Massachusetts State Lottery Commission Meeting

Executive Director’s Report

Delivered by: Michael R. Sweeney October 24, 2019 Fiscal Year 2019 - Final Statement of Operations

• Record $1.104 billion in net profit

• Record $5.509 billion in revenues

• Record $3.987 billion in prizes paid to customers

• Record $314 million in commissions and bonuses earned by retailers

2 Recent Editorial Lottery holds up well to new competition October 11, 2019

“For all the complaints about the efficiency of state agencies, and their abilities to keep up with changing demands, the Massachusetts Lottery has numbers to show it’s one of the Commonwealth’s most well-run and successful operations.”

“The lottery set another record for total prizes. The lottery reports that three-quarters of sales are returned as prize money. Commissions to retailers who sell lottery tickets were $314 million in FY 2019, another record. State officials say the 1.9 percent of lottery revenues that pay for administrative costs represent the lowest percentage in the nation.”

“Maintaining a healthy lottery that meets modern tastes was still important, because it remains a crucial financial channel for the state’s cities and towns.”

“Treasurer Deb Goldberg said $3 billion has been returned to communities over the past three years.”

“…the mission of helping cities and towns remains central to the Lottery’s relevance…the fiscal 2019 numbers say the Massachusetts Lottery continue to provide needed revenue for cities and towns”

3 Lottery Sales Update – September • Overall sales for September of 2019 were up $7.6 million from September 2018.

Figures for the month of September 2019 • Estimated September 2019 net profit and prize payout figures do not include accruals for prizes won that have not yet been paid. o Due in part to a $15 million increase in overall prizes paid ($303 million September 2019 compared to $288 million in September 2018) and a combined $3.9 million decrease in Mega Millions and Powerball sales in September 2019 compared to September 2018: . Estimated Net profit for September 2019 was $67.9 million compared to $77.5 million in September 2018, resulting in an estimated $9.6 million decrease in net profit. . Estimated Prize payout for September 2019 was 75.52 percent, as compared to 72.91 percent in September 2018.

Figures for Fiscal Year 2020 • Our estimated FY20 year-to-date net profit and prize payout figures both include accruals for prizes won that have not yet been paid. o Due in part to a $14.9 million increase in prizes paid in the first three months of FY20 compared to the first three months of FY19 ($957.1 million in FY20 compared to $942.2 million in FY19), and a combined $18.3 million decrease in Mega Millions and Powerball sales (Mega Millions: $14.6 million decrease, Powerball: $3.7 million decrease) in the first three months of FY20 compared to the first three months of FY19 as a result of smaller jackpots: . Our estimated year-to-date net profit for the first three months of FY20 is $241.9 million compared to $259.7 million for the first three months of FY19. After adding a 1-day average net profit figure of $2.7 million due to a shift in the calendar that resulted in 1 less day being included in the net profit figure for the first three months of FY20, the adjusted year-over-year change for the first three months of FY20 vs. the first three months of FY19 is an estimated $15.1 million decrease in net profit. . Our estimated year-to-date prize payout for the first three months of FY20 is 73.96 percent, as compared to 72.81 percent for the first three months of FY19.

September 2019 sales breakdown • Instant Ticket sales were up $8.0 million, Keno sales were up $3.2 million, Mass Cash sales were up $280,152, and Megabucks Doubler sales were up $227,076 (high jackpot of $5.4 million compared to $2.9 million in September 2018).

• Compared to September of 2018, Mega Millions sales were down $2.1 million (high jackpot of $227 million compared to $336 million in September 2018), Powerball sales were down $1.8 million (high jackpot of $80 million compared to $213.4 million in September 2018), All or Nothing sales were down $130,588, Numbers Game sales were down $41,766, and Lucky for Life sales were down $15,644.

4 5 Year Comparison Prize Payout as a % of Sales Through September 2019 (September 2019 Estimated) 77.0%

76.1% 76.0%

75.2% 75.0% 74.7%

73.9% 74.0% 73.9% 73.8% 73.8% 73.6% 73.6% 73.7% 73.5% 73.3% 73.4% 73.3% 73.2% 73.3% 73.2% 73.4% 72.8% 73.1% 73.0% 73.1% 72.9% 73.0% 73.0% 72.6% FY20 72.4% 72.3% 72.3% 72.3% 72.4% FY19 72.0% 71.9% 72.2% 72.3% FY18 72.0% 71.7% 72.0% % 71.6% 71.6% 72.0% 72.0% 71.5% 71.9% 71.4% FY17 71.2% 71.2% 71.4% 71.4% 71.6% 71.4% FY16 71.0% 71.0%

70.1% 70.0%

69.0%

68.0%

67.0% July-P1 Aug-P2 Sept-P3 Oct-P4 Nov-P5 Dec-P6 Jan-P7 Feb-P8 Mar-P9 Apr-P10 May-P11 June-P12

Period

5 MSLC Gross Sales Results SEPTEMBER FY20 vs. FY19 Unadjusted Non Fiscal Year ($ millions) Through September 28, 2019 FY20 % of Total FY19 % of Total $ Change % Change

Instant Tickets $273.5 68.1% $265.5 67.4% $8.0 3.01% Mega Millions $6.3 1.6% $8.4 2.1% -$2.1 -25.2% Powerball $4.4 1.1% $6.2 1.6% -$1.8 -29.3% Keno $81.5 20.3% $78.3 19.9% $3.2 4.1% Mass Cash $6.8 1.7% $6.6 1.7% $0.3 4.3% All or Nothing $0.7 0.2% $0.8 0.2% -$0.1 -15.8% Lucky for Life $1.8 0.5% $1.8 0.5% $0.0 -0.8% Numbers Game $24.7 6.2% $24.7 6.3% $0.0 -0.2% Megabucks Doubler $1.5 0.4% $1.3 0.3% $0.2 17.3% Total $401.3 100.0% $393.7 100.0% $7.6 1.9%

Instant Tickets $273.5 68.1% $265.5 67.4% $8.0 3.0% Draw Games $45.6 11.4% $49.1 12.5% -$3.5 -7.1% Monitor Games $82.2 20.5% $79.1 20.1% $3.1 3.9% Total $401.3 100.0% $393.7 100.0% $7.6 1.9%

Unadjusted Month 9/1/19-9/28/19 Month 9/2/18-9/29/18 4 weeks 4 weeks 28 days 28 days

6 MSLC Gross Sales Results YEAR-TO-DATE FY20 vs. FY19 Unadjusted Non Fiscal Year ($ millions) Through September 28, 2019 FY20 % of Total FY19 % of Total $ Change % Change

Instant Tickets $882.3 68.3% $869.8 67.4% $12.5 1.44% Mega Millions $17.6 1.4% $32.3 2.5% -$14.6 -45.3% Powerball $16.4 1.3% $20.1 1.6% -$3.7 -18.5% Keno $260.5 20.2% $253.6 19.6% $6.9 2.7% Mass Cash $22.1 1.7% $21.9 1.7% $0.2 0.8% All or Nothing $2.2 0.2% $2.6 0.2% -$0.4 -15.6% Lucky for Life $5.9 0.5% $6.0 0.5% -$0.1 -2.0% Numbers Game $79.6 6.2% $80.4 6.2% -$0.8 -1.01% Megabucks Doubler $4.7 0.4% $4.2 0.3% $0.6 13.9% Total $1,291.4 100.0% $1,290.9 100.0% $0.4 0.0%

Instant Tickets $882.3 68.3% $869.8 67.4% $12.5 1.4% Draw Games $146.4 11.3% $164.9 12.8% -$18.5 -11.2% Monitor Games $262.7 20.3% $256.2 19.8% $6.5 2.5% Total $1,291.4 100.0% $1,290.9 100.0% $0.4 0.0%

Unadjusted Year 6/30/19-9/28/19 Year 7/1/18-9/29/18 13 weeks 13 weeks 91 days 91 days

7 Multi-State Game Jackpots since July 1, 2019

Mega Millions • 33 drawings (through Tuesday, Oct. 22) • High jackpot of $227 million • Jackpot has been $100 million or less in 19 of 33 drawings • 2 jackpots hit: o July 23 $168 million (New Hampshire) o Sept. 24 $227 million (Texas)

Powerball • 32 drawings (through Saturday, Oct. 19) • High jackpot of $198 million • Jackpot has been $100 million or less in 23 of 32 drawings • 4 jackpots hit: o July 13 $198 million (Tennessee) o August 17 $148 million (New York) o Sept. 4 $80 million (New York) o Sept. 21 $80 million (Michigan)

8 The Lottery at The Big E

Full service retail space • Instant ticket, draw game and monitor game sales • Cashing of prizes up to $600

Year Sales 2017 $466,029 2018 $441,502 2019 $478,218 (8.3% increase)

9 UMass “Community Salute” Partnership

The Community Salute program honors individuals who, through their dedicated commitment and humanitarian spirit, have made exceptional and lasting contributions to the UMass and greater Western Mass communities.

Nominations for this year are currently being accepted. During the final five UMass hockey home games, the Minutemen and their fans will salute the exemplary efforts of these individuals during special in-game presentations.

10 Recent Grand Prize Winners

$1,000,000 Instant Prize Winner $1,000,000 Instant Prize Winner $1,000,000 Instant Prize Winner Plymouth Lexington Haverhill

$100,000 Mass Cash Prize Winner $1,000,000 Instant Prize Winner $1,000,000 Instant Prize Winner Greenfield Framingham Dorchester

11 Holiday Instant Tickets Release (October 22)

$10,000 Winter Ice Price Point: $1 Top Prize: $10,000 Merry Money Blowout Quantity: 7,056,000 Price Point: $10 Top Prize: $500 Quantity: 15,120,000 $1,000,000 Winter Ice Price Point: $5 Top Prize: $1,000,000 Quantity: 12,096,000

$100,000 Winter Ice Frosty the Doughman Price Point: $2 Price Point: $2 Top Prize: $100,000 Top Prize: $100,000 Quantity: 8,064,000 Quantity: 5,040,000

12 VIP Club Holiday Promotion Red Carpet VIP Club members have the chance to win from $1,000 to $10,000 in cash prizes. Enter non-winning Winter Ice, Frosty the Doughman and/or Merry Money Blowout tickets to earn entries into a drawing. Up to Twenty-eight (28) winners shall be randomly selected by the Lottery from all eligible entries. Promotion period: Tuesday, October 22, 2019 at 9 a.m. to Tuesday, January 7, 2020 at 3:00 p.m.

Web Banner

13 Season Tickets Holiday Discount Period We will be offering a discount on Season Ticket purchases from November 17 through January 4. Season Tickets are available for Lucky for Life, Mass Cash, Mega Millions, Megabucks Doubler and Powerball. As an extra incentive, every Season Ticket bought or renewed during this discount period and registered by February 8 will also be entered into a drawing to win $1,000. Twenty $1,000 prize winners will be selected.

8 x 11 Poster

14 Holiday Agent Incentives

15 Keno and All or Nothing “Lucky 3s” Promotion

From November 17 through December 7, the Lottery will increase the number of 3X Bonus multipliers, resulting in more games having a bonus multiplier.

Playing Keno or All or Nothing Bonus doubles the price of a wager, while offering players the chance to multiply their prizes by the value of the Bonus multiplier.

8.5 x 11 Poster

16 Social Media Messaging

Jackpot Start of new awareness season (Twitter) (Facebook)

Responsible play (Instagram)

17 Instant Ticket Games Monthly Sales Unadjusted Non Fiscal Year October 2016 through September 2019 $400,000,000

$350,000,000

$300,000,000

$250,000,000

$200,000,000 MonthlySales $150,000,000

$100,000,000

$50,000,000

$- October November December January February March April May June July August September Oct18-Sept19 Monthly Sales $275,157,130 $341,445,200 $303,760,717 $355,448,873 $278,551,848 $293,058,540 $298,061,483 $365,018,233 $282,832,521 $268,757,579 $340,078,018 $273,487,773 Oct17-Sept18 Monthly Sales $265,713,468 $327,135,114 $278,942,942 $326,729,624 $272,342,241 $299,683,864 $300,520,215 $368,184,652 $278,911,892 $269,195,152 $335,134,078 $265,495,312 Oct16-Sept17 Monthly Sales $265,447,444 $328,268,756 $285,299,842 $337,750,779 $261,819,580 $273,938,994 $271,288,398 $360,247,336 $272,201,069 $269,014,241 $336,603,290 $260,549,479

Month Ending

18 Keno Game Monthly Sales Unadjusted Non Fiscal Year October 2016 through September 2019 $120,000,000

$100,000,000

$80,000,000

$60,000,000 MonthlySales

$40,000,000

$20,000,000

$- October November December January February March April May June July August September Oct18-Sept19 Monthly Sales $82,031,406 $100,113,694 $83,234,832 $101,949,430 $83,327,938 $83,719,826 $82,605,955 $102,326,582 $79,527,920 $78,190,978 $100,769,762 $81,510,030 Oct17-Sept18 Monthly Sales $73,036,564 $94,907,202 $80,024,061 $93,795,926 $80,282,794 $82,733,382 $80,117,255 $101,256,429 $77,960,158 $76,449,245 $98,856,161 $78,296,530 Oct16-Sept17 Monthly Sales $67,903,575 $87,121,263 $71,379,200 $86,695,983 $73,079,093 $75,553,888 $74,943,381 $91,798,292 $70,195,149 $70,200,002 $88,375,116 $71,304,919

Month Ending

19 All or Nothing Game Monthly Sales Unadjusted Non Fiscal Year October 2016 through September 2019 $1,600,000

$1,400,000

$1,200,000

$1,000,000

$800,000 MonthlySales $600,000

$400,000

$200,000

$- October November December January February March April May June July August September Oct18-Sept19 Monthly Sales $686,819 $805,907 $627,580 $810,632 $654,568 $665,798 $654,157 $772,737 $592,982 $636,800 $884,488 $697,808 Oct17-Sept18 Monthly Sales $699,384 $859,732 $739,477 $845,234 $715,146 $720,855 $686,928 $888,139 $694,472 $759,294 $1,043,143 $828,396 Oct16-Sept17 Monthly Sales $1,328,770 $1,425,445 $959,434 $1,091,127 $1,060,185 $938,145 $799,596 $938,981 $844,782 $878,865 $1,135,981 $784,151

Month Ending

20 Numbers Game Monthly Sales Unadjusted Non Fiscal Year October 2016 through September 2019 $35,000,000

$30,000,000

$25,000,000

$20,000,000

$15,000,000 MonthlySales

$10,000,000

$5,000,000

$- October November December January February March April May June July August September Oct18-Sept19 Monthly Sales $24,593,862 $31,297,451 $25,857,569 $30,316,141 $25,150,637 $25,467,058 $25,371,870 $31,425,465 $24,734,262 $24,303,392 $30,603,351 $24,689,908 Oct17-Sept18 Monthly Sales $24,874,265 $31,519,968 $25,413,240 $29,699,634 $25,259,961 $25,246,517 $25,700,710 $31,749,551 $25,053,206 $24,490,722 $31,190,101 $24,731,674 Oct16-Sept17 Monthly Sales $24,620,633 $31,043,731 $25,431,190 $30,775,436 $24,770,610 $25,275,748 $25,497,066 $31,690,709 $24,649,541 $24,465,891 $30,736,469 $24,533,111

Month Ending

21 Mass Cash Game Monthly Sales Unadjusted Non Fiscal Year October 2016 through September 2019 $10,000,000

$9,000,000

$8,000,000

$7,000,000

$6,000,000

$5,000,000

MonthlySales $4,000,000

$3,000,000

$2,000,000

$1,000,000

$- October November December January February March April May June July August September Oct18-Sept19 Monthly Sales $6,626,481 $8,521,634 $7,022,110 $8,447,793 $6,759,616 $6,875,652 $6,888,620 $8,606,204 $6,788,502 $6,707,719 $8,546,514 $6,843,642 Oct17-Sept18 Monthly Sales $6,264,886 $7,868,552 $6,384,027 $7,798,092 $6,348,169 $6,307,946 $6,444,685 $7,994,227 $6,373,279 $6,916,066 $8,447,576 $6,563,490 Oct16-Sept17 Monthly Sales $5,954,338 $7,437,632 $6,209,782 $7,534,299 $5,987,492 $6,113,012 $6,146,061 $7,653,772 $6,068,129 $5,948,156 $7,667,798 $6,226,521

Month Ending

22 Megabucks Doubler Game Monthly Sales Unadjusted Non Fiscal Year October 2016 through September 2019 $2,500,000

$2,000,000

$1,500,000

MonthlySales $1,000,000

$500,000

$- October November December January February March April May June July August September Oct18-Sept19 Monthly Sales $1,571,905 $1,488,294 $1,576,509 $1,580,864 $1,084,415 $1,159,927 $1,204,895 $1,620,881 $1,341,276 $1,348,339 $1,834,899 $1,541,955 Oct17-Sept18 Monthly Sales $1,551,952 $2,047,615 $2,270,338 $2,220,653 $1,146,212 $1,261,614 $1,287,612 $1,608,429 $1,120,794 $1,211,549 $1,624,032 $1,314,879 Oct16-Sept17 Monthly Sales $1,610,177 $2,136,411 $2,238,197 $2,363,779 $2,054,585 $1,409,920 $1,165,475 $1,562,843 $1,342,458 $1,374,517 $1,961,802 $1,512,736

Month Ending

23 Lucky for Life Game Monthly Sales Unadjusted Non Fiscal Year October 2016 through September 2019 $2,500,000

$2,000,000

$1,500,000

MonthlySales $1,000,000

$500,000

$- October November December January February March April May June July August September Oct18-Sept19 Monthly Sales $1,958,050 $2,298,351 $1,999,681 $2,332,031 $1,816,066 $1,856,426 $1,872,616 $2,330,752 $1,846,104 $1,799,132 $2,277,321 $1,819,010 Oct17-Sept18 Monthly Sales $1,853,560 $2,232,798 $1,963,724 $2,248,644 $1,838,946 $2,020,380 $1,864,948 $2,295,146 $1,828,500 $1,830,989 $2,349,164 $1,834,654 Oct16-Sept17 Monthly Sales $1,903,010 $2,328,274 $2,031,316 $2,360,732 $1,813,760 $1,973,906 $1,882,964 $2,307,906 $1,844,764 $1,841,290 $2,380,590 $1,848,784

Month Ending

24 Mega Millions Game Monthly Sales Unadjusted Non Fiscal Year October 2016 through September 2019 $60,000,000

$50,000,000

$40,000,000

$30,000,000 MonthlySales

$20,000,000

$10,000,000

$- October November December January February March April May June July August September Oct18-Sept19 Monthly Sales $55,366,747 $7,330,381 $10,244,884 $8,982,506 $6,889,416 $5,297,473 $6,240,244 $13,098,077 $8,538,472 $5,430,334 $5,900,611 $6,306,923 Oct17-Sept18 Monthly Sales $2,964,417 $6,105,169 $9,586,572 $10,743,128 $6,111,340 $16,711,105 $4,918,463 $5,944,453 $6,465,820 $17,190,511 $6,627,342 $8,433,647 Oct16-Sept17 Monthly Sales $3,154,921 $4,040,911 $4,092,354 $5,454,116 $3,290,421 $4,506,419 $3,070,678 $3,870,438 $4,478,634 $6,227,118 $9,564,398 $3,477,126

Month Ending

25 Powerball Game Monthly Sales Unadjusted Non Fiscal Year October 2016 through September 2019 $40,000,000

$35,000,000

$30,000,000

$25,000,000

$20,000,000 MonthlySales $15,000,000

$10,000,000

$5,000,000

$- October November December January February March April May June July August September Oct18-Sept19 Monthly Sales $27,940,731 $7,169,301 $7,847,786 $7,224,059 $8,516,396 $30,749,914 $5,938,577 $11,530,425 $5,489,643 $5,535,944 $6,452,724 $4,413,256 Oct17-Sept18 Monthly Sales $6,183,263 $6,882,079 $12,755,854 $14,747,567 $8,221,513 $10,991,073 $5,914,486 $9,027,129 $5,300,630 $6,107,036 $7,762,706 $6,242,958 Oct16-Sept17 Monthly Sales $5,959,329 $14,169,749 $5,599,470 $8,074,568 $15,822,474 $5,327,739 $4,854,401 $13,236,099 $12,345,763 $6,949,704 $34,456,871 $5,461,592

Month Ending

26 All Games Monthly Sales Unadjusted Non Fiscal Year October 2016 through September 2019 $600,000,000

$500,000,000

$400,000,000

$300,000,000 MonthlySales

$200,000,000

$100,000,000

$- October November December January February March April May June July August September Oct18-Sept19 Monthly Sales $475,933,131 $500,470,213 $442,171,668 $517,092,329 $412,750,900 $448,850,614 $428,838,417 $536,729,356 $411,691,682 $392,710,217 $497,347,688 $401,310,305 Oct17-Sept18 Monthly Sales $383,141,759 $479,558,229 $418,080,235 $488,828,502 $402,266,322 $445,676,736 $427,455,302 $528,948,155 $403,708,751 $404,150,564 $493,034,303 $393,741,540 Oct16-Sept17 Monthly Sales $377,882,197 $477,972,172 $403,240,785 $482,100,819 $389,698,200 $395,037,771 $389,648,020 $513,306,376 $393,970,289 $386,899,784 $512,882,315 $375,698,419

Month Ending

27 Monthly Net Profit October 2016 through September 2019 (Estimated Figure for September 2019) $140,000,000

$120,000,000

$100,000,000

$80,000,000

$60,000,000 MonthlySales

$40,000,000

$20,000,000

$- October November December January February March April May June July August September Oct18-Sept19 Monthly Sales $117,728,818 $109,003,023 $85,773,027 $85,234,144 $77,320,467 $94,998,625 $94,060,011 $119,429,160 52,299,780 $80,108,022 $91,692,242 $67,844,979 Oct17-Sept18 Monthly Sales $72,258,816 $95,626,330 $98,399,359 $81,233,852 $68,602,971 $65,586,495 $87,487,165 $99,021,314 $48,547,047 $80,970,105 $108,782,628 $77,459,395 Oct16-Sept17 Monthly Sales $87,242,409 $108,339,712 $94,341,505 $105,646,645 $76,540,597 $70,657,044 $47,017,246 $112,022,390 $56,808,328 $96,754,213 $108,446,664 $76,841,827

Month Ending

28