sold only in the Gem State.
Increasing the number of Lotto choices for players netted significant results for
the Lottery, with an overall gain of 10.83% in Lotto sales over the previous year.
When the Lottery began in 1989, it did so without the benefit of
a lotto-style game. At the time, the Lottery determined it
could not provide players with their own, in-state million dollar
game and sought to join a multi-state game to fill that need.
On February 1, 1990, the Idaho Lottery offered its first
lotto-style ticket, Idaho Super Lotto/Lotto*America. In the first
five minutes of sales, 1,000 tickets were sold. The first hour
saw the Lottery collect $4,301. The first jackpot was $2,000,000.
Hello, my name is “BALL”! The unofficial mascot
of the Idaho Lottery is “Ball”, a large, life-sized symbol of the
red Powerball. “Ball” boasts a circumference of 132 inches
and made his debut in television commercials in 2006.
The Powerball commercials featuring “Ball” won critical acclaim
from the Northwest Addy Awards and depicted “Ball” being so
huge, he could not fit into revolving doors, elevators, or up
escalators. This past year, “Ball” made appearances at special
events and community venues such as collegiate and professional
football, basketball, baseball and hockey games.
17
No other game in the Idaho Lottery cadre brings players
into retail locations like Powerball. The idea of winning a
multi-million dollar jackpot for $1 per play equated 29%
of the Lottery’s total sales in Fiscal Year 2008.
Played in 31 Lottery jurisdictions in the United States in
Fiscal Year 2008, Powerball allows players to choose 5
five numbers from 1 to 55 and one Powerball from 1 to
42. Powerball sales are jackpot driven and when the
jackpot grows, so does the excitement for the game.
During the year, the jackpot grew to $314 million in
August 2007 and reached $275 million in March 2008.
Thirteen jackpots were won during the year and the
average announced jackpot was $68.7 million.
When the jackpot reached its highest point of $314
million on August 25, 2007, Powerball tickets sold at an
average rate of $1,000 per minute, $60,511 per hour, and
recorded over $847,000 for the day.
In Idaho, winners had greatest success with Powerball
and the PowerPlay feature. PowerPlay is an additional
$1 per play at the time of purchase. All non-jackpot
prize amounts are multiplied by the PowerPlay number
that is chosen during the draw for that night. In total, 16
players won $200,000 or more by matching all five of the
“white balls”. Three players used the PowerPlay feature
to multiply their winnings, making them some of the
biggest winners in the Idaho Lottery’s history. Two of the
16 “Match 5” winners won $600,000 and one player
claimed a $1,000,000 prize using the PowerPlay feature.
The first big innovation for Lotto-style games arrived on
October 1, 2008 when the Idaho Lottery kicked-off sales for
Hot Lotto. Hot Lotto is played in similar fashion to Powerball
and Wild Card. Players select five numbers from 1 to 39
(white balls) and one “Hot Ball” number (an orange ball) from
1 to 19. The drawings are held twice a week on Wednesday
and Saturday nights, just like Powerball and Wild Card.
Tickets cost $1 per play. Players can purchase a multi-draw
ticket for up to 10 draws at a time. A mid-sized jackpot game,
Hot Lotto filled a need in the Lottery’s lineup by offering a top
cash prize between the $1 million to $20 million range.
Following the success Wild Card enjoyed in Fiscal Year 2007
with its record jackpot of $2.78 million, the Lottery capitalized
on the opportunity to provide players with an appealing
game that continued to offer jackpots in the millions. In
addition, the Lottery recognized that the historic jackpot
run on Wild Card the year prior might never be duplicated.
To capture the excitement from the previous year, the
Idaho Lottery gained approval from the Multi-State Lottery
Association (MUSL) to offer Hot Lotto. In its first official month
of Idaho sales, Hot Lotto sold over 360,000 tickets.
Hot Lotto is a multi-state game and played in 12 other
jurisdictions across the United States. To win the jackpot,
players must match all five numbers and the Hot Ball. The
overall odds of winning any prize are 1 in 16. The jackpot
prize can be paid out either as a 25-payment annuity, or as a
single lump sum in cash. The first jackpot available was $3.8
million. During the year, the average announced jackpot for
Hot Lotto was $3.06 million.
In 2008, Hot Lotto sales were successful bringing in $2.76
million in sales and accounting for 2.02% of total sales.
When combined with Wild Card sales, the two games
equaled 9.4 % more than Wild Card had done during its
historic run the year before.
18
Responding directly to player’s requests for a large jackpot, Idaho only game, the Lottery introduced the Idaho $1,000,000
Raffle on November 11, 2007. The top prize was $1,000,000 cash and was won by a WWII/Korean War Marine Veteran
who purchased his ticket in the 11th minute, of the 11th day, of the 11th month of the year, coincidentally the national
Veterans Day holiday.
The Idaho $1,000,000 Raffle offered players the best odds ever of winning the million dollar top prize in Idaho.
The Lottery issued only 250,000 tickets at $10 each. The game came with a 52% payout and 805 total prizes.
In addition to the top prize, there were four $25,000 prizes, three-hundred $500 prizes, and five-hundred $100 prizes.
The only Lotto-style game in Idaho without a rolling
jackpot or a guaranteed top prize, Idaho Pick 3 enjoyed
another successful year bringing into the Idaho Lottery
an additional $1.84 million - it’s most successful year
since its introduction in 2000. Prizes for Idaho Pick 3 are
pre-determined based on wager type and the amount of
the wager. Players choose numbers from 0 to 9 and then
select one of five wager types: exact order, any order,
exact/any order, front pair, and back pair.
The consistent and faithful player base for Idaho Pick 3
benefited this year when the Lottery expanded operations
on December 2, 2007 for this daily game to include a
draw each day of the week. This change brought Pick 3
an additional 6.29% of revenue, about $115,000,
for the year.
Created as a promotional button for retailers, this unique
offering appealed to players who wanted one of each Lotto
product carried by the Idaho Lottery. The debut of The Works
coincided with the launch of Hot Lotto, October 1, 2007 and was
used to encourage players to sample all Lotto-style games.
For five dollars, players receive one Powerball with PowerPlay
($2), one Wild Card ($1), one Hot Lotto ($1), and one Idaho Pick 3
($1). If customers wanted to play the Lottery, but were uncertain
which products to purchase, retail clerks were able to suggest
The Works. For players who routinely purchased one of each
game, they were able to simply ask retail clerks for “The Works”.
The ingenuity behind bundling all the Lotto games into a single
purchase buoyed ticket sales, especially for Idaho Pick 3.
The game produced a new iconic advertising image called “Raffle Lady” along with the signature orange raffle ticket, both of
which became instant hits. With an enthusiastic pre-sale message, players lined-up at local retail stores to purchase their
tickets starting the wee hour of 12:01 AM on November 11, 2007. In total, the Idaho Lottery sold 35,891 tickets for $358,910 on
the first day of sales. Allowing a 50-day selling window, the Lottery exceeded expectations with a game sellout in just
36 days!
On December 31, 2007 at 10:00 AM, thousands of Idaho players watched
the Idaho Lottery announce the winning numbers during a live, internet
video-stream press conference at a financial institution in downtown Boise.
The Idaho $1,000,000 Raffle brought in $2.5 million, an amount equal
to all of FY 2007 Hot Lotto’s sales but doing so in 1/8th the amount
of time, thereby making it second only to Powerball for the
most successful Lotto-style game of the year.
$1,000,000 Winner!
19
Bob Chester of Boise, was the big winner of the first Idaho Lottery $1,000,000 Raffle.
Wild Card sales accounted for 3.06% of total sales.
The Wild Card jackpot was captured in Idaho on three
different occasions during the year. The largest jackpot
during Fiscal Year 2008 was $552,000. Without the
record jackpot of Fiscal Year 2007, Wild Card returned to
sales levels similar to previous years. When compared to
FY 2006 sales, Wild Card sales in FY 2008 actually
increased by 28%.
In Wild Card, players match five numbers from 1 to 31 and
one face card (ace, king, queen, jack) and that card’s suit
(diamond, heart, spade, club) from a regular playing card
deck to win the jackpot. For $1, players receive two plays
in this game. Jackpots begin at $100,000 and increase
incrementally based on sales. Wild Card is played in four
states: Idaho, Montana, North Dakota and South Dakota.
PullTabs can be found in many popular social arenas like
pubs, bingo halls, eateries, and bowling centers. Games
cost between $0.25 and $1 and players have a chance
to win up to $500 instantly. Players pull perforated tabs
and match 3 symbols to a pre-determined set of prizes
identified on the ticket. All prizes must be claimed at the
same retail location where the game was purchased on
the day it was bought. Top prizes range from $45 to $500.
PullTabs sales reached $1.695 million, an increase of 36%
over the previous fiscal year.
20
Lottery Retailers
Like a rock concert for tomorrow’s jukebox hero, last year’s Idaho Lottery Collegiate Scratch Ticket Design Contest winner
Trevor Nesbitt from Lewis-Clark State College definitely had stars in his eyes. Nesbitt, a Graphic Arts and Printing Technology
student at LCSC, was the state’s top winner with his legends of rock-n-roll inspired design of “Amped on Cash”: the scratch
ticket that jams.
Winning the top prize of a $1,000 scholarship, Nesbitt’s custom illustration of a guitar player hooked up to an amplifier
was hand drawn and is a design he created with “emotion and energy.”
The Collegiate Scratch Ticket Design Content is another way the Idaho Lottery furthers their mission of benefiting public
schools. It remains an opportunity for collegiate graphic design students to utilize their education skills in real-life work
scenarios while adding to their creative portfolio. Each winning ticket is added to the Lottery’s game line-up and once
printed, features the designer’s name and the college they attend.
In addition to Nesbitt, another top northern Idaho winner was Katie Anderson from the University of Idaho who received a
$500 second prize scholarship for her design “Fishin’ for Fortune”. Anderson chose her creative concept because she felt
people would relate to the popular outdoor Idaho sport of fishing.
The third place winning ticket was designed by Idaho State University Mass Communications junior Kitty Weber. For her
creative efforts, Weber received a $250 scholarship, she shared with Lottery officials that her inspiration came from a dark
and windy night in Pocatello when she had the idea for “Coin Caper”. Inspired by the pages of classic Marvel Comic books,
“Coin Caper” draws the player into a storyline to find a museum’s priceless coin collection that has been stolen and hidden
somewhere in the city.
In addition, Lucky Lighthouse designed by University of Idaho
student Dan Stephens was chosen to be printed as part of the
Idaho Lottery’s 2009 game lineup.
Committed to taking a lead in generating additional foot traffic to retail locations, the Idaho Lottery took the initiative
to create a bi-annual series of Retailer Advisory Board meetings. Regional meetings were hosted in Boise, Twin Falls,
Pocatello, and Coeur d’Alene. The primary goals for these newly formed groups was to create an atmosphere of
open dialogue and collaboration to produce more sales, increase profits, find new innovative ways to drive players to
retailer locations, and improve overall customer service.
An important topic of discussion during the spring Retailer Advisory Board meeting centered on the retailer bonus
commission program.
By law, the Lottery pays a 5% selling commission for Lottery products. The Director is authorized to pay up to an
additional 1% of sales for bonuses to retailers – or a total of 6%. The current practice allows for bonuses on both
cashing low-tier winning tickets and for selling high-tier winners. This program has paid out 5.9% or higher to retailers
for many years. During Fiscal Year 2008, the Lottery had an extraordinary number of “Match 5” Powerball/PowerPlay
winners (16), plus three Wild Card jackpot winners, and the Idaho $1,000,000 Raffle winner. By March 31, 2008,
the Lottery had paid out 6.27 percent. of their total sales in commissions. Idaho’s “luck” placed the Lottery outside
compliance with the cap provided by State law.
In order to comply with statute, on April 10, 2008, Director Anderson
suspended the cashing and selling bonus program. He did not
suspend the 5% commission each retailer earns for selling
Lottery products.
After careful review and evaluation, Director Anderson reinstated
the program and at the end of the Fiscal Year returned 6% of net
revenue, the statutory limit, to the retailers. With the payments on
June 30, 2008, the Idaho Lottery eclipsed the $100 million mark in
commissions paid to its retail partners.
This year’s contest saw 49 students submit a total of 61
entries from Idaho State University, the University of Idaho,
Lewis-Clark State College, College of Southern Idaho
and North Idaho College. The entries were scored
by a select panel of graphics and scratch ticket
experts who judged the submissions on design,
play style, marketability, and creativity.
First Place $1,000!
21
The success of the Idaho Lottery in Fiscal Year 2008 carried over into record economic benefits for our statewide
network of 880 retailers. More than $8 million was paid in retailer commissions. Without their support and
dedication, the entertainment brought to the players and revenues for the annual dividend would not be possible.
Since 1989, Idaho Lottery retailers registered more than $1.72 billion in lottery sales, including last year’s record
$137 million.
The Idaho Lottery’s very first retailer was Jiffy Stop in Burley.
The first year, the Lottery had over 1,000 retailers and only 9 Sales
Representatives to handle their questions. Today, Lottery retailers
total close to 900 with 13 Sales Representatives. The amount of
commission earned by retailers for Fiscal Year 1990 was $3.3
million, compared to the more than double amount of $8.1 million
paid nineteen years later.
Trevor Nesbitt won a $1,000 first place prize for his Scratch™ ticket design of Amped on Cash!
22
Charitable Gaming In Idaho
Many Idahoans enjoy attending their community or church bingo games or participating in their church, school, or favorite
charity raffle. As these activities in the Gem State continue to grow, the Idaho Lottery provides the necessary oversight of charitable bingo games and raffles. The Idaho Lottery is charged with protecting the public from fraudulently conducted operations
and assuring that charitable groups and institutions realize the profits from these games. When a non-profit
organization or a charity wishes to conduct a bingo game or a raffle in Idaho, they are required to obtain a license from the
state through the Lottery. Licenses for bingo and raffle operations are necessary when the gross revenue (bingo) or value of
prize (raffle) exceeds statutory benchmarks. We also license the vendors who provide charitable gaming equipment.
There are over 200 active charitable gaming licenses in Idaho. Forty-six of these conduct bingo operations with the balance of
them holding raffles. Thirty of the forty-four counties in Idaho have licensed charitable bingo or raffle organizations. Between
2006 and 2007, the number of licensed bingo-raffle organizations grew by 27 percent.
As directed by state law, a minimum of 20% of an organization’s gross bingo revenue and 90% of an organization’s net raffle
proceeds must be used for charitable purposes. In the past year, charitable bingo gross revenues were nearly $4.7 million
with $1.2 million returned to charities. Licensed charitable raffles generated over $3.1 million in gross revenue with $2 million
returned to charities.
These funds, raised by licensed organizations conducting bingo and raffles, benefit people and communities throughout
Idaho. Some examples of charitable uses of bingo/raffle proceeds include conservation research on the Island Park Dam,
funding a food bank in Payette, offering self-esteem courses for young women in the Treasure Valley, and providing leadership
skills in agribusiness statewide.
The Bingo-Raffle Advisory Board reviews the
operation and regulation of bingo and raffle events
in Idaho. They provide recommendations to the Idaho
State Lottery Commission on matters related to the
overall operations of bingo and raffle events including
the issuance of bingo/raffle licenses, collections of fees,
and operator record keeping. The Board is comprised
of six members representing six regions of Idaho.
Each member serves a three-year term. Board
members are appointed by the Governor and
confirmed by the Idaho Senate. Board members
are also available to the communities they serve to
provide information and guidance to organizations
related to the conduct of bingo and raffles. To find more
information on charitable bingo and raffles in Idaho,
visit http://idaholottery.com/rafflebingofaqs.asp.
23
Sales by County
CHANGE IN SALES
COUNTY
COUNTIES WITH MORE THAN A 10%
INCREASE OVER LAST YEAR’S SALES
Ada
Adams
Bannock
Bear Lake
Benewah
Bingham
Blaine
Boise
Bonner
Bonneville
Boundary
Butte
Camas
Canyon
Caribou
Cassia
Clark
Clearwater
Custer
Elmore
Franklin
Fremont
Gem
Gooding
Idaho
Jefferson
Jerome
Kootenai
Latah
Lemhi
Lincoln
Madison
Minidoka
Nez Perce
Onieda
Owyhee
Payette
Power
Shoshone
Teton
Twin Falls
Valley
Washington
FY07 TO FY08
8.64%
-4.13%
4.30%
-0.33%
-4.90%
-0.32%
12.31%
-7.08%
2.11%
0.27%
-3.70%
8.93%
2.36%
6.63%
8.34%
6.76%
25.89%
22.87%
30.65%
7.40%
21.59%
-4.43%
8.75%
-3.65%
4.95%
1.02%
-4.90%
-0.29%
2.39%
6.18%
-1.14%
2.86%
8.75%
-1.64%
9.78%
2.61%
2.34%
-3.94%
0.06%
15.96%
1.56%
2.37%
0.69%
24
To the Idaho Lottery Commission Idaho Lottery Boise, Idaho
We have audited the accompanying financial statements of Idaho Lottery (the “Lottery”), an agency of the State of Idaho,
as of and for the year ended June 30, 2008 and 2007, as listed in the table of contents. These financial statements are the
responsibility of Lottery’s management. Our responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the
standards applicable to financial audits contained in Governmental Auditing Standards, issued by the Comptroller General of
the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the
Lottery, as of June 30, 2008 and 2007, and the changes in financial position and cash flows for the years then ended in
conformity with accounting principles generally accepted in the United States of America.
As described in Note 9, the Lottery adopted Government Auditing Standards No. 45, “Accounting and Financial Reporting by
Employers for Post employment Benefits Other Than Pensions”. This standard establishes standards for the measurement,
recognition, and display of other post employment benefits and the related reporting of expense and related liabilities, note
disclosures, and, required supplementary information.
In accordance with Government Auditing Standards, we have also issued our report dated September 16, 2008 on our
consideration of the Lottery’s internal control over financial reporting and our tests of its compliance with certain provisions
of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope
of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an
opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed
in accordance with Government Auditing Standards and should be considered in assessing the results of our audit.
The Management’s Discussion and Analysis and other required supplementary information listed in the table of contents are
not a required part of the basic financial statements but are supplementary information required by the accounting principles
generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally
of inquiries of management regarding the methods of measurement and presentation of the required supplementary
information. However, we did not audit the information and express no opinion on it.
Boise, Idaho September 16, 2008
25
Management’s Discussion and Analysis
The following Management Discussion and Analysis (MD&A) allows Idaho Lottery management to provide users of the
financial statements with an analysis of the agency’s financial activities based upon currently known facts, decisions and
conditions. Please read it in conjunction with the Idaho Lottery Financial Statements that follow this section.
A key focus of the MD&A is the discussion of the current-year results in comparison with the prior year. While the
accompanying financial statements present the financial position of the Idaho Lottery as of June 30, 2008 and 2007, and
financial activity for the years then ended, the MD&A also includes this information for the year ended June 30, 2006, in order
to allow a comparison with the year ended June 30, 2007.
OVERVIEW OF THE ACCOMPANYING FINANCIAL STATEMENTS
These required statements offer short and long-term financial information about the Idaho Lottery.
•
The Statements of Net Assets provides information about the nature and amounts of investments in resources (assets) and obligations (liabilities) at the close of fiscal year 2008 and 2007.
•
The Statements of Revenues, Expenses and Changes in Fund Net Assets, measures the success of the Lottery’s operations for fiscal year 2008 and 2007 and the resulting increase or decrease in net assets.
•
The Statements of Cash Flows. The primary purpose of this statement is to provide information about the Lottery’s cash receipts and cash payments during the fiscal year 2008 and 2007. The statement reports cash receipts, cash payments and net changes in cash resulting from operations, investing and financial activities and provides answers to such questions as where cash originated from and where it went during the fiscal years.
The Idaho Lottery is structured as a single enterprise fund with revenues recognized when earned, not when received.
Expenses are recognized when incurred, not when paid. Capital assets are capitalized and depreciated over their useful
lives. The notes to the financial statement contain, among other information, a description of the Idaho Lottery’s significant
accounting policies. The accompanying notes are an integral part of the financial statements.
The reader should refer to the financial statement and the accompanying notes for information on the individual components
of the Statements of Net Asset. The following analysis is intended to highlight selective changes between 2008 and 2007 and
2007 and 2006.
Change
2006 to 2007
$ 1,239,875 310,381 (2,625,881)
(140,361) (1,215,986) $ 34,425,747 765,134 -
934,312 36,125,193 $ (1,041,791)
378,570
2,782,616
(55,600)
2,063,795 2,559,628 710,555 $ 40,243,185 2,555,013 365,471 $ 41,109,472
4,615 345,084 $ (866,287)
2,328,422 406,081 $ 38,859,696 226,591
(40,610)
$ 2,249,776 $ 1,093,694
34,750,000
279,591
3,404,783
47,229
39,575,297
$
$
$
$
$ 34,623,831
1,454,085
156,735
738,351
36,973,002
Reserves with MUSL Plant and equipment, Net LIABILITIES AND NET ASSETS
CURRENT LIABILITIES
Accounts payable and
accrued expenses Dividend payable Due to MUSL Prizes payable Current portion of capital leases Total current liabilities OTHER POST
EMPLOYMENT
BENEFITS LONG-TERM CAPITAL LEASES TOTAL LIABILITIES NET ASSETS
Invested in capital assets Unrestricted Total net assets Change 2007 to 2008
2006 ASSETS CURRENT ASSETS
Cash and cash equivalents Receivables Due From MUSL Prepaids Total current assets 2008 62,144 130,732 39,768,173 532,594
(57,438)
475,156
$ 40,243,329
2007
$ 33,383,956
1,143,704
2,782,616
878,712
38,188,988
1,157,422 34,000,000 584,383 5,741,329 -
41,483,134 -
-
41,483,134 365,471
(739,133)
(373,662)
$ 41,109,472
(63,728) 750,000 (304,792) (2,336,546) 47,229 (1,907,837) 62,144 130,732
(1,714,961) $
167,123 681,695 848,818 (866,143)
981,753 33,000,000 308,930 2,447,201 -
36,737,884 -
-
36,737,884 406,081
1,715,731
2,121,812
$ 38,859,696
175,669
1,000,000
275,453 3,294,128
4,745,250
4,745,250
(40,610)
(2,454,864)
(2,495,474)
$ 2,249,776
Cash and cash equivalents
The increase in cash and cash equivalents between 2007 and 2008 is due primarily to the increase in net income. Accordingly, the
decrease between 2006 and 2007 is primarily attributable to the decrease in net income.
26
27
The increase in cash and cash equivalents between 2007 and 2008 is due primarily to the increase in net income. Accordingly,
the decrease between 2006 and 2007 is primarily attributable to the decrease in net income.
Prizes Payable
The $2,336,546 decrease in prizes payable between 2007 and 2008 and the $3,294,128 increase in prizes payable between 2006
and 2007 are primarily due to a Wild Card jackpot prize of $2,782,616 which was won on June 30, 2007, but not claimed until August
6, 2007. When excluding this prize, the prizes payable increased by $446,070 between 2007 and 2008 and increased by $511,512
between 2006 and 2007.
Receivables
The Lottery’s billing week is from Sunday through Saturday. The amount due from retailer transactions (i.e., sales, less
commissions and prizes paid by the retailer) are transferred from the retailer’s bank account to the Lottery’s account the
following Thursday. Similarly, any amounts due to the retailer from the Lottery are transferred to the retailer’s account on
Thursday. The Lottery refers to this transfer as a “sweep”, and this mandatory process between the Lottery and its retailer
customers simplifies collections.
The receivables balances for 2008, 2007 and 2006 consist of the following:
2008 Week ended June 30 sales $ 1,454,085 Accounts to Attorney General for collection -
Total $ 1,454,085
2007
$ 1,139,523 4,181 $ 1,143,704
2006
$ 763,597
1,537
$ 765,134
Due from MUSL primarily decreased from 2007 because Idaho had a Wild Card winner of approximately $2.7 million before year
end 2007, which hadn’t been paid to the state as of June 30, 2007.
Prepaids
Prepaids consist primarily of a prepaid contract with Intralot to provide Sales Force Automation and prepaid costs on instant
tickets. Under the contractual agreement with its scratch ticket supplier, Scientific Games International (SGI), the Lottery pays
set-up and certain other fixed costs for each game printed. SGI, however, retains ownership of the tickets and the Lottery pays
SGI a percentage (between 1.5479% and 1.7699%) of scratch ticket sales. Other fixed costs are amortized over the sales life of the
game. PullTab tickets are paid for when received from the manufacturer, and expensed when the tickets are sold. Consequently,
the prepaid balances in relation to scratch tickets on June 30, 2008, 2007, and 2006, consist of any unamortized fixed costs of
scratch tickets and the cost of unsold PullTab ticket stock.
Plant Property and Equipment, net
The balances shown were derived as follows:
2008
2007 2006
Beginning balance
$ 365,471
$ 406,081
$ 618,027
Add: acquisitions
534,252 172,676
128,267
Deduct: retirements, net of accum. depr.
(22,623)
-
- Deduct: depreciation
(166,545) (213,286)
(340,213)
Ending balance $ 710,555 $ 365,471
$ 406,081
The Lottery was able to purchase several new automobiles in the current year. In support of Governor Otter’s carbon reduction
initiatives, the Idaho Lottery has replaced most of our fleet in the field with more fuel efficient, lower carbon footprint vehicles.
These assets were paid for with surplus cash and a capital lease of $193,506.
Other Post Employment Benefits
In 2008, the State of Idaho implemented the Governmental Accounting Standards Board (GASB) Statement No.45, Accounting and
Financial Reporting by Employers for Post Employment Benefits Other than Pensions. This statement required the State of Idaho to
recognize the liability associated with other benefits provided to retirees. In accordance with GASB No.45, the State is required to
record a portion of the overall liability in the current year ended June 30, 2008. This recorded liability is $62,144 at June 30, 2008. The
remaining liability of $852,790 will be recognized as an expense and a liability over a 30 year period. The State has no plans to fund
this liability and has instead chosen to pay these costs as they are incurred.
Total Net Assets
Net assets represent the difference between the Lottery’s total assets and its total liabilities. Net assets are allocated between the
portion which represents the investment in capital assets (i.e., plant equipment and other fixed assets) and the total. The Lottery
strives to provide the highest dividend to the State based on cash at hand, which can consequently make unrestricted Net Assets
negative. In 2007, there was approximately $33.4 million cash to pay for the declared dividend of $34 million. In 2008, the Lottery
had approximately $34.6 million in cash to pay for the declared dividend $34.75 million, and which consequently resulted in lower
negative unrestricted net assets
Operating Revenues
Comparative operating revenues for the three major product sales classifications; lotto tickets, scratch tickets, raffle and PullTab tickets
and other for revenue are as follows:
Change
Change
2007 to 2006 to
2008 2007
2008
2006
2007
Lotto Sales
Powerball $ 39,471,389 $ 38,348,748 $ 1,122,641 $ 44,760,077 $ (6,411,329
Wild Card 4,191,160 6,371,182 (2,180,022) 3,255,698 3,115,484
Pick 3 1,840,395 1,421,235 419,160 1,212,833 208,402
Hot Lotto 2,760,090 -
2,760,090
-
Raffle 2,500,000 -
2,500,000 -
Less: spoiled tickets -
(56,345) 56,345 (50,844)
5,501
Total Lotto Sales 50,763,034 46,084,820 4,678,214 49,177,764 (3,092,944)
Scratch ticket sales PullTab ticket sales Total sales Online charges Other revenues Total operating revenues 84,386,584 1,695,570 136,845,188 83,202,859 1,243,740 130,531,419
1,183,725 451,830 6,313,769
80,986,917 966,360 131,131,041 2,215,942
277,380
(599,622)
595,370 50,486 $ 137,491,044 506,558 32,993 $ 131,070,970 88,812 17,493 $ 6,420,074 479,488 29,670 $ 131,640,199 27,070
3,323
$ (569,229)
Dividend Payable
28
29
Lotto Ticket Sales
The Powerball game is sold in thirty-one U.S. lottery jurisdictions (twenty-nine states, the District of Columbia and the U.S. Virgin
Islands). These lotteries contribute a fixed percentage of their Powerball sales revenue to a consolidated Jackpot prize. There are two
Powerball drawings a week with a minimum-starting jackpot of $15 million. Each time the jackpot is not won it “rolls” into the next
draw and thus the jackpot grows until it is won.
PullTab ticket sales
PullTab tickets, which are sold mainly in bowling alleys and age controlled establishments, have never represented much more than twopercent of the Lottery’s total annual sales. Faced with competition from illegal gaming machines, annual sales reached their maximum in
1997 ($2 million) and have fallen off gradually ever since. Increased marketing efforts have resulted in a modest increase in sales for 2008.
Powerball sales are jackpot driven; the higher the announced jackpot, the higher the sales. In 2002, Powerball was modified to
change several elements including increasing the odds of winning the jackpot to 1 in 146,107,962. Since then, additional lottery
jurisdictions have also joined the game, thereby increasing the player base. While these two factors have generally tended to make
Powerball sales trend up, it is important to be aware of the relationship of the jackpot and sales as illustrated in the following chart:
Average Announced Average Sales Annual
2008 $
71,146,154 $
379,533 $ 39,471,389
2007 69,694,286 365,226 38,348,748
2006 82,345,192 430,385 44,760,077
2005 49,202,885 289,351 30,092,519
2004 62,099,048 339,498 35,647,385
2003 49,337,500 302,959 31,577,648
Neither Wild Card, nor Pick 3 is as sensitive to jackpots as Powerball. Both games have a consistent player base, although
players will shift their buying habits from both games to Powerball, when the latter games jackpot is unusually large. Record Wild
Card jackpots in 2007 spiked sales for that period and lower jackpots in 2008 are reflected in similarly lower 2008 sales. During fiscal
year 2008, the Lottery added a new multi-state lotto game called Hot Lotto to the mix, in addition to a raffle game which launched
in November 2007 – and ended when all 250,000 tickets sold out. These two lotto games, with higher profit margins than scratch,
increased profits in the lotto category.
Scratch Ticket Sales
The 2008 increase in scratch tickets represents the seventh consecutive year of sales increases. The continuing increase in scratch
ticket sales is in large measure attributable to the Lottery’s efforts to shift sales from the lower price points (one to four dollar tickets) to
higher price point tickets, especially those tickets selling from five to seven dollars. The more expensive games generally offer more
interesting play features than the simple “match three” format of many one and two-dollar games. As a result, players often perceive
the higher priced tickets as having more entertainment value. Scratch ticket sales by price point for the fiscal years 2008, 2007 and
2006 are as follows:
One-dollar games Two-dollar games Three-dollar games Five-dollar games Seven-dollar games Ten-dollar games Fifteen-dollar games Total Sales 2008
$ 10,695,179 12.7%
8,145,796 9.7% 28,438,768 33.7% 14,601,734 17.3% 6,182,442 7.3% 9,946,570 11.8% 6,376,095 7.6% $ 84,386,584 100.0% 2007 $ 11,488,607 13.8% 8,825,982 10.6% 29,893,590 35.9% 14,239,072 17.1% 7,508,788 9.0% 5,232,300 6.3% 6,014,520 7.2% $ 83,202,859 100.0% Increase over prior year $
$
1,183,725 2,215,942 2006
$ 13,376,481 9,730,284 31,190,340 10,777,774 6,281,898 3,993,800 5,636,340 $ 80,986,917 $ 3,240,263
16.5%
12.0%
38.5%
13.3%
7.8%
4.9%
7.0%
100.0%
Interest income on funds held at the state
All idle cash with the State Treasurer is invested in a variety of securities. The Lottery is an involuntary member of this pool. As of FY2007,
estimated interest accrued is reflected in the Lottery’s financial statements. The interest earned is offset by a transfer to the State of Idaho
General Fund. Interest income earned on the funds held at the state by the Lottery for 2008 and 2007 were $588,786 and $833,588.
Operating expenses
2008, 2007 and 2006 operating expenses are as follows:
2008 2007
Prizes, net of unclaimed prizes $ 81,463,579 $ 78,875,202
Retailer commissions 8,188,156 7,660,882
Lotto games contractor’s fees 2,954,092 3,399,743
Scratch ticket costs 2,094,071 2,268,038
PullTab ticket costs 76,186 47,118
Advertising 3,054,673 2,865,196
Salaries and benefits 2,474,926 2,417,323
Telephone and satellite costs 166,545 213,286
Depreciation and amortization 64,656 60,061
Office and equipment rental 148,819 450,183
Professional services 540,228 561,634
Shipping costs 362,491 465,828
Supplies 105,141 117,067
Other costs 371,931 411,922
Total operating expenses $102,065,494 $ 99,813,483
Change
2007 to 2008
$ 2,588,377
527,274
(445,651)
(173,967)
29,068
189,477
57,603
(46,741)
4,595
(301,364)
(21,406)
(103,337)
(11,926)
(39,991)
$ 2,252,011
2006
$ 76,679,037
7,748,091
3,943,964
2,130,016
35,378
2,630,284
2,417,453
340,213
106,562
439,371
506,990
499,849
123,935
483,189
$ 98,084,332
Change
2006 to 2007
$ 2,196,165
(87,209)
(544,221)
138,022
11,740
234,912
(130)
(126,927)
(46,501)
10,812
54,644
(34,021)
(6,868)
(71,267)
$ 1,729,151
Generally, the changes in expenses during the three fiscal years reflect the change in the level of sales as well as a shift in the product
sales mix, i.e., the relative percentage that each product group (Lotto, Scratch™, and PullTab) represents of total sales. Sales levels and
mix for each of the years is represented below:
2008
Mix % Lotto Sales $ 50,763,034
Scratch ticket sales 84,386,584
PullTab ticket sales 1,695,570
Total Sales $ 136,845,188
Increase (decrease)
from prior year $
37.1%
61.7%
1.2%
100.0%
2007 $ 46,084,820 83,202,859 1,243,740
$ 130,531,419 6,313,769 $
2006
Mix % 35.3% 63.7%
1.0%
100.0% (599,622) Mix % $ 49,177,764 80,986,917 966,360 $ 131,131,041 37.5%
61.8% 0.7%
100.0%
$17,633,662
30
31
Statements of Net Assets
Certain cost categories, namely advertising, salaries and benefits, depreciation and amortization, telephone and data line costs,
professional services, office and equipment, supplies and other costs are only minimally affected by sales increases or shifts in the sales
mix. However, the change in sales level or mix impacts prizes, retailer commissions, lotto game commissions, scratch and PullTab ticket
costs, as well as shipping, detailed in the following information which outlines prize expense percentages.
Lotto game contractor fee
The lotto game vendor provides the Lottery with critical hardware and software, network communications, and support personnel. GTECH
Corporation had been the Lottery’s lotto game vendor since it began operations in 1990. In February 2007, as the result of a competitive
bidding process, the Lottery changed lotto vendors to Intralot. Accordingly, the 2005 and 2006 “lotto game contractor fee” amounts reflect
fees paid to GTECH, while the 2007 total reflects thirty-three weeks under the GTECH contract and nineteen weeks under the Intralot contract.
Prizes, net of unclaimed prizes
Each of the three product types, lotto, scratch, and PullTabs have differing average prize expense percentages associated with that
product. The average prize percentage for each category depends upon the prize percentage of the individual games within that product
type. For example, Powerball has a prize percentage of 50% (i.e. 50% of the sales go into the prize fund for Powerball); Pick 3 also has a
50% prize percentage while Wild Card has a prize percentage of 55%. The overall average prize percentage for the suite of lotto products
depends upon the sales mix for the three games. Similarly, most scratch and PullTab games have different prize percentages, although they
average in the range of 67-69%.
Two other prize factors are considered in computing prize expense. The first factor is the prize expense associated with second chance
draws. Second chance draws are held in conjunction with lotto or scratch games, where the drawing entry is normally a non-winning ticket.
The second factor is unclaimed prizes. The value of all prizes not claimed within the statutory 180-day claiming period is off-set against and
thus reduces that year’s total prize expense.
Prize expense, net of unclaimed prizes, consisted of the following for the years 2006-2008:
32
2008 Sales Prize % Lotto ticket sales $ 48,263,034 50.26% Scratch ticket sales 84,386,584 69.11% Raffle sales 2,500,000 52.00% PullTab ticket sales 1,695,570 69.34% Second Chance draws Unclaimed prizes Prizes
$ 24,255,853
58,316,777
1,300,000
1,175,633
41,556
(3,626,240)
$ 81,463,579
2007 Sales Prize % Lotto ticket sales $ 46,084,820 50.75% Scratch ticket sales 83,202,859 69.18% PullTab ticket sales 1,243,740 68.99% Second Chance draws Unclaimed prizes Prizes
$ 23,389,141
57,561,694
858,015
28,476
(2,962,124)
$ 78,875,202
2006 Sales Prize % Lotto ticket sales $ 49,177,764 50.52% Scratch ticket sales 80,986,917 67.74% PullTab ticket sales 966,360 68.28% Second Chance draws Unclaimed prizes Prizes
$ 24,846,318
54,859,493
659,849
117,897
(3,804,520)
$ 76,679,037
Retailer commissions, Scratch and PullTab ticket costs
Changes in these cost categories generally reflect and are related to the corresponding change in sales.
The fee decrease reported between 2006 and 2007 represents the effects of both a decrease in sales and the cost saving effects of the new
contract, and is reflected even more so in 2008 profitability, as 2008 recognized a full year of the new, lower rate.
CURRENT ASSETS
Receivables
Due from MUSL
Prepaids Total current assets 2008
$ 34,623,831
1,454,085
156,735
738,351
36,973,002 2007
$ 33,383,956
14,143,704
2,782,616
878,712
38,188,988
DEPOSITS WITH MUSL
PROPERTY AND EQUIPMENT, NET LIABILITIES AND NET ASSETS
CURRENT LIABILITIES
Accounts payable and accrued expenses 2,559,628 710,555 $ 40,243,185 2,555,013
365,471
$ 41,109,472
$ 1,093,694
$
Dividend payable
Due to MUSL
Prizes payable
Current portion of capital leases Total current liabilities 34,750,000
279,591
3,404,783
47,229
39,575,297 34,000,000
584,383
5,741,329
41,483,134
OTHER POST EMPLOYMENT BENEFITS
LONG-TERM CAPITAL LEASES TOTAL LIABILITIES 62,144
130,732
39,768,173 41,483,134
NET ASSETS
Invested in capital assets
Unrestricted
Total net assets TOTAL LIABILITIES AND NET ASSETS 532,594
(57,582) 475,012 $ 40,243,185 365,471
(739,133)
(373,662)
$ 41,109,472
OPERATING REVENUES
Scratch ticket sales
Lotto ticket sales
PullTab ticket sales
Raffle sales Communication charges
Other
Total operating revenues 84,386,584
48,263,034
1,695,570
2,500,000
595,370
50,486
137,491,044
83,202,859
46,084,820
1,243,740
506,558
32,993
131,070,970
1,157,422
33
Statements of Revenues, Expenses, and Changes in Net Assets
OPERATING EXPENSES
Prizes, net of unclaimed prizes
Retailer commissions Gaming system services Scratch tickets PullTab tickets Advertising Salaries and benefits Depreciation and amortization Telephone and data line costs Professional services Office and equipment Shipping costs Supplies Other Total operating expenses OPERATING INCOME NONOPERATING REVENUES
Interest income
Interest income on funds held at the State
Interest expense
Total non operating revenue 174,313
588,786 (1,189)
761,910 2007
$ 78,875,202
7,660,882
3,499,436
2,268,038
47,118
2,865,196
2,417,323
213,286
60,061
350,490
561,634
465,828
117,067
411,922
99,813,483
31,257,487
247,039
833,588
-
1,080,627
INCOME BEFORE TRANSFERS
TRANSFERS
State Permanent Building Fund
State Public Schools Building Fund
State general fund-interest earnings
Total transfers 36,187,460
(17,375,000)
(17,375,000)
(588,786)
(35,338,786) 32,338,114
(17,000,000)
(17,000,000)
(833,588)
(34,833,588)
CHANGE IN NET ASSETS 848,674 (2,495,474)
TOTAL NET ASSETS, BEGINNING
TOTAL NET ASSETS, ENDING (373,662)
$ 475,012 2,121,812
$ (373,662)
34
2008
$ 81,463,579
8,188,156
2,954,092
2,094,071
76,186
3,054,673
2,474,926
166,454
64,565
148,819
540,228
362,491
105,141
371,931
102,065,494
35,425,550 Statements of Cash Flows
CASH FLOWS FROM OPERATING ACTIVITIES
2008
Ticket sales $ 137,180,663
Prizes paid to winners
(81,479,036)
Commissions and payment to retailers
(8,188,156)
Paid to vendors for goods and services
(7,041,532)
Paid to vendors for promotions
(3,054,673)
Paid to employees for service
(2,424,102)
NET CASH PROVIDED BY OPERATING ACTIVITIES
35,405,034
CASH FLOWS FROM NON CAPITAL FINANCING ACTIVITIES
Transfers to State Permanent Building Fund
(17,000,000)
Transfers to State Public Schools Building Fund
(17,000,000) NET CASH USED BY NON CAPITAL FINANCING ACTIVITIES (34,000,000) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES
Purchase of equipment and software
(340,746)
Proceeds from sale of fixed assets
22,623 Principal paid on capital debt
(15,545) Interest paid on capital debt (1,189)
NET CASH USED BY CAPITAL AND RELATEDFINANCING ACTIVITIES
(334,857) CASH FLOWS FROM INVESTING ACTIVITIES
Interest income
Change in deposit with MUSL
NET CASH PROVIDED BY INVESTING ACTIVITIES NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR CASH AND CASH EQUIVALENTS, END OF YEAR RECONCILIATION OF OPERATING INCOME TO NET
CASH PROVIDED BY OPERATING ACTIVITIES
Operating income
Adjustment to reconcile operating income to net cash
provided by operating activities
Depreciation
Changes in assets and liabilities
Receivables
Due from MUSL Prepaids
Accounts payable and accrued expenses
Other post employment benefits
Due to MUSL Prizes payable
SUPPLEMENTAL DISCLOSURE FOR CASH FLOW INFORMATION
NON CASH INVESTING AND FINANCING TRANSACTIONS
Vehicles purchased by capital lease 2007
$ 130,185,842
(78,088,237)
(7,660,882) (6,629,662)
(2,865,196)
(2,419,558)
32,110,437
(16,500,000)
(16,500,000)
(33,000,000)
(172,676)
(172,676)
174,313
(4,615)
169,698 247,039
(226,591)
20,448
1,239,875 33,383,956 $ 34,623,831 (1,041,791)
34,425,747
$ 33,383,956
$ 35,425,550
$ 31,257,487
166,545
213,286
(310,381)
2,625,881
140,361
(63,728)
62,144 (304,792)
(2,336,546)
$ 35,405,034 (378,570)
(2,782,616)
55,600
175,669
275,453
3,294,128
$ 32,110,437
$
$
193,506 -
35
Notes to the Financial Statements
NOTE 1– SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Authorizing Legislation
The Idaho Lottery (the Lottery), an agency of the State of Idaho (the State), was established in November
1988 with the enactment of Title 67, Chapter 74 of the Idaho Code (the Act). The purpose of the Act is to
establish a lottery to generate revenue for the State. Revenues generated by the Lottery, after allowances
for prizes and expenses, are distributed to the State Permanent Building and Public School Building Funds.
Basis of Presentation
The Lottery is accounted for and reported as a proprietary-type enterprise fund of the State.
Basis of Accounting
The financial statements are prepared on the accrual basis of accounting. In order to conform to the
reporting election made by the State, the Lottery has elected not to apply any Financial Accounting
Standards Board Statements and Interpretations issued after November 30, 1989, which is an option under
Governmental Accounting Standards Board No. 20, “Accounting and Financial Reporting for Proprietary
Funds and Other Governmental Entities That Use Proprietary Fund Accounting.”
Multi-State Lottery Association
State statutes authorize the Lottery to participate in the Multi-State Lottery Association (MUSL). MUSL is a
nonprofit, government benefit association that administers low odds on-line games with other participant
state lotteries. The Lottery contributes to the related prize pools based on weekly on-line ticket sales. MUSL
holds semi-weekly drawings for prize amounts determined by ticket sales.
Revenue Recognition
Lottery tickets are sold to the public by contract retailers. Revenue from the sale of on-line tickets is
recognized when tickets are sold to players. Revenue from the sale of instant tickets is recognized when
retailers “settle” instant ticket packets. “Settling” occurs after the retailer sells the instant tickets to players.
Accounts Receivable
The Lottery provides credit in the normal course of business to its customers and performs ongoing credit
evaluations of those customers. The Lottery sweeps accounts receivables directly from its customers’
accounts weekly, and will place customers’ accounts on hold if there are insufficient funds after two weeks.
As the Lottery identifies bad accounts quickly, the credit losses, when realized, have been within the range
of the Lottery’s expectations and, historically, have not been significant. Consequently, no allowance for
doubtful accounts has been established.
Commissions
Retailers receive a commission of 5% on ticket sales. Additional discretionary commissions of up to 1%
may be awarded to retailers and, as a result, commission expense may be slightly higher than five percent
of revenue. In addition, retailers selling a winning lotto or scratch ticket with a prize amount of $500 or
greater receive a selling bonus of 10% of the prize amount, up to a predetermined limit.
Prizes
In accordance with the Act, at least 45% of Lottery revenues must be returned to players in the form
of prizes.
Scratch Games - Prize expense for instant games is recognized as ticket packs are settled by retailers
based on a predetermined prize structure for each game.
Multi-State Lotto Games:
Idaho Powerball – Idaho, in association with the twenty-seven other U.S. lottery jurisdictions, participates in
Powerball. Prize expense represents 50% of revenues recognized for the game. Prizes are paid out over a
twenty-five year annuity or as a single cash payment. MUSL establishes an irrevocable trust from collected
revenues for each jackpot winner in the event an annuity is desired. The assets and related liabilities are
reflected in the MUSL’s financial statements, so are not shown in the Lottery’s financial statements.
Wild Card – Idaho, in association with Montana, North Dakota and South Dakota, acting as a suborganization of MUSL participates in the Wild Card Lotto. Prize expense represents 55% of revenues
recognized for the game. Jackpot prizes are paid out as single cash payments.
Cash held at the State Investment Pool
The Lottery is an involuntary member of the State Investment Pool. All interest is paid to the General account of
the State of Idaho.
Unclaimed Prizes
Prizes may be claimed for a period of 180 days after the drawing for on-line games or 180 days from the
declaration of the end of game for instant games. Unclaimed prizes are offset against that fiscal year’s
prize expense.
Cash and Equivalents
Cash and equivalents include liquid investments with original maturities of three months or less. The Lottery’s
excess funds are held in the State of Idaho’s investment pool. Funds held in the pool are generally available to
the Lottery within 90 days.
Property and Equipment
Property, equipment and software are stated at cost. Depreciation/amortization is computed using the
straight-line method over the estimated useful life ranging from three to five years. When assets are retired or
otherwise disposed of, the cost and related accumulated depreciation are removed form the accounts and any
resulting gain or loss is reflected in the results of operations in the period of disposal.
Other Assets
Other assets are comprised of prepaid expenses.
Compensated Absences
Employees earn the right to be compensated during absences for vacation and illness. Within limits
established by law, unused vacation benefits are paid to employees upon separation from State service and
are the responsibility of the State entity employing the individual at the time of their separation from State
service. Accumulated unused sick leave is paid upon the employee’s retirement and is the responsibility of the
State. Accumulated benefits for compensated absences are based on the period of service with the State and
are accrued at current salary rates. Accordingly, the Lottery assumes the liability for benefits accumulated for
employees who transfer to the Lottery from other State agencies. The Lottery will be relieved of liability upon the
transfer of an employee to another State agency.
Dividends
Dividends are recorded on the date they are declared by the Idaho Lottery Commission.
Budget
The appropriation for administrative costs is limited to 15% of revenue. Modification of the administrative
appropriation must be approved by the State Division of Financial Management. In addition, the Lottery
prepares and monitors an operating budget. The budget does not meet the definition of a legally adopted
budget for financial reporting purposes. Accordingly, no budget is presented within the financial statements.
Estimates
Management uses estimates and assumptions in preparing financial statements. Those estimates and
assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and
liabilities, and reported revenues and expenses. Significant estimates used in preparing these financial
statements include those assumed in determining the prizes payable, interest income from the funds held at
the state, and the actuarial assumptions made in the other post employment liability. It is at least reasonably
possible that the significant estimates used will change within the next year.
Reclassifications
Certain 2007 balances were reclassified to conform to the 2008 presentation.
NOTE 2 – CASH AND EQUIVALENTS
Cash and cash equivalents consisted of the following at June 30,
2008 2007
Cash in banks $ 312,932 $
155,693
Cash on deposit with State Controller 120,000 120,000
Idaho Lotto Games:
Idaho Pick 3 – Sales of Idaho Pick 3 began in June 2000. Prize expense is budgeted at 50% of game
revenues, but adjusted in the financial statements to reflect the actual prize expense for the reporting
period. Prizes are paid out as single cash payments.
Investments in the State of Idaho’s General Fund
Investment Pool, at cost, which approximates market Raffle – Idaho’s Million Dollar Raffle was a new raffle game developed by the Idaho Lottery and played
only in Idaho. Million Dollar Raffle launched on November 11, 2007 and sales ended when all 250,000
available tickets had been sold out. There was only one draw. Prize expense represents 52% of revenues
recognized for the game. The one jackpot prize was paid out as a single cash payment.
The Lottery is required to keep excess cash on deposit in the State of Idaho’s General Fund. The State
Treasurer’s Office acts as the State’s bank, receiving and disbursing all monies. In accordance with Idaho
Code, Section 67-1210 and 67-1210A, all idle cash deposited with the State Treasurer is invested in a variety of
Total cash and equivalents 34,190,899 $ 34,623,831 NOTE 1– SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Idaho Lottery (the Lottery), an agency of the State of Idaho (the State), was established in November 1988
with the enactment of Title 67, Chapter 74 of the Idaho Code (the Act). The purpose of the Act is to establish a
lottery to generate revenue for the State. Revenues generated by the Lottery, after allowances for prizes and
expenses, are distributed to the State Permanent Building and Public School Building Funds.
Basis of Accounting
Revenue Recognition
Accounts Receivable
Commissions
Retailers receive a commission of 5% on ticket sales. Additional discretionary commissions of up to 1% may
be awarded to retailers and, as a result, commission expense may be slightly higher than five percent of
revenue. In addition, retailers selling a winning lotto or scratch ticket with a prize amount of $500 or greater
receive a selling bonus of 10% of the prize amount, up to a predetermined limit.
Prizes
of prizes.
Scratch Games - Prize expense for instant games is recognized as ticket packs are settled by retailers based
on a predetermined prize structure for each game.
Hot Lotto – Idaho, in association with District of Columbia, Delaware, Iowa, Kansas, Minnesota, Montana,
New Hampshire, New Mexico, North Dakota, Oklahoma, South Dakota, and West Virginia, as a suborganization of MUSL, participates in Hot Lotto. Sales began September 30, 2007 and prize expense
represents 50% of revenue recognized for the game. Jackpot prizes are paid out as single cash payments.
A multiplier feature called Hot Lotto Sizzler was added on July 3, 2008.
Deposits with MUSL
Two percent of the payments to MUSL for multi-state on-line games are accumulated in a deposit account
with MUSL until the account balance has reached a level established by the MUSL Board. The Lottery
is an involuntary member of the MUSL Prize Reserve Funds Account (PRFA) investment pool. The PRFA
is an unrated investment pool. All investments of the PRFA shall meet the general requirements of state
36
public funds laws. Permitted investments shall include the direct obligations of the United States Government,
perfected repurchase agreements, and obligations issued or guaranteed as to payment of principal and
interest by agencies or instrumentalities of the United States Government, and mutual funds of approved
investments. The average portfolio maturity shall be no more than 1.33 years. As of June 30, 3008, the
duration for the underlying classes of securities of the pool was .98 years.
33,108,263
$ 33,383,956
securities. The Lottery is an involuntary member of this investment pool. Idaho Code, Section 67-1210(m)
states all interest received on all such investments, unless specifically required by law, shall be paid
into the general account of the State of Idaho. For the years ended June 30, 2008 and 2007, the Lottery
transferred $588,786 and $833,588, respectively to the State of Idaho. Further disclosure of the State’s
investment pool is located in the State of Idaho’s Comprehensive Annual Financial Report.
The cash in banks is invested in highly rated financial institutions and may, at times, exceed FDIC
insurance limits.
The Lottery is an involuntary member of the State Investment Pool. All interest is paid to the General account
of the State of Idaho.
Unclaimed Prizes
prize expense.
Cash and equivalents include liquid investments with original maturities of three months or less. The
Lottery’s excess funds are held in the State of Idaho’s investment pool. Funds held in the pool are generally
available to the Lottery within 90 days.
straight-line method over the estimated useful life ranging from three to five years. When assets are retired
or otherwise disposed of, the cost and related accumulated depreciation are removed form the accounts
and any resulting gain or loss is reflected in the results of operations in the period of disposal.
Other Assets
established by law, unused vacation benefits are paid to employees upon separation from State service
and are the responsibility of the State entity employing the individual at the time of their separation
from State service. Accumulated unused sick leave is paid upon the employee’s retirement and is the
responsibility of the State. Accumulated benefits for compensated absences are based on the period of
service with the State and are accrued at current salary rates. Accordingly, the Lottery assumes the liability
for benefits accumulated for employees who transfer to the Lottery from other State agencies. The Lottery
will be relieved of liability upon the transfer of an employee to another State agency.
Dividends
Budget
prepares and monitors an operating budget. The budget does not meet the definition of a legally
adopted budget for financial reporting purposes. Accordingly, no budget is presented within the financial
statements.
Estimates
statements include those assumed in determining the prizes payable, interest income from the funds
held at the state, and the actuarial assumptions made in the other post employment liability. It is at least
reasonably possible that the significant estimates used will change within the next year.
Reclassifications
2008 2007
155,693
Idaho Lotto Games:
revenues, but adjusted in the financial statements to reflect the actual prize expense for the reporting period.
Prizes are paid out as single cash payments.
Investment Pool, at cost, which approximates market Raffle – Idaho’s Million Dollar Raffle was a new raffle game developed by the Idaho Lottery and played only
in Idaho. Million Dollar Raffle launched on November 11, 2007 and sales ended when all 250,000 available
tickets had been sold out. There was only one draw. Prize expense represents 52% of revenues recognized
for the game. The one jackpot prize was paid out as a single cash payment.
The Lottery is required to keep excess cash on deposit in the State of Idaho’s General Fund. The State
Treasurer’s Office acts as the State’s bank, receiving and disbursing all monies. In accordance with Idaho
Code, Section 67-1210 and 67-1210A, all idle cash deposited with the State Treasurer is invested in a variety
Deposits with MUSL
with MUSL until the account balance has reached a level established by the MUSL Board. The Lottery is
an involuntary member of the MUSL Prize Reserve Funds Account (PRFA) investment pool. The PRFA is an
unrated investment pool. All investments of the PRFA shall meet the general requirements of state public
funds laws. Permitted investments shall include the direct obligations of the United States Government,
Total cash and equivalents 34,190,899 33,108,263
$ 34,623,831 $ 33,383,956
of securities. The Lottery is an involuntary member of this investment pool. Idaho Code, Section
67-1210(m) states all interest received on all such investments, unless specifically required by law,
shall be paid into the general account of the State of Idaho. For the years ended June 30, 2008 and
2007, the Lottery transferred $588,786 and $833,588, respectively to the State of Idaho. Further
disclosure of the State’s investment pool is located in the State of Idaho’s Comprehensive Annual
Financial Report.
The cash in banks is invested in highly rated financial institutions and may, at times, exceed FDIC
37
NOTE 1– SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Idaho Lottery (the Lottery), an agency of the State of Idaho (the State), was established in November 1988
with the enactment of Title 67, Chapter 74 of the Idaho Code (the Act). The purpose of the Act is to establish
a lottery to generate revenue for the State. Revenues generated by the Lottery, after allowances for prizes
and expenses, are distributed to the State Permanent Building and Public School Building Funds.
Basis of Accounting
Revenue Recognition
Accounts Receivable
Commissions
Retailers receive a commission of 5% on ticket sales. Additional discretionary commissions of up to 1% may
be awarded to retailers and, as a result, commission expense may be slightly higher than five percent of
revenue. In addition, retailers selling a winning lotto or scratch ticket with a prize amount of $500 or greater
receive a selling bonus of 10% of the prize amount, up to a predetermined limit.
Prizes
of prizes.
Scratch Games - Prize expense for instant games is recognized as ticket packs are settled by retailers
based on a predetermined prize structure for each game.
Idaho Lotto Games:
revenues, but adjusted in the financial statements to reflect the actual prize expense for the reporting
period. Prizes are paid out as single cash payments.
Raffle – Idaho’s Million Dollar Raffle was a new raffle game developed by the Idaho Lottery and played only
in Idaho. Million Dollar Raffle launched on November 11, 2007 and sales ended when all 250,000 available
tickets had been sold out. There was only one draw. Prize expense represents 52% of revenues recognized
for the game. The one jackpot prize was paid out as a single cash payment.
Deposits with MUSL
with MUSL until the account balance has reached a level established by the MUSL Board. The Lottery is
an involuntary member of the MUSL Prize Reserve Funds Account (PRFA) investment pool. The PRFA is an
unrated investment pool. All investments of the PRFA shall meet the general requirements of state public
funds laws. Permitted investments shall include the direct obligations of the United States Government,
The Lottery is an involuntary member of the State Investment Pool. All interest is paid to the General
account of the State of Idaho.
Unclaimed Prizes
prize expense.
Cash and equivalents include liquid investments with original maturities of three months or less. The
Lottery’s excess funds are held in the State of Idaho’s investment pool. Funds held in the pool are generally
available to the Lottery within 90 days.
straight-line method over the estimated useful life ranging from three to five years. When assets are
retired or otherwise disposed of, the cost and related accumulated depreciation are removed form the
accounts and any resulting gain or loss is reflected in the results of operations in the period of disposal.
Other Assets
established by law, unused vacation benefits are paid to employees upon separation from State service
and are the responsibility of the State entity employing the individual at the time of their separation
from State service. Accumulated unused sick leave is paid upon the employee’s retirement and is the
responsibility of the State. Accumulated benefits for compensated absences are based on the period of
service with the State and are accrued at current salary rates. Accordingly, the Lottery assumes the liability
for benefits accumulated for employees who transfer to the Lottery from other State agencies. The Lottery
will be relieved of liability upon the transfer of an employee to another State agency.
Budget
prepares and monitors an operating budget. The budget does not meet the definition of a legally
adopted budget for financial reporting purposes. Accordingly, no budget is presented within the financial
statements.
Estimates
statements include those assumed in determining the prizes payable, interest income from the funds
held at the state, and the actuarial assumptions made in the other post employment liability. It is at least
reasonably possible that the significant estimates used will change within the next year.
Reclassifications
2008 2007
155,693
Investment Pool, at cost, which approximates market Total cash and equivalents 38
!
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Dividends
34,190,899 33,108,263
$ 34,623,831 $ 33,383,956
!
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Annual Report 2008

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