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Mass. Lottery scratches its way back to profitability

BOSTON — Having navigated through the initial disruptions of the pandemic earlier this year, September sales results show the Massachusetts Lottery has righted the ship but a persistent drag on its second most popular product is expected to continue or perhaps worsen.

September sales of $421.3 million were up $20 million over September 2019 and year-to-date sales of $1.37 billion are running $80.6 million, or about 6 percent, above the same time period last fiscal year, Executive Director Michael Sweeney told the Lottery Commission on Tuesday morning.

The Lottery turned an estimated profit of $61 million last month, compared to $68.4 million in September 2019. Sweeney said the profit dip was due in part to a $10 million increase in instant ticket grand prize claims last month. Through the first quarter of fiscal 2021, the Lottery has generated profits $31.8 million greater than at the same point last year.

Though sales appear to have mostly rebounded to pre-pandemic levels, the effects of the widespread business closures are evident in the agency’s monthly sales report.

Scratch tickets are the engine that drives the Lottery — they generally account for 70 percent of all Lottery sales. Keno generally accounts for another 20 percent of all sales and the rest of the Lottery’s games each command a few percentage points of the total.

But with bars closed until there is a COVID-19 treatment or vaccine and many restaurants offering limited indoor service, closing for the winter or having already shuttered this year, Keno players have fewer options and year-to-date Keno sales are down nearly 10 percent. The game has been responsible for 17.2 percent of Lottery sales since July 1, compared with 20.2 percent over the same amount of time in fiscal 2020.

“Keno came back a little bit during the summer, particularly the late summer months, as some restaurants adjusted and reopened with limited capacity and outdoor seating. But it is still well below on a biweekly basis in comparison to pre-pandemic levels,” Sweeney said.

Sweeney highlighted Keno sales data from one unnamed restaurant on the North Shore in a chart that displayed a line graph for Keno sales from March through October 2019 and another line for Keno sales during the same months of 2020. That restaurant had been doing at least $18,000 in Keno sales each week during 2019, but has not crossed the $2,000 threshold any week since the end of March, he said.

Even once the restaurant reopened this summer with outdoor seating, Sweeney said, “those Keno numbers, for the most part, continue to be completely flatlined.” And the Lottery will monitor Keno performance as the colder weather makes outdoor dining less practical, reducing the number of people who eat out.

“Certainly these numbers are not going to get better as we now go into the colder weather,” Sweeney said.

Scratch tickets appear to be picking up the slack from Keno — they account for 71.6 percent of sales so far this budget year, compared to 68.3 percent last budget year. While Keno sales are down $24.5 million or 9.4 percent so far this fiscal year, scratch ticket sales are up $99.7 million, or 11.3 percent.

Instant tickets, the Numbers Game and Mass Cash are the only Lottery products to have sold more so far in fiscal 2021 than to this point in fiscal 2020.

The Lottery recently turned to man’s best friend to gin up fresh interest in scratch tickets and ran a series of $2 “Lucky Dog” tickets connected to an online contest in which players could vote for their favorite of seven dogs. Each dog was used on a scratch ticket as the “winning dog” that a player was trying to match after scratching off bone-shaped decals.

“I got unbelievable feedback on this ticket,” Treasurer Deborah Goldberg, who oversees the Lottery, said. “I have never had people message me on Facebook, text me out of the blue and tell me how these tickets brought a smile to their face. Honest to God, they said they bought extras.”

Assistant Executive Director Ed Farley backed up what Goldberg heard anecdotally with data and said the Lucky Dog tickets performed 14 percent better than an average instant ticket.

“With all the news about Keno and other things that are negatively impacted, this ticket positively impacted [the Lottery],” Goldberg said of the fully in-house marketing and promotional project. “Which goes to show you how critical the type of marketing that we do have available to us, what a great job they’ve done and how we do so much with so little.”

Having navigated through the initial disruptions of the pandemic earlier this year, September sales results show the…

Massachusetts Lottery earns 3rd largest profit in history despite coronavirus shutdown

Despite a sizable three-month decrease in sales of scratch tickets and Keno due to the coronavirus shutdown, the Massachusetts Lottery in fiscal 2020 had the third largest revenue pot in its 49-year history.

The Lottery earned $5.252 billion in revenues in the fiscal year ending June 30. Its record was set in the previous fiscal year, when it earned $5.5 billion, according to an announcement from state Treasurer Deb Goldberg, who oversees the Lottery.

The Lottery netted a $979 million profit after expenses and winning payouts for fiscal 2020. In the previous record-setting year it netted $1.1 billion, she said.

“It is shocking. I didn’t expect it to be that high,” said state Rep. Carlos Gonzalez, D-Springfield, who is a member of the House Ways and Means Committee. “The news is a great sign to see for the recovery.”

Lottery profits are distributed to all 351 cities and towns in the state as unrestricted aid. For this fiscal year, for example, Springfield received about $44.1 million in aid, Chicopee received $12.2 million, Holyoke received $10.7 million, Westfield received $6.6 million, Northampton received $4.6 million, West Springfield received $3.8 million and Agawam received $3.9 million.

Among some of the smaller Western Massachusetts towns, Southampton received $676,000, Granby received $937,000 and Granville received $170,000.

The money will help local communities struggling with decreased revenues from the coronavirus-related shutdown of restaurants, retail stores, hotels and most other businesses. Many are reopening now, but income to cities and towns continues to be reduced, Gonzalez said.

“I hope it means people have some disposable income,” he said.

The Lottery did see a dramatic decline in sales starting in March and through April and May. The biggest drop-off was in Keno sales, since the game is most often played in restaurants and bars. Under the state’s reopening plan, bars are set to remain closed until a coronavirus vaccine is available.

Keno sales for this fiscal year totaled $979 million, a drop of $76.2 million from the previous year, Goldberg said.

But strong lottery sales in the early part of the fiscal year and a rebound in June, when more businesses reopened, allowed the lottery to recoup some of the losses from the spring.

“From the early stages of the pandemic, the Lottery has been committed to operating within the guidelines recommended by state and federal officials, taking significant measures to create a safe environment for our lottery team,” said Michael Sweeney, executive director of the lottery. “More important than setting records across the board last year, we faced significant operational challenges and overcame them.”

Instant ticket sales for this fiscal year totaled $3.646 billion, a $27.2 million decrease from the previous year.

Sales of the multistate draw games, Mega Millions and Powerball, decreased by $141 million from the previous year. Some of the decline was also due to smaller jackpots, Goldberg said.

“It is good news, but it is a small part of the state’s budget,” said Sen. Eric P. Lesser, D-Longmeadow, a member of the Senate Ways and Means Committee.

Revenue from sales and income taxes are expected to decline rapidly for the next fiscal year, and there is concern that the $600 additional payments that came with weekly unemployment benefits will end this month, Lesser said.

The state has also received none of the expected income from the three new casinos in the state since they were shut down in mid-March. The casinos reopened this month.

“I think it is an encouraging data point but we are not out of the woods yet,” Lesser said.

Though the Lottery produced more in profit for the state than it had been projecting, Sweeney said the Lottery is hampered by being primarily a cash-only and in-person business. Goldberg and Sweeney have for years been calling on the Legislature to authorize the Lottery to sell its products online, but lawmakers have been cool to the idea and it has not gained significant traction on Beacon Hill.

This session, the Joint Committee on Consumer Protection and Professional Licensure sent bills related to online lottery sales to a study.

“Nothing is close to back to normal yet, particularly for a business that cannot avail itself of direct online sales,” Sweeney said.

Gov. Charlie Baker included language in his fiscal year 2021 budget proposal that would allow players to purchase Lottery products using smartphone apps for cashless payment or with debit cards, but not online or with credit cards. Baker’s budget remains in the House Ways and Means Committee and neither the House nor Senate has produced its own budget plan yet.

A finalized accounting of the Lottery’s fiscal year 2020 performance is expected to be completed by the middle of September.

Material from the State House News Service was used in this report.

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