HomeMy WebLinkAboutNorth Carolina Education Lottery - Public Financial ReportFISCAL YEAR ENDED JUNE 30, 2021
Popular Annual Financial Report
About the Popular Annual Financial Report:
The North Carolina Education Lottery (NCEL) finance division is proud to present you its Popular Annual Financial Report (PAFR) for the
Fiscal Year (FY) ended June 30, 2021. This report provides an overview of the NCEL’s financial condition and a brief analysis of where the
money comes from and where the dollars are spent.
Most of the information in this report is drawn from the financial information appearing on the NCEL’s FY 2021 Annual Comprehensive
Financial Report (ACFR). The ACFR is a more detailed and complete financial presentation prepared in conformance with Generally
Accepted Accounting Principals (GAAP) and was audited by an independent accounting firm, receiving an unqualified (clean) opinion.
The financial data in this report also conforms to the GAAP. The ACFR, PAFR and the NCEL’s Annual Report are available for viewing on the
NCEL’s website at www.nclottery.com/about.aspx
2
NC Education Lottery
N.C. Education Lottery reports $3.8 billion in sales and record earnings of $936 million for
education.
For the 15th year in a row, the N.C. Education Lottery set a new record for lottery ticket sales
in fiscal year 2020-2021, and set a new record for money raised for education programs in
North Carolina.
Ticket sales exceeded $3.8 billion, up 26% year over year. The lottery continued its record of
increasing sales every year of its operations.
From those sales, the Lottery also set a new record for the amount of money raised for the
state, raising $936 million, up 28.4%, or an additional $207.4 million.
Scratch-off tickets consistently remain to be the Lottery’s most popular product, generating
$2.56 billion in sales, or 67% of revenue. Scratch-off sales also set a record, exceeding $2.5
billion for the first time ever. The Lottery launched 55 new scratch-off games during the year.
In September, the Education Lottery started its first new game in three years called Fast Play
Progressive. Fast Play games were the first lottery games to offer a chance to win a rolling
jackpot instantly while also giving players the chance to win cash prizes instantly too.
During the year, Lottery players received $2.46 billion in prize money including 102 prizes of
$1 million or more. The biggest prizes won were four $10 million prizes – the largest scratch-
off prizes offered in the state – three in the $10,000,000 Colossal Cash game and one in the
$300,000,000 Supreme Riches game.
The record ticket sales demonstrated again how much North Carolinians enjoy playing lottery
games. Last year, the Lottery averaged $10.4 million a day in ticket sales, $6.7 million a day in
prizes, and $2.5 million a day raised for education. The Lottery ended the fiscal year with
7,160 retail locations across the state. Those retailers earned $263 million in sales
commissions and incentives.
Total sales since the inception of the Lottery in 2006 stood at $30.5 billion, and the amount of
money raised for education climbed to $8.3 billion.
In its annual financial audit, the Lottery received an “unmodified opinion” from independent
auditors as it has in all prior annual financial audits.
The Lottery also attained again the World Lottery Association’s Level 4 certification for its
commitment to building the best practices in responsible gaming into all of its operations. Only
a few lotteries worldwide have achieved Level 4 certification, the highest level possible under
the association’s strict responsible gaming standards. The lottery received national attention
for its work in social responsibility, winning three awards from the National Council of Problem
Gambling for its outstanding work in the area of responsible gaming.
The State Lottery Act directs the lottery to increase and maximize the available revenues for
education purposes. In the 2020-21 fiscal year, a breakdown of revenues showed 64.6% went
to prizes, 24.6% for education programs, 6.9% in retailer commissions, and the remaining
3.9% to administrative expenses.
The N.C. General Assembly allocates lottery revenues that exceed projections to the Needs-
Based Public School Capital Fund. With that decision, $234 million in additional monies raised
in fiscal year 2020-21 will go to the fund. The General Assembly also directed transfers of $2.1
million in profits to the N.C. Alcohol Law Enforcement and $1 million to the N.C. Problem
Gambling Program.
The Lottery transferred its
net profits monthly to the Office of State Budget and
Management and into the North Carolina State
Lottery Fund. Funds then were distributed as
outlined in the state budget. The General
Assembly reports the following allocation of
money raised by the lottery in FY21:
• $385.9 million to
noninstructional
support personnel;
• $100 million for the
Public School Building
Capital Fund which
provides monies to
North Carolina counties to build and
repair schools;
• $75 million to the
Needs-Based Public
School Capital Fund,
which provides
financial assistance to
low-wealth counties to
build new schools;
• $78.2 million, to the
N.C. Pre-K program to
fund seats in the
prekindergarten
program for at-risk
four-year-olds;
• $30.4 million, for N.C.
Education Lottery
Scholarships which are
awarded based on
financial need to
students attending a
state university or
community college;
• $10.7 million, to the
UNC Need-Based
Grant program, which
provides financial aid
based on need to
students attending one
of the 16 UNC system
institutions.
• $21.4 million to
support school transportation for each
of the state’s school
systems.
3
Education Programs Receiving Lottery Dollars
County FY21 Cumulative County FY21 Cumulative
Alamance County 9,657,496 110,916,289 Johnston County 14,494,903 157,028,936
Alexander County 1,951,606 25,146,666 Jones County 509,488 22,764,267
Alleghany County 748,671 8,617,863 Lee County 4,520,017 53,935,863
Anson County 1,214,032 35,126,266 Lenoir County 3,635,564 47,305,139
Ashe County 1,238,324 33,621,208 Lincoln County 4,817,050 54,998,845
Avery County 863,645 12,365,928 Macon County 1,841,063 22,946,807
Beaufort County 2,762,446 34,902,373 Madison County 958,451 12,119,636
Bertie County 936,239 15,890,223 Martin County 1,003,861 23,189,936
Bladen County 16,809,012 43,862,375 McDowell County 2,171,373 45,457,624
Brunswick County 5,636,257 65,078,356 Mecklenburg County 62,673,535 701,287,853
Buncombe County 11,592,340 135,979,470 Mitchell County 605,877 24,143,425
Burke County 4,893,227 68,448,204 Montgomery County 1,899,172 24,510,546
Cabarrus County 15,551,966 167,342,387 Moore County 4,873,033 53,485,734
Caldwell County 4,069,115 69,097,217 Nash-Rocky Mount 4,775,523 83,849,534
Camden County 759,923 21,354,171 New Hanover County 11,191,046 135,229,435
Carteret County 13,099,842 51,534,584 Northampton County 777,209 28,702,959
Caswell County 844,721 28,624,318 Onslow County 12,109,711 135,938,113
Catawba County 17,630,987 121,755,618 Orange County 8,112,627 91,347,401
Chatham County 3,939,828 44,305,201 Pamlico County 578,724 7,656,053
Cherokee County 1,359,355 32,747,349 Pasquotank County 2,273,696 29,166,707
Chowan County 15,781,113 26,275,240 Pender County 4,285,611 43,953,099
Clay County 454,833 17,083,248 Perquimans County 676,861 8,862,788
Cleveland County 20,003,061 96,175,052 Person County 1,919,847 25,549,373
Columbus County 3,053,650 63,271,998 Pitt County 10,083,105 125,046,213
Craven County 5,681,946 69,418,468 Polk County 994,036 12,720,274
Cumberland County 22,675,233 285,371,920 Randolph County 8,287,802 103,087,959
Currituck County 1,666,752 17,770,975 Richmond County 3,053,794 40,467,841
Dare County 2,284,583 24,726,672 Robeson County 23,956,154 147,325,753
Davidson County 9,631,168 116,220,105 Rockingham County 4,826,047 64,306,331
Davie County 2,724,319 33,533,107 Rowan-Salisbury 7,442,218 96,214,982
Duplin County 4,195,746 49,364,470 Rutherford County 3,004,739 61,188,449
Durham County 13,948,310 161,877,590 Sampson County 4,776,484 60,746,975
Edgecombe County 2,936,958 41,982,646 Scotland County 2,596,404 36,235,292
Forsyth County 21,475,428 256,033,551 Stanly County 3,865,070 50,062,852
Franklin County 3,344,505 40,150,840 Stokes County 2,535,530 34,669,677
Gaston County 14,746,607 169,142,922 Surry County 4,046,884 56,272,194
Gates County 555,508 10,744,746 Swain County 733,495 15,653,616
Graham County 726,181 10,170,442 Transylvania County 1,728,399 17,442,765
Granville County 3,038,722 39,162,829 Tyrrell County 204,684 3,740,198
Greene County 1,248,452 16,873,137 Union County 16,462,406 185,403,399
Guilford County 33,282,413 396,823,973 Vance County 2,481,721 33,902,887
Halifax County 2,758,740 39,866,919 Wake County 65,119,551 693,903,847
Harnett County 17,136,195 103,745,570 Warren County 898,050 12,936,801
Haywood County 2,895,169 35,928,440 Washington County 542,965 10,258,257
Henderson County 5,493,372 63,678,060 Watauga County 2,159,696 24,323,100
Hertford County 1,106,566 33,474,405 Wayne County 21,657,143 118,140,731
Hoke County 13,570,252 58,504,495 Wilkes County 4,188,541 57,046,184
Hyde County 262,890 3,598,524 Wilson County 3,781,202 71,734,777
Iredell County 10,694,235 120,870,627 Yadkin County 2,171,429 29,076,033
Jackson County 1,451,634 18,000,259 Yancey County 897,416 11,066,310
55%
6% 3%
11%
25%
Program Allocation
School Workers
School
Construction
NC Pre-K
Financial Aid,
Scholarships,
Grants
School
Transportation
4
Sales
The gross lottery ticket
sales for fiscal year 2021
totaled $3.805 billion as compared to $3.016 billion
for fiscal year 2020 and
$2.860 billion for fiscal
year 2019. This
represents an increase of
$789 million from 2020
and $945 million from
2019.
Instant Ticket Sales
Gross instant ticket sales were $2.561 billion for fiscal year 2021 compared with $2.089 billion
for fiscal year 2020 and $1.909 billion for fiscal year 2019, an increase of approximately $472
million from fiscal year 2020 and approximately $652 million from fiscal year 2019. The increase
in instant ticket sales in 2021 was once again driven by growth at the $5, $10, and $20 price
points, which combined experienced a 25% increase over the previous year. The launch of the
first $30 game in almost 2 years, Millionaire Maker in March, was also a significant contributor
the instant ticket growth. The game featured a unique value proposition at the $30 price point
and included the best odds to win the $1 million top prize compared to other games. The best-selling game of the year was the $30 game $10,000,000 Colossal Cash, which accounted for
$214 million in total sales. The $5 price point again was the top selling price point in FY21
accounting for $612 million in sales with a growth rate of 17% year over year. $500 Stacked led
the way at the $5 price point and became the best-selling $5 game ever. FY21 marked the first
year that there were three different price points, $5, $10, and $20, that accounted for over $500
million in sales.
Draw game sales were $1,245 million for fiscal year 2021 compared to $927 million for fiscal year
2020 and $951 million for fiscal year 2019, representing a $318 million increase compared to
fiscal year 2020 and a $294 million increase over fiscal year 2019. This marked the first time that
draw game sales eclipsed the $1 billion mark. Growth was experienced across the entire draw
game portfolio, led by Pick 3 and Mega Millions. Pick 3 added $98 million and Mega Millions
added $43.5 million year over year in sales. Pick 4 wasn’t too far behind with an additional $42.6
million in sales when compared to FY20. The Numbers games have continued their recent strong
performance with three years of consecutive growth. Our in-state rolling jackpot game, Cash 5 continued to grow at a healthy rate of 16% year over year due to a record jackpot for the game,
as well as higher than average jackpots overall.
The NCEL added a new Draw game to the portfolio, Fast Play, in September that contributed over
$64 million in sales in the nine months that it was in the market in FY21. Fast Play is a game
category that features multiple on demand games and play styles, instant wins, and a progressive
jackpot that all of the games contribute towards. Over the course of the first nine months, 9 new
Fast Play games were introduced with the $10 Jackpot 777’s game leading the way with $22.5
million in sales. The $10 price point collectively was the largest contributor to overall Fast Play sales, accounting for approximately 40% of the sales for the category.
Game FY 2021 FY 2020 FY 2019
Instant Tickets 2,560,821,887 2,089,212,972 1,908,861,531
Powerball 138,361,797 101,326,600 158,736,625
Mega Millions 118,863,047 75,349,730 142,092,878
Pick 3 498,616,646 400,507,614 352,111,247
Pick 4 227,755,867 185,154,744 161,554,924
Cash 5* 90,513,576 78,014,721 73,282,850
Lucky for Life 24,916,530 20,362,570 20,493,314
KENO 80,641,758 66,276,603 42,491,370
Fast Play 64,861,261 - -
Total Sales 3,805,352,369 3,016,205,554 2,859,624,739
*The EZ Match game is an additional add on to the Carolina Cash 5 game; sales for EZ Match have been in included with Cash 5 in the chart.
Draw Game Sales
5
Statement of Net Position
Statement of Net Position
The Statement of Net Position
presents the NCEL’s financial
position from a long-term
perspective. It reports all of
the NCEL’s assets and
liabilities.
As required in the Lottery Act,
net revenues of the NCEL are
transferred four times a year
to the NC Education Lottery
Fund at the Office of State
Budget and Management.
At year end, Net Revenues
Assets are zero for the NCEL.
There are no changes in the
Net Positions from year to
year.
Readers wanting more
detailed financial information
should refer to the NCEL’s FY
2021 Annual Comprehensive
Financial Report (ACFR)
available on the North Carolina
Education Lottery’s website at :
https://www.nclottery.com/
CorporateSocialResponsibility_
Integrity
A current asset is an asset which can either be converted to cash or used to pay current liabilities within 12 months.
The NCEL’s total current assets mainly consist of total cash, accounts receivable, investments in annuity contracts,
and inventory.
A non-current or capital asset is an asset or property which cannot easily be converted into cash. The NCEL’s non-current
assets are mainly made up on long-term investments in annuity contracts, prepaid items, furniture, and equipment.
Total current liabilities are what the NCEL currently owes to its suppliers, winners, and the State; all of which are short term
debts to be paid within a year. The NCEL’s total current liabilities are made up of accounts payable, accrued payroll,
current annuity prizes, and due to other fund (“Due to Other Funds” represents the amount of net revenues for the fiscal
year not yet transferred to the State as of June 30, 2021 but will be transferred during fiscal year 2022.
Non-current liabilities are the NCEL’s long-term financial obligations that are not due in the present accounting year.
The majority of the NCEL’s non-current liabilities consist of long term annuity prizes and accrued time off.
The majority of capital asset investments were during our first full year of operation in 2007. The investment in capital
assets includes game equipment, data processing equipment, telephone equipment, software, and fixtures. The
capitalization of all items including equipment, computers, and furniture follows North Carolina’s Office of State Controller’s
policies. Capital assets are reported at their cost and are depreciated over their estimated useful lives.
Condensed Statement of Net Position (in thousands)
FY 2021 FY 2020 FY 2019
ASSETS
Total current assets 242,461 57,873 58,420
Non-current assets 85,976 79,825 77,017
Capital assets, Dep. (net) 2,470 2,541 3,000
Total Assets 330,907 140,239 135,437
Deferred Outflows 10,281 8,080 7,861
LIABILITIES
Total current liabilities 249,129 64,189 62,234
Non-current liabilities 123,928 117,256 110,885
Total Liabilities 373,057 181,446 173,119
Deferred Inflows 12,829 11,571 14,877
NET POSITIONS
Invested in capital assets 2,470 2,541 3,000
Restricted net positions 32 36 127
Unrestricted net positions (47,200) (47,275) (47,825)
Total Net Positions (44,698) (44,698) (44,698)
Activity for Capital Assets for Year Ended June 30, 2021 (in thousands)
Balance
June 30, 2021 Increase Decrease Balance
June 30, 2020
Capital assets, depreciable
Furniture 49 - - 49
Equipment 5,475 546 87 5,016
Motorized equipment 80 - - 80
Computer software 1010 - - 1,010
Total capital assets, depreciable 6,614 546 87 6,155
Less accumulated depreciation for
Furniture 29 - - 29
Equipment 3,302 404 - 2,898
Motorized equipment 80 - - 80
Computer software 733 126 - 607
Total accumulated depreciation 4,144 530 - 3,614
Total capital asset, depreciable net 2,470 16 87 2,541
Capital assets, net 2,470 16 87 2,541
6
Statement of Activities
This section reports the fiscal
year’s financial activities from
a long-term perspective. It is
designed to provide a
summary of the financial
health and stability of the
North Carolina Education
Lottery. Information in this
section should provide the
reader with a general
understanding of how the
NCEL’s resources are used.
Operating Revenues
Operating revenue is income
derived from the lottery’s
everyday activities and mainly
consists of ticket sales and
communication fees collected
from retailers.
The majority of Fees and
Licenses represent a weekly
retailer communication fee
charged to active retailers for
satellite communications and
an application fee for new
retailers and changes in
ownership.
Operating Expenses
An operating expense is an
expense that an organization
incurs as a result of its normal
business operations. In the
lottery’s case these expenses
are all directly related to the
production and sale of lottery
tickets.
The following charts show the
major components of the
NCEL operating expense and
transfers as a percentage of
total revenues for the June
30, 2021, 2020, and 2019
fiscal years:
Statement of Activities (in thousands)
FY 2021 FY 2020 FY 2019
Operating Revenues:
Gross Sales: 3,805,352 3,016,205 2,859,624
Less: Prize Tickets and Bad Debt (26) (2) (14)
Fees and Licenses 5,298 5,399 5,335
Total Operating Revenues 3,810,624 3,021,602 2,864,945
Operating Expenses:
Salaries, Wages, and Benefits 27,929 25,478 22,259
Lottery Prizes 2,462,425 1,957,588 1,845,287
Retailer Commissions 261,688 209,187 198,924
Retailer Incentive 1,432 1,256 1,120
Gaming Systems Services 70,789 53,883 45,586
Advertising 28,748 21,729 25,367
Marketing 2,837 4,535 4,448
Other Services 9,240 10,948 5,388
Furniture, Fixtures, and Equipment 1,409 1,469 944
Depreciation 529 527 564
Other General and Administrative Expenses 4,873 4,121 4,018
Total Operating Expenses 2,871,899 2,290,721 2,153,905
Operating Income 938,725 730,881 711,040
Non-operating Revenues (Expenses):
Investment Earnings and Other Miscellaneous Revenue (Expense) 360 1,156 1,450
Compulsive Gambling Contribution (1,000) (1,000) (1,000)
ALE Gaming Enforcement (2,100) (2,100) (2,100)
Inter-Agency Transfer In 4,000
Nonoperating Expense (4,000)
Unclaimed Prizes to NC Education Lottery Fund (24,247) (13,617) (16,206)
Net Revenues to the State of NC (912,572) (715,782) (692,989)
Miscellaneous Non-operating Expenses 370 462 (195)
Noncapital Contributions 464
Total Non-operating Revenue (Expense) (938,725) (730,881) (711,040)
Change in Net Position - - -
Net Position, Beginning July 1 (44,698) (44,698) (44,698)
Cumulative Effect from Change in Accounting Principle - - -
Net Position, Beginning July 1 (Restated) - - -
Net Position, Ending June 30 (44,698) (44,698) (44,698)
Prize Expense &
Prize Tickets
65%
Advertising
1%
All other
Expenses &
Transfers3%
Commissions
7%
Net Revenue to be
Transferred to NCEL Fund
24%
DISTRIBUTION OF REVENUES FY 2021
Prize Expense & Prize Tickets
65%
Advertising
1%
All other Expenses &
Transfers
3%
Commissions
7%
Net Revenue to be
Transferred to NCEL Fund 24%
DISTRIBUTION OF REVENUES FY 2020
Prize Expense &
Prize Tickets 64%
Advertising 1%
All other Expenses &
Transfers
3%
Commissions 7%
Net Revenue to be Transferred to NCEL Fund
25%
DISTRIBUTION OF REVENUES FY 2019
7
Operating Revenues vs. Expenses
$-
$200,000,000
$400,000,000
$600,000,000
$800,000,000
$1,000,000,000
$1,200,000,000
$1,400,000,000
$1,600,000,000
$1,800,000,000
$2,000,000,000
$2,200,000,000
$2,400,000,000
$2,600,000,000
$2,800,000,000
$3,000,000,000
$3,200,000,000
$3,400,000,000
$3,600,000,000
$3,800,000,000
$4,000,000,000
FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021
OPERATING REVENUES VS EXPENSES FY 2012 TO FY 2021
Total Operating Revenues Prize Expense Commissions Other Expenses
Non-operating Revenues and Expenses
Non-operating revenues and expenses are defined as those that are incurred by activities not related to the
core operations of an organization. In the lottery’s case, non-operating items are any revenues or
expenses incurred not directly associated with the sale of lottery tickets.
Non-operating revenues consist of investment earnings from the Short Term Investment Fund held at the
State Treasurer’s Office and Multi-State Lottery Association (MUSL) dividends received.
Non-operating expenses mainly consist of transfers from the NCEL to the State. These transfers consist of
net revenues to the State, compulsive gambling treatment contributions, and unclaimed prizes transferred
to the North Carolina Education Lottery Fund.
Readers wanting more detailed financial information on any of the lottery’s financial activities and results
should refer to the NCEL’s FY2021 Annual Comprehensive Financial Report (ACFR) available on the
NCEL’s website at https://www.nclottery.com/CorporateSocialResponsibility_Integrity
Statement of Activities
Section 18C-162, NC General
Statute stipulates no more
than eight percent of the total
annual revenues shall be
allocated for payment of
expenses of the lottery.
Advertising expenses shall not
exceed one percent of the total
annual revenues.
Prizes, commissions, and gaming vendor charges all directly relate to sales. As expected, as sales have
increased so have these expenses. In fiscal year 2021, total gaming expenses which consist of prizes,
retailer commissions, and gaming vendor charges (gaming system services), totaled $2,795 million as
compared to $2,221 million and $2,090 million for fiscal years 2020 and 2019, respectively. Other
operating expenses, which consist of advertising and marketing, salary and benefits, professional fees,
rent, maintenance, depreciation, and general administrative expenses increased to $77.0 million in fiscal
year 2021, as compared with $70.1 million and $64.1 million for fiscal years 2020 and 2019, respectively.
2728 Capital Boulevard, Raleigh, NC
Connect and Learn More
Information about the lottery’s mission to raise money for education is
available to you in many ways. You are invited to visit our website, contact
our communications team, or connect with us through social media. We are
here to provide available resources schedule interviews with lottery officials,
or arrange for presentations to civic groups, classes, and associations.
Van Denton, Director of Communications
919-301-3308
robert.denton@lotterync.net
www.nclottery.com
The Government Finance Officers Association of the United States and Canada
(GFOA) has given an Award for Outstanding Achievement in Popular Annual
Financial Reporting to the North Carolina Education Lottery for its Popular Annual
Financial Report for the fiscal year ended June 30, 2020. The Award for Outstanding
Achievement in Popular Annual Financial Reporting is a prestigious national award
recognizing conformance with the highest standards for preparation of state and
local government popular reports.
In order to receive an Award for Outstanding Achievement in Popular Annual
Financial Reporting, a government unit must publish a Popular Annual Financial
Report, whose contents confirm to program standards of creativity, presentation,
understandability, and reader appeal.
An Award for Outstanding Achievement in Popular Annual Financial Reporting
is valid for a period of one year only. The North Carolina Education Lottery has
received a Popular Award for the last thirteen consecutive years (fiscal years ended
2008—2020). We believe our current report continues to conform to the Popular
Annual Financial Reporting requirements, and we are submitting it to GFOA.
Awards and Acknowledgements
255 Copies of this public document were printed at a cost of $709.46 or $2.77 per copy.
Government Finance Officers Association
Award for Outstanding
Achievement in Popular Annual Financial Reporting
Presented to
North Carolina Education Lottery
For its Annual Financial Report
for the Fiscal Year Ended June 30, 2020
Executive Director/CEO