Press Release  Bump Finds Improvements Needed in Lottery Audit

Boston — State Auditor Suzanne M. Bump today released an audit of the Massachusetts State Lottery Commission (the Lottery) which recommended improvements to better ensure game integrity and that state assets are protected.

The Lottery, overseen by the State Treasurer and Receiver General, is a major source of revenue for the Commonwealth, with $984 million in net profits for Fiscal Year 2012. Within the same year, the Lottery reported $4.73 billion in overall sales, with players winning more than $3.3 billion in prizes. Lottery products are sold by more than 7,000 licensed sales agents.

“The Lottery has been successful in providing hundreds of millions in financial aid to our cities and towns. It can only continue its success with a diligent dedication to game integrity and maintaining a positive reputation,” said Auditor Bump.

Today’s audit found that the Lottery did not complete documentation to show it had properly accounted for and ultimately destroyed activated instant-game lottery tickets returned by terminated sales agents. Activated instant tickets come from books of tickets that are partially sold and can be cashed in up until the point of destruction. A sample review of Lottery records found several forms lacking sign-offs that the number of activated tickets collected from sales agents matched the number sent for destruction. Irregular record keeping of activated tickets creates a risk that tickets may be mishandled and prizes may be collected from unsold tickets.

Other findings included noncompliant monitoring of “peeking.” Peeking is an abuse of the Lottery where a sales agent scans an unsold instant ticket to determine which tickets are winners. To detect potential peeking, sales agent activity is monitored for certain patterns which trigger investigations into possible wrongdoing. Due to a misinterpretation of internal procedure, auditors found the Lottery did not initiate as many investigations into peeking as it should have.

In addition, the report recommended changes to improve sales agent background checks and internal employee policies.

In response to audit findings, the Lottery stated it has implemented new policies to ensure that all returned activated instant tickets are accounted for, properly safeguarded and destroyed and is applying a more stringent review of sales agents for potential peeking activity.

The Office of the State Auditor conducts technical assessments and performance audits of state government’s programs, departments, agencies, authorities, contracts, and vendors. With its reports, the OSA issues recommendations to improve accountability, efficiency, and transparency.

The Massachusetts State Lottery Commission audit is available here.

###