The Ohio Lottery Commission An Enterprise Fund of the State of Ohio Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2020 The Ohio Lottery Commission An Enterprise Fund of the State of Ohio Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2020 Prepared by the Ohio Lottery Office of Finance Mike DeWine, Governor Pat McDonald, Executive Director Matthew Blair, Commission Chairperson Gregory A. Bowers, Finance Director Comprehensive Annual Financial Report FY 2020 1 2 The Ohio Lottery TABLE OF CONTENTS INTRODUCTORY SECTION LETTER OF TRANSMITTAL Profile of the Ohio Lottery ...................................................................................................................................................................................... 6 Economic Outlook ..................................................................................................................................................................................................... 6 Lottery Products ....................................................................................................................................................................................................... 7 Major Initiatives ......................................................................................................................................................................................................... 9 Accounting Systems and Policies .........................................................................................................................................................................10 Budgetary Control ...................................................................................................................................................................................................10 Internal Control Environment ...............................................................................................................................................................................10 Financial Information ...............................................................................................................................................................................................11 GFOA Certificate of Achievement .........................................................................................................................................................................11 Independent Audit ....................................................................................................................................................................................................11 Acknowledgments .....................................................................................................................................................................................................11 Certificate of Achievement ....................................................................................................................................................................................13 Ohio Lottery Commission - Structure of Organization ...................................................................................................................................14 Principal Officials .....................................................................................................................................................................................................15 FINANCIAL SECTION INDEPENDENT AUDIT Independent Auditor’s Report ......................................................................................................................................................................................................................................................18 MANAGEMENT’S DISCUSSION AND ANALYSIS Financial Highlights ........................................................................................................................................................................................................................................................................21 Overview of the Financial Statements .......................................................................................................................................................................................................................................21 Lottery Operating Fund ..................................................................................................................................................................................................................................................................21 Annuity Prize Fund ...........................................................................................................................................................................................................................................................................21 Financial Analysis ...........................................................................................................................................................................................................................................................................22 Operating Analysis ..........................................................................................................................................................................................................................................................................25 Capital Assets and Debt Administration ..................................................................................................................................................................................................................................27 Contacting the Ohio Lottery’s Financial Management .........................................................................................................................................................................................................27 FINANCIAL STATEMENTS Statement of Net Position - Major Funds .................................................................................................................................................................................................................................28 Statement of Revenues, Expenses, and Changes in Fund Net Position - Major Funds ...............................................................................................................................................30 Statement of Cash Flows - Major Funds ....................................................................................................................................................................................................................................31 NOTES TO THE BASIC FINANCIAL STATEMENTS Summary of Significant Accounting Policies ..........................................................................................................................................................................................................................32 Cash Deposits and Investments ..................................................................................................................................................................................................................................................35 Capital Assets ...................................................................................................................................................................................................................................................................................38 Prize Awards Payable .....................................................................................................................................................................................................................................................................39 Other Liabilities ...............................................................................................................................................................................................................................................................................39 Current and Noncurrent Liabilities ............................................................................................................................................................................................................................................40 Pension-Ohio Public Employees Retirement System (Opers)/Net Pension Liability/Asset........................................................................................................................................40 Other Post Employment Benefits ...............................................................................................................................................................................................................................................44 Net OPEB Liability ............................................................................................................................................................................................................................................................................44 Interfund Transactions and Balances .......................................................................................................................................................................................................................................48