llHEUJRERVjJ Massachusetts State Lottery Commission

DEBORAH B. GOLDBERG MICHAELR. SWEENEY Treasurer and Receiver General Executive Director

February 26, 2021

His Excellency Charlie Baker Governor, Commonwealth of Massachusetts State House Boston, MA 02133

Dear Governor Baker:

In compliance with the provisions of Chapter 10 Section 24 of the Massachusetts General Laws, attached please find the Statement of Operations for the Massachusetts State Lottery Commission for the month of January 2021.

Please note that we have changed the format of the Statement of Operations and included a summa1y report to provide a more representative description and comparison of the current fiscal year results over the prior fiscal year.

Sincerely,

Michael Sweeney (Feb 26, 202110:◄ 6 EST)

Michael R. Sweeney Executive Director

cc: Deborah B. Goldberg Treasurer and Receiver General

Supporting the 351 Cities and Towns ofM assachusetts 150 Mount Vernon Street• Dorchester• Massachusetts • 02125 • Tel: 781-849-5555 • Fax: 781-849-5547 • TIY: 781-849-5678 • www.masslottery.com Governor's Report MSLC Statement of Operations

January,2021

Comments/ Observations

YTD amounts for January, 2021 (includes 7/1/20- 1/30/21) have two (2) less days of activity * than the YTD amounts for January, 2020 (7/1/19-2/1/20).

Statement of Operations Adjusted (+2 days)**

• Instant Games sales up 5.6% I $122.2M up 6.6% I $143.7M • Draw Games + KENO sales*** down 0.7% / $7.0M up 0.2% I $2.SM • Total Revenues up 3.5% I $113.2M up 4.5% I $144.3M • Prize Payout % 72.8% 72.8% (compared to 73.9% at Janua,y, 2020) • Prizes (Paid) up 2.0% I $47.4M up 3.0% I $70.0M • Agent Commissions % up 3.6% I $5.8M up 4.6% I $7.3M • Agent Bonuses down 1.3% I $0.3M down 0.4% / $0.lM • Administrative Expenses down 5.5% / $2.4M down 4.6% I $2.0M • Net Profit up 10.3% I $62.8M up 11.3% / $69.lM

IRed - Reduces profit vs. prior year I * IBiack - Increases profit vs. prior yea~

* The Lottery operates on a weekly (not monthly) close schedule. There are 12 accounting periods in a fiscal year; eight (8) periods have 4 weeks and four (4) periods have five (5) weeks. Because the calendar changes each year, the accounting period for one year does not align with the comparable accounting period for the previous year. The amount of "misalignment" changes from year to year. For the month of January 2021, Fiscal Year 2021, the misalignment is two (-2) days.

** See attached "Adjusted" MSLC Statement of Operations dated January, 2021

*** Draw Games + KENO sales was previously referred to as Online Game Sales. The change was made to provide a better description of what the games sales actually represent. Draw Games + KENO refers to games that have a drawing to select winning numbers. The Draw Games include The Numbers Game, Mega Millions, Powerball, Mass Cash, Lucky for Life and Megabucks. KENO also includes All or Nothing. Massachusetts State Lottery Commission Statement of Operations Lottery and Arts Lottery Funds January, 2021 22-Feb-21 ($000's) Adjusted Year-to-Date Period Close Year-to-Date Year-to-Date Adjusted Adjusted January, 2021 % FY2021 % Sales Adj (+2 da;rs) FY2021 % FY2020 % $ Change S Change ¾Change ¾Change Revenues Instant Games 4 13,124 64.7% 2,307,126 69.4% 21,562 2,328,688 69.4% 2,184,959 68.1% 122,167 143,729 5.6% 6.6% MegaMillions 43,191 6.8% 77,436 2.3% 724 78, 160 2.3% 47,956 1.5% 29,481 30,204 61.5% 63.0% Powerball 3 1,596 4.9% 66,73 1 2.0% 624 67,354 2.0% 48,696 1.5% 18,034 18,658 37.0% 38.3% Numbers Grune 35,184 5.5% 212,468 6.4% 1,986 214,453 6.4% 190,058 5.9% 22,409 24,395 11.8% 12.8% Mass Cash 9,475 1.5% 55,308 1.7% 5 17 55,825 1.7% 53,579 1.7% 1,728 2,245 3.2% 4.2% Keno 99,666 15.6% . 569,032 17.1% 5,3 18 574,350 17.1% 645,643 20.1% -76,61 1 -71,293 -11.9% -11.0% All or Nothing 697 0.1% 3,998 0.1% 37 4,035 0.1% 4,745 0.1% -747 -710 -15.7% -15.0% Lucky for Life 2,53 1 0.4% 14,108 0.4% 132 14,240 0.4% 14,676 0.5% -567 -435 -3.9% -3.0% Charity Game Tickets -1 0.0% I 0.0% 0 I 0.0% 952 0.0% -951 -951 -99.9% -99.9% Beano Tax (2/5.) 2 0.0% 3 0.0% 0 3 0.0% 259 0.0% -256 -256 -98.8% -98.8% Pull Tabs 30 0.0% 135 0.0% I 136 0.0% 370 0.0% -236 -234 -63.6% -63.3% License Fees II 0.0% 51 0.0% 0 51 0.0% 59 0.0% -8 -8 - 14.2% -13.4% Bond Fees and Fines 186 0.0% 1,155 0.0% II 1,166 0.0% 1,3 12 0.0% -158 -147 -12.0% -11.2% Service Fees 475 0. 1% 2,885 0. 1% 27 2,911 0.1% 3,219 0.1% -334 -307 -10.4% -9.5% Megabucks 2,773 0.4% 13,429 0.4% 126 13,554 0.4% 14, 166 0.4% -737 -612 -5.2% -4.3% Miscellaneous Income 0 0.0% 4 0.0% 0 4 0.0% 8 0.0% -4 -4 -51.6% -51.1% 0.0% Interest 0 ~ 0 0.0% 0 0 0.0% 0 0.0% 0 0 0.0% Subtotal Revenues 638,940 100.0% 3,323,868 100.0% 31,064 3,354,932 100.0% 3,210,657 100.0% 113,211 144,275 3.5% 4.5%

Subtotal Prizes 47 1,880 73.9% 2,418,787 72.8% 22,605 2,441,393 72.8% 2,371,417 73.9% 47,370 69,976 . 2.0% 3.0%

Operating Expenses Commissions 31,834 5.0% 165,691 5.0% 1,549 167,239 5.0% 159,924 5.0% 5,766 7,315 3.6% 4.6% Bonuses 4.315 0.7% 24.3 IO 0.7% 227 24.537 0.7% 24.625 0.8% -314 -87 -1.3% -0.4% Subtotal Operating Expenses 36,148 ~ 190,001 5.7% 1,776 191,777 5.7% 184,549 ~ 5,452 7,228 3.0% 3.9%

Operating Revenue 130,912 20.5% 715,080 21.5% 6,683 721,763 21.5% 654,691 20.4% 60,389 67,072 9.2% 10.2%

Administrative Expenses Salaries 3,918 0.6% 19,931 0.6% 186 20, 117 0.6% 18,989 0.6% 942 1,129 5.0% 5.9% Advertising 23 0.0% 136 0.0% 1 137 0.0% 1,642 0.1% -1,506 - 1,505 -91.7% -91.7% Equip Rental 4 0.0% 33 0.0% 0 33 0.0% 59 0.0% -25 -25 -43.3% -42.8% Admin/Facilities 1,208 0.2% 8,879 0.3% 83 8,962 0.3% 9,164 0.3% -284 -201 -3. 1% -2.2% Facilities Rental 410 0.1% 2,861 0.1% 27 2,887 0.1% 2,927 0.1% -67 -40 -2.3% -1.4% Telephone 75 0.0% 3,766 0.1% 35 3,801 0.1% 3,311 0.1% 454 489 13.7% 14.8% Travel I 0.0% 7 0.0% 0 7 0.0% 19 0.0% -12 -12 -62.3% -62.0% Employee Benefits 79 0.0% 696 0.0% 7 703 0.0% 796 0.0% -100 -93 -12.5% -11.7% Off./Other Equipment 99 0.0% 205 0.0% 2 207 0.0% 290 0.0% -85 -83 -29.3% -28.6% Postage & Freight 226 0.0% 997 0.0% 9 1,007 0.0% 1,119 0.0% - 122 -112 -10.9% -10.1% Maintenance 60 0.0% 898 0.0% 8 907 0.0% 1,070 0.0% -1 72 -163 -16.0% -15.3% Professional Services 249 0.0% 2,147 0.1% 20 2,167 0.1% 3,481 0.1% - 1,334 -1,314 -38.3% -37.8% Other 0 0.0% 18 0.0% 0 18 0.0% 58 0.0% -39 -39 -68.5% -68.2% Vehicles 0 0.0% -2 0.0% 0 -2 0.0% 0 0.0% -2 -2 355.0% 359.3% Building Improvements 94 0.0% 704 0.0% 7 710 0.0% 744 0.0% -41 -34 -5.5% -4.6% Prior Year Adjustment 0 0.0% 0 0.0% 0 0 0.0% 0 0.0% 0 0 0.0% 0.0% Estimated Fringe Benefit Alloc. 0 ~ 0 0.0% 0 0 0.0% 0 0.0% 0 0 0.0% 0.0% Subtotal Admin. Expenses 6,445 1.0% 41,276 1.2% 386 4 1,662 1.2% 43,668 ~ -2,392 -2,006 -5.5% -4.6%

Net Profit Before Distributions 124,467 19.5% 673.803 20.3% 6,297 680,101 20.3% 611,023 19.0% 62.780 69.078 10.3% 11.3%

Noles to Fir1ancial Statement: 1 Y(!l1r-to-D11te t1mou11ts lmve bee,r tu/ju sted/or prize flccruals. 2 Ye.11r-to-Dute m11ou11ts for FY 2021 (7/1/20-1/30/21) include two (2) le.-..-. duv,.,. ofa ctivity over FY2020 (7/1/19-2/1/20). For compt1rative p11rposo·, two (2) additiom1/ days ofreve nue in FY21 wo11ltl totul approximately $31. 1 million, i11cre11si11g revenu es to $3.354 billio11, resultinx i11 a $144.3 million or 4.5% clwnJ!e over FY20. Two (2) "dditio,wl ,it,yl· ofr eve11ue would incre11se net profit by approximately $6.3 millio11 to $680. J million, resulti11g in a $69. 1 million or 11.3% clumJ!e over FY20. 3 Administrlllive Expenses reflect tlte costs against tlte Lottery's Geneml Ft1nd Acco,mts upproprillletl in the (lllnu11/ budge/ (Gc11cral Approprilltion Act). The costs t1,:ainst these t1ccollnts llre broke11 down by type ofe.xpe ndit11res b11sed 11pon the object classes and object codes contained in tlte Expe11dit11re Clt,ssificution Hmulbook 11 scd ill all 11cco11ntillgfor e.xpemlitures under tire Massachusetts Mam,,:cment Accou,rting am/ ReporlillK System (MMARS).