AGENCY SUMMARY

ORIGIN AND CURRENT STATE

In 1986 by initiative, the people of voted on authorizing a Lottery for the first time. The initiative passed with 60% of voters saying "yes". However, it was challenged and was later declared unconstitutional by the Idaho Supreme Court. In 1988 the Idaho Legislature authorized another vote and in November 1988, a constitutional amendment was approved by 51% of Idaho voters that created the Idaho Lottery. Idaho set a new industry record by implementing a lottery within 200 days.

The first Idaho Lottery Scratch ticket was sold on July 19, 1989. The Idaho Lottery’s first year resulted in $65 million in sales. The first dividend check of $17,225,000 was returned to the "People of the State of Idaho."

The last major restructuring of the Idaho Lottery occurred in 2007.

The Lottery is authorized to offer Draw Games, Scratch Games, and PullTab Games.

The Lottery Performance Measures are: to exceed performance to the business plan for all products that we can influence (not including multi-state games and , since jackpot size is out of our control); to increase net revenues available for transfer to beneficiaries each year; and to perform better in a variety of criteria compared to our peer group of like lotteries.

Over the last decade, the Idaho Lottery has returned $443.7 million to the People of Idaho, and $846 million since inception in 1989.

Idaho Lottery Mission The mission of the Idaho Lottery is to responsibly provide entertaining games with a high degree of integrity to maximize the dividend for public schools and the Permanent Building Fund.

Idaho Lottery Vision To become the highest performing jurisdiction in North America.

Vision Realized In April 2014, the Idaho Lottery received a national award from the Public Gaming Research Institute. The “Sharon Sharp Good Causes Award” recognizes lotteries which have achieved the highest percentage increase in net funds contributed to its beneficiaries.

ORGANIZATION

The Idaho Lottery is a self-governing, dedicated fund agency comprised of the Idaho State Lottery Commission and Idaho Lottery staff. The Governor appoints the five-member commission with the consent of the Idaho Senate. Members serve five-year staggered terms. The Commission promulgates rules for the agency, approves contracts for major procurements, monitors all Lottery operations, and is the governing authority of the charitable gaming Bingo-Raffle Advisory Board.

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The Idaho Lottery Commission may not have more than three members from the same political party. The current commissioners are:

Mel Fisher (Boise), Chairman (Republican, term expires January 1, 2023) Susan Kerrick (Lewiston), Commissioner (Democrat, term expires January 1, 2019) Craig Corbett (Grace), Vice Chairman (Republican, term expires January 1, 2020) Grant Brackebusch (Silverton), Commissioner (Republican, term expires January 1, 2021) Gary Michael (Boise), Commissioner (Independent, term expires January 1, 2022)

Executive Director Jeffrey R. Anderson was appointed in 2007 and serves at the pleasure of the Governor. The Director is responsible for overseeing day-to-day Lottery operations, including security, marketing, sales, media relations, warehousing and inventory control, information systems and fiscal management. The Director appoints the Deputy Directors.

The executive team is comprised of:

Becky Schroeder, Chief Operating Officer Amber French, Deputy Director for Security and Enforcement Sherie Moody-St. Clair, Deputy Director for Marketing Larry Polowski, Deputy Director for Sales

The Lottery sells its products through a network of 1,200 local retailers throughout Idaho. They are paid a 5% commission on total sales. An additional 1% of sales is distributed to retailers for cashing bonuses (paying winners up to $599) and selling bonuses (for selling winning tickets with big prizes).

The Lottery has a statutory limit on advertising and marketing of 3.5%. The total in FY2018 was 1.4%.

Ten percent of sales come from Idaho retailers near the Utah border.

There are currently 45 full-time employees of the Idaho Lottery – two fewer than when the Lottery started in 1989.

Net Lottery proceeds are returned to the State as an annual dividend. Beginning in 1989, the annual dividend was divided equally between the Department of Education’s Public School Building Fund and the State’s Permanent Building Fund. In 2009, a statutory change to the Lottery proceeds distribution formula fixed Public School and Permanent Building Fund dividends at FY2008 funding levels. When proceeds surpass that mark, ⅜ goes to the Permanent Building Fund, ⅜ to the Public School Building Fund, and ¼ to the Bond Levy Equalization Fund. In 2017, the Legislature eliminated the sunset date for the Bond Levy Equalization Fund provision, making the change in the Lottery’s funding formula to include the Bond Levy Equalization Fund permanent.

Since 1989, the Lottery has transferred $846 million to the State of Idaho.

MAJOR ACCOMPLISHMENTS

Consistent, predictable revenue continues.

Sales have set records each year for the past twelve years. Net revenues are subject to the product mix in any given year and are strongly influenced by the performance of big jackpot games that have the highest margins.

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DIVIDEND SALES TRANSFER FY14 209,643,000 $49,000,000 FY15 210,940,000 $45,000,000 FY16 236,820,000 $49,500,000 FY17 240,687,000 $48,500,000 FY18 265,085,000 $53,500,000

$ 1,163,175,000 $ 245,500,000

Lottery Gaming System Contract Bid, Award, and Conversion.

Following a competitive bidding process in the summer of 2016, Intralot USA was selected as the Successful Vendor for a ten-year contract to provide Lottery Gaming System services for the Idaho Lottery. Intralot had held the previous contract for ten years. The contract provides for a secure central gaming system capable of delivering, managing, and accounting for all current in-state and multi-state Draw Games, inventory control and logistics for the full complement of Scratch Games, and other related services. It provides for an upgrade in technology, higher quality services to players and retailers, and improved security and integrity of lottery games in the Gem State.

The conversion required every Idaho Lottery retailer in Idaho to replace their ten-year old equipment and terminals with new, state-of-the-art equipment. The process of replacing equipment in 1,200 location spread across Idaho’s vast geography took eight weeks to complete. This included comprehensive communication plans and training materials for the thousands of retailer employees. All new back office and reporting functionality is in place, including a new Internal Control System and disaster recovery site in Helena MT. A post-conversion satisfaction survey of retailers showed 97% were satisfied with how their new equipment was installed and 98% were satisfied with their trainer.

The new contract pays Intralot 2.26% of sales for all equipment, gaming software licenses, and personnel. It is an exceptionally fair price and very favorable to Idaho relative to other small lotteries in the USA.

New Lease and Major Office Remodel completed in 2017.

The Idaho Lottery main office has been in the same downtown Boise location since the Lottery began operations in 1989. The location is convenient for customers and the parking is free.

The previous lease expired on December 31, 2017. The Lottery initiated discussions with the building owner in September 2015 in order to have adequate time to negotiate an acceptable renewal or plan for a move to a new location.

The result was very favorable and the Lottery Commission approved the request for a ten year lease at their November 2016 commission meeting.

• The Lottery returned 1,702 square feet of suboptimal space. • All work groups were moved to the first floor, except the Security and Enforcement Division. • The lease rate was reduced by $0.63/ sq. ft. to $18.50/ sq. ft. • Overall costs were reduced in year one by $40,776 or 14.5%. • Annual increases of 2.5% remain the same as in the previous lease. • Turnkey Tenant Improvements for the building were paid entirely by the landlord. • Modifications to the lease save the Lottery $6,000 per year in electrical costs.

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Remaining in the current location produced annual cost savings and eliminated a minimum FY2018 budget request of $300,000 for relocation expenses.

The Lottery initiated a warehouse space needs analysis when we were nearing the end of our lease contract and determined that a more efficient warehouse layout would allow for the return of nearly 8,500 square feet. With the assistance from the Division of Public Works, an RFP was published and the result was a smaller, more efficient negotiated leased space, a lower per square foot rate and a savings of nearly $60,000 per year.

Game Changes Last Four Years.

• The first $25 Scratch Game was introduced for our 25th Anniversary in 2014. • InstaPlay Games, including Idaho Jackpot, were launched in October of 2014. • introduced in Idaho, February 2015. • Powerball game matrix change, October 2015. • Sum It Up! added to Idaho Pick 3, January 2016. • 2 game is retired, February 2016. • Idaho Cash introduced, February 2017. • Sizzler game is retired, October 2017. • Mega Millions price increases to $2 per play and game matrix changes, October 2017. • introduced nationally and in Idaho, November 2017.

SHORT AND LONG TERM CRITICAL NEEDS

Four appointments will be necessary in January 2019. All four require consent of the Idaho Senate.

1. Idaho Lottery Commission a. Idaho Lottery Commissioner Susan Kerrick’s term ends January 1, 2019. She has been an engaged and thoughtful commissioner. She is willing to be reappointed. Ms. Kerrick is the only Democrat on the Commission. The Lottery Staff recommends considering reappointment. 2. Bingo-Raffle Advisory Board – no more than three members may belong to the same political party – Idaho Code § 67-7704 a. Region One (northern Idaho) member Rayelle Anderson’s term expires January 1, 2019. She is an excellent board member and is willing to be reappointed. The Lottery Staff recommends considering reappointment. b. Region Two (Lewiston area) is vacant. At the time this document was prepared, no recommendation is available. Lottery staff continues to search for a candidate. This needs to be a Democrat. c. Region Three (Burley area) member Amber Larna’s term expires January 1, 2019. Lottery Staff recommends not reappointing Ms. Larna. Russ Ludlow, a bingo operator in Burley, is willing to serve. Charitable Gaming Coordinator, Angela Vitek, has more information on Mr. Ludlow. Lottery Staff recommends considering Mr. Ludlow for this appointment.

There are no other critical needs at this time.

RECENT SIGNIFICANT CHANGES IN FUNDING OR STAFFING LEVELS

No material changes in the past four years.

August 17, 2018

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Statutory Authority Information

COMMISSION: The Idaho State Lottery Commission (see Idaho Code §67-7405) has general duties, powers and responsibilities as set forth at Idaho Code §67-7408. The Commission may not have more than three members of the same political party. It has rulemaking authority and upon recommendation of the Director has adopted rules it considers necessary with the ultimate goal of maximizing the net income of the Lottery for the State and its particular beneficiaries. The Lottery determines, subject to the kinds of games authorized in Idaho, the types of lottery games it conducts. The Lottery also determines prize structures, methods of sale, and terms and conditions of its retailer contracts, including retailer compensation, bonuses and incentives. See Idaho Code §67-7408(1). The Commission approves all major procurements and has authority to enter into written agreements negotiated by the Director with other states, Canada and its provinces or agency or contractors of those entities for operation and promotion of joint lottery games, such as Powerball. See Idaho Code §67- 7408(2), (4).

DIRECTOR: The Idaho State Lottery Director is responsible for daily operations and has various duties, powers and responsibilities as set forth in Idaho Code §67-7409. The Director operates and administers the Lottery and appoints and hires deputy directors, sales personnel and security staff and other professional, technical employees as necessary. The Director also regularly confers with the Commission on the Lottery operations, continuously studies and investigates Lottery operations and advises it with recommendations as deemed necessary to improve operations. The Director enters into marketing and advertising contracts and for other products and services, but the Commission approves major procurements and contracts for administration of the Lottery. The Director reports to the Governor and legislature and provides various reports, including financial statements to both, as well as to the Commission. The Director is also the Governor’s liaison responsible for monitoring Class III gaming on Indian reservations according to Tribal Compacts and in accordance with the Indian Gaming Regulatory Act. See Idaho Code §67-7409.

DEPOSITS: The Idaho Lottery has a dedicated account in the Treasurer’s Office under Idaho Code §67-7428 in to which it deposits all monies received from the sale of lottery tickets and products and all other monies received from whatever source pursuant to Idaho Code §67-7431. From this account, the Director is authorized to disburse monies for payment of prizes and purchase of annuities for payment of certain ongoing prize payments, for refunds when appropriate, and for expenses and obligations of the Lottery. Of utmost importance, the Lottery pays annual dividends on July 1 from the lottery account to enumerated beneficiaries in accordance with Idaho Code § 67-7434.

DIRECTOR OF SECURITY: Finally, there is a Lottery Director of Security appointed by the Idaho Lottery Director and that Director of Security manages the Lottery’s security division which has various powers, duties and responsibilities pursuant to Idaho Code § 67-7410. It conducts background investigations on employees, retailers, bingo and raffle operators, vendors and major procurement contractors and also enforces the criminal provisions of the Lottery act. It is a law enforcement agency with power to subpoena and require fingerprint- based background checks, and access the criminal offender record information of ISP. It is the Security Division which controls and administers charitable bingo and raffle games in accordance with Idaho Code §§67-7701 et. seq.

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Idaho Lottery Statutes CHAPTER 74

67-7401 — PURPOSE 67-7402 — IDAHO LOTTERY AGENCY CREATED 67-7403 — INITIATION AND OPERATION OF THE LOTTERY 67-7404 — DEFINITIONS 67-7405 — COMMISSION -- APPOINTMENT -- CHAIRMAN 67-7406 — QUORUM -- MEETINGS -- MINUTES -- COMPENSATION 67-7407 — DIRECTOR 67-7408 — POWERS AND DUTIES OF THE COMMISSION 67-7409 — POWERS AND DUTIES OF THE DIRECTOR 67-7410 — DIRECTOR OF LOTTERY SECURITY 67-7411 — CONTRACTING WITH LOTTERY GAME RETAILERS 67-7412 — SELECTION OF LOTTERY GAME RETAILERS 67-7413 — TERMINATION OF THE LOTTERY GAME RETAILER 67-7414 — COMPENSATION FOR LOTTERY GAME RETAILERS 67-7415 — SALES TO PERSONS UNDER THE AGE OF EIGHTEEN 67-7416 — DISPLAY OF CERTIFICATE OF AUTHORITY 67-7417 — LOTTERY GAME RETAILER BONDING 67-7418 — LOTTERY GAME RETAILER ACCOUNTING 67-7419 — LOTTERY GAME RETAILER PAYMENTS 67-7420 — CONTRACTS FOR MAJOR PROCUREMENTS 67-7421 — LOTTERY VENDOR DISCLOSURES FOR MAJOR PROCUREMENTS 67-7422 — SEPARATION OF VENDORS AND RETAILERS 67-7423 — ENFORCEABILITY OF CONTRACTS 67-7424 — INFORMATION UNDER OATH 67-7425 — MISSTATEMENTS OR OMISSIONS 67-7426 — COMPLIANCE WITH APPLICABLE LAWS 67-7427 — VENDOR PERFORMANCE BONDS 67-7428 — STATE LOTTERY ACCOUNT 67-7429 — PROHIBITION ON USE OF STATE FUNDS 67-7430 — TEMPORARY LINE OF CREDIT FOR START-UP COSTS 67-7431 — CASH RECEIPTS 67-7432 — CASH DISBURSEMENTS 67-7433 — PRIZE EXPENSE 67-7434 — LOTTERY DIVIDENDS 67-7435 — REIMBURSEMENTS FOR GOVERNMENT SERVICES 67-7436 — AUDITS 67-7437 — PRIZES 67-7438 — PRIZE CLAIMING PERIOD 67-7439 — TAXES 67-7440 — RESTRICTED PLAYERS 67-7441 — RECORDS 67-7442 — OPEN PUBLIC MEETINGS OF THE COMMISSION 67-7443 — CONFLICT OF INTEREST

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Idaho Lottery Statutes CHAPTER 74 - continued

67-7444 — LIMITATION ON ACTIONS 67-7445 — CONDITIONS OF PURCHASE 67-7446 — RESTRICTIONS 67-7447 — LAWFUL ACTIVITY 67-7448 — PROHIBITED ACTS -- PENALTIES 67-7449 — CAP ON ADMINISTRATIVE COSTS 67-7450 — AUDIT OF FUNDS -- REPORTS 67-7451 — LOTTERY EXEMPT FROM STATE PURCHASING LAWS 67-7452 — SEVERABILITY

Bingo and Raffle CHAPTER 77 67-7701 — PURPOSE AND POLICY 67-7702 — DEFINITIONS 67-7703 — BINGO-RAFFLE ADVISORY BOARD ESTABLISHED 67-7704 — BINGO-RAFFLE ADVISORY BOARD -- MEMBERS -- APPOINTMENT -- QUALIFICATIONS 67-7705 — QUORUM -- MEETINGS -- MINUTES -- COMPENSATION 67-7706 — BINGO-RAFFLE ADVISORY BOARD -- POWERS -- DUTIES 67-7707 — BINGO BY CHARITABLE OR NONPROFIT ORGANIZATIONS 67-7708 — LIMIT ON SESSIONS AND BINGO PRIZES 67-7709 — ACCOUNTING AND USE OF BINGO PROCEEDS 67-7710 — RAFFLES -- DUCK RACES -- HOLIDAY CHRISTMAS TREE FUNDRAISERS 67-7711 — LICENSING PROCEDURE 67-7712 — LICENSE FEES -- SUSPENSION OR REVOCATION 67-7713 — LICENSURE REQUIREMENTS 67-7714 — RULES AND FORMS 67-7715 — VENDORS -- LICENSING -- FEES 67-7716 — ELECTRONIC BINGO DEVICE AND SITE SYSTEMS -- APPROVAL REQUIRED 67-7717 — MANUFACTURING AND DISTRIBUTING REQUIREMENTS 67-7718 — LICENSED DISTRIBUTOR REQUIREMENTS AND DUTIES 67-7719 — LICENSED ORGANIZATIONS -- USE OF ELECTRONIC BINGO DEVICES

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NON CLASSIFIED POSITIONS

APPT TYPE CURRENT INCUMBENT POSITION COMBO PAY RATE ANDERSON, JEFFREY R. NGR EXECUTIVE DIRECTOR, ISL $74.78 ANDERSON, KRISTEN NRR REGIONAL SALES REP $17.00 BAISCH, MARC H. NRR REGIONAL SALES REP $19.77 BERNT, JOAN T. NRR REGIONAL SALES REP $20.89 BLACKWOOD, MONICA J. NRR SECRITY ASSISTANT $17.14 BLOEDEL, TONYA L. NRR GRAPHIC/MEDIA PRODCTION MGR. $22.21 BOYER, RICHAE M. NRR REGIONAL SALES REP $20.15 BRASHER, RHONDA NRR REGIONAL SALES REP $17.00 CANTRELL, ZACHARY C. NRR REGIONAL SALES REP $18.03 CASTILLO, CHRISTINA NRM DRAW MANAGER $14.21 COLEMAN, DAVID S. NRR REGIONAL SALES REP $19.58 COMNICK, JUSTIN NRR REGIONAL SALES REP $17.51 COPE, KEVIN L. NRR REGIONAL SALES REP $19.39 COWLISHAW, AARON NRR ONSITE SECURITY OFFICER $14.78 DILLON, HEATHER A. NRR CUSTOMER SERVICE REP $13.11 EMMONS, MICHELLE S. NRR DETECTIVE $30.60 FOSTER, JULIE A. NRR REGIONAL SALES REP $19.58 FRENCH, AMBER L. NRR DEPUTY DIRECTOR OF SECURITY $46.36 GRAVELEY, KARLA J. NRR CUSTOMER SERVICE REP $14.38 HAMPERLE-FRANK, JILL NRR REGIONAL SALES REP $21.87 HINKLE, TRISTA K. NRR REGIONAL SALES REP $17.00 HOFFERBER, MICHAEL B. NRM DRAW MANAGER $14.21 KAWAMURA, JANET D. NRR REGIONAL SALES REP $20.67 KIDD, ELIZABETH NRR INTERACTIVE MARKETING SPEC $18.00 KING, JOSEPH M. NRR SENIOR PRODUCT MANAGER $25.12 KOVALESKI, COLLEEN A. NRM DRAW MANAGER $14.77 MCLEAN-FLEMING, AMANDA G. NRR REGIONAL SALES REP $19.39 MOODY-ST CLAIR, SHERIE A. NRR DEPUTY DIRECTOR OF MARKETING $40.32 MUNSEY, RONDA NRR REGIONAL SALES REP $17.00 MURREY JR, WALTER L. NRR INFORMATION SECURITY OFFICER $22.27 POLOWSKI, LARRY NRR DEPUTY DIRECTOR OF SALES $39.40 PRICKETT, JOHN A. NRD CHIEF FINANCIAL OFFICER $40.35 QUINNO-MILLER, JENNIFER M. NRD MANAGEMENT ASSISTANT/HR $26.50 SAYSIPHASEUT, TYNA NRR BUSINESS ANALYST $25.75 SCHROEDER, REBECCA R. NRR CHIEF OPERATING OFFICER $60.52 SMITH, LAURA NRR CUSTOMER SERVICE SUPERVISOR $21.33 TRULL, JANICE NRM DRAW MANAGER $14.21 VITEK, ANGELA K. NRR CHARITABLE GAMING COORDINATOR $22.85 WATTERSON-CHAPA, MARY M. NRR RETAILER ACCOUNT MANAGER $20.92 WOOTEN, ADDIE N. NRR KEY ACCOUNTS MANAGER $24.70 WORKMAN, DAVID R. NRR PUBLIC INFORMATION SPEC. $29.66 FACILITIES INFORMATION

NUMBER OF PLANS FOR LEASED OR LEASE EXPIRATION FACILITY ADDRESS EMPLOYEES AT FUTURE STATE OWNED DATE LOCATION RELOCATION 1199 Shoreline Lane Idaho Lottery Suite 100 28 Leased December 31, 2027 None at this time Headquarters Boise, ID 83702 2740 South Cole Road Idaho Lottery Unit 310 2 Leased June 30, 2023 None at this time Warehouse Boise, ID 83709

NOTE: 1. Lottery Sales Representatives work from their regional locations and their Idaho Lottery vehicles.

2. The Lottery rents six small storage units in Lottery Sales Representative regions to store displays and Point of Sale materials, on a month by month basis.