Revenue Estimating Conference Lottery Sales Executive Summary August 1, 2018

Transcription

1 Revenue Estimating Conference Lottery Sales Executive Summary August 1, 2018 The Revenue Estimating Conference reviewed Lottery revenues on August 1, Total ticket sales were $134.0 million over estimate for Fiscal Year , mostly due to strength in scratch-off ticket and Mega Millions sales. The Conference increased the overall sales forecast by $147.3 million in Fiscal Year and increased the forecast by $221.2 to $222.6 million in subsequent fiscal years. While not exclusively related to sales activity, the final transfers to the Educational Enhancement Trust Fund (EETF) were increased by $12.2 million in Fiscal Year , and by $22.5 to $27.0 million in the remaining fiscal years. In regard to the specific games: Scratch-Off sales were approximately $72.5 million over estimate for Fiscal Year The Conference increased the Scratch-Off ticket sales by $117.2 to $210.7 million each fiscal year. Powerball sales were about $9.0 million over estimate for Fiscal Year The Conference chose to retain the prior estimate for Powerball sales, which assumes three large jackpots per fiscal year. Mega Millions ticket sales were healthier than anticipated 1, coming in $45.6 million over estimate for Fiscal Year The Conference increased the forecast between $40.3 and $42.8 million for each fiscal year. Lotto sales came in $10.4 million below expectation for Fiscal Year The Conference reduced the forecast between $28.9 and $43.7 million for each fiscal year. Fantasy 5 ended Fiscal Year within 0.5% of the estimate. The Conference made a slight upward adjustment of $1.2 million for each fiscal year in the forecast. Ticket sales for Lucky Money were $2.5 above estimate for Fiscal Year The Conference chose to increase Fiscal Year sales by $3.8 million, but revert to negative growth rates for the remaining years. Ticket sales for Pick Games Pick 2, Pick 3 (formerly Cash 3), Pick 4 (formerly Play 4), and Pick 5 were nearly on estimate, coming in only 0.99% above expectation. The Conference increased the forecast between $16.8 and $18.8 million for each fiscal year. Cash 4 Life sales were below estimate by 0.97% for the Fiscal Year The Conference decreased the forecast for Cash 4 Life sales to a flat $52.0 million per fiscal year, indicative of $1 million per week in sales. Fast Play is a new instant ticket game that came online in September Total ticket sales for Fiscal Year were $7.29 million above forecast. The Conference increased the forecast to an even $15.0 million per fiscal year based on the recent sales. The details of the forecast and changes are shown in the following table. 1 Mega Millions sales for Fiscal Year were influenced by jackpot activity and a price increase from $1 to $2 (October 2017).

2 Summary of All Games Jan 2018 Aug 2018 Difference Scratch-off Powerball Mega Millions Lotto Lucky Money Fantasy Pick Games Cash 4 Life Fast Play TOTAL EETF Receipts from Ticket Sales Other Income % unclaimed prizes Distribution to EETF from Lottery Receipts

3 LOTTERY ESTIMATING CONFERENCE, August 2018 LOTTERY SALES PROJECTIONS SUMMARY Ticket Sales Jan 2018 Aug 2018 Diff Other Income Jan 2018 Aug 2018 Diff Unclaimed Prizes Jan 2018 Aug 2018 Diff Distribution to EETF from Lottery Receipts Jan 2018 Aug 2018 Diff /1/2018

4 SCRATCH-OFF Total Sales Due to EETF from Ticket Sales Per Capita Sales Average Weekly Sales Jan 2018 Aug 2018 Jan 2018 Aug 2018 Jan 2018 Aug 2018 Jan 2018 Aug Average Weekly Sales % -12.9% Jan 2018 Aug % 0.7% % 7.1% % 15.3% % 18.0% % 12.8% % 9.0% % 6.2% % 7.3% % 9.6% % 4.7% % 3.9% % 1.9% % 1.6% % 1.4% % /1/2018

5 POWERBALL (INCLUDING POWER PLAY) Ticket Sales Per Capita Sales Average Weekly Sales Jan 2018 Aug 2018 Jan 2018 Aug 2018 Jan 2018 Aug * * % 86.0% % -9.5% % 28.2% % 29.9% % -28.3% % -20.1% % 60.5% % -27.9% % 9.2% % -6.9% % 1.5% % 1.5% % 1.5% % 1.4% % *Annualized figures 3 8/1/2018

6 Ticket Sales Per Capita Sales Average Weekly Sales Jan 2018 Aug 2018 Jan 2018 Aug 2018 Jan 2018 Aug n/a % -12.1% % 1.8% % -1.7% % 49.7% % -1.0% % 1.6% % 1.5% % 1.4% % 1.4% % Mega Millions 4 8/1/2018

7 Ticket Sales Per Capita Sales Average Weekly Sales Jan 2018 Aug 2018 Jan 2018 Aug 2018 Jan 2018 Aug % -16.5% % -31.5% % -7.7% % 1.9% % -15.9% % -0.9% % -13.8% % -3.2% % -13.2% % -5.1% % -9.0% % -5.0% % -3.0% % -1.0% % -0.5% % LOTTO WITH XTRA 5 8/1/2018

8 Ticket Sales Per Capita Sales Average Weekly Sales Jan 2018 Aug 2018 Jan 2018 Aug 2018 Jan 2018 Aug % -16.7% % -9.9% % -3.4% % 3.8% % -3.1% % -11.2% % 29.8% % -17.0% % 4.9% % -17.2% % 2.9% % -1.8% % -1.7% % -1.9% % -1.8% % *Formerly Mega Money. Name Change effective July *EZ Match added at same time as name change. LUCKY MONEY* (Including EZ Match)* 6 8/1/2018

9 Ticket Sales Per Capita Sales Average Weekly Sales Jan 2018 Aug 2018 Jan 2018 Aug 2018 Jan 2018 Aug % -7.2% % -1.9% % 0.3% % 2.8% % -3.2% % 2.4% % -0.2% % 3.0% % -7.0% % -4.1% % 0.8% % 0.3% % 0.3% % 0.3% % 0.3% % FANTASY 5 (Including EZ Match) 7 8/1/2018

10 Jan 2018 Aug 2018 Jan 2018 Aug 2018 Jan 2018 Aug % -0.9% % -3.6% % 1.8% % 1.9% % 1.6% % 5.0% % 7.0% % 5.0% % 0.2% % 3.8% % 3.4% % 1.9% % 1.7% % 1.6% % 1.5% % Pick Games* Pick Games Ticket Sales Per Capita Sales Average Weekly Sales * Beginning August 1, 2016, the Lottery is launching a new family of Pick Games that includes Cash 3 and Play 4 which will be renamed Pick 3 and Pick 4 and introduces two similar new games called Pick 2 and Pick 5. The historical data through Fiscal Year is the combined sales data for Cash 3 and Play 4. Beginning in Fiscal Year , the conference will forecast all four pick games together. 8 8/1/2018

11 Ticket Sales Per Capita Sales Average Weekly Sales Jan 2018 Aug 2018 Jan 2018 Aug 2018 Jan 2018 Aug % 105.8% % -12.2% % 0.0% % 0.0% % 0.0% % 0.0% % Cash 4 Life 9 8/1/2018

12 Ticket Sales Per Capita Sales Average Weekly Sales Jan 2018 Aug 2018 Jan 2018 Aug 2018 Jan 2018 Aug % -15.7% % 0.0% % 0.0% % 0.0% % 0.0% % Fast Play 10 8/1/2018

13 Raffle Ticket Sales Per Capita Sales Average Weekly Sales Jan 2018 D.O.L. Exec. Leg. Jan 2018 D.O.L. Exec. Leg. Jan 2018 D.O.L. Exec. Leg /1/2018

14 Lucky Lines Ticket Sales Per Capita Sales Average Weekly Sales Monopoly Millionaire Ticket Per Capita Average Weekly Sales Sales Sales /1/2018

15 Ticket Sales Due to EETF from Ticket Sales Per Capita Sales Average Weekly Sales Jan 2018 Aug 2018 Jan 2018 Aug 2018 Jan 2018 Aug 2018 Jan 2018 Aug Average Weekly Sales Jan 2018 Aug 2018 Jan 2018 Aug % -2.8% % -2.2% % 5.6% % 5.4% % -1.7% % -4.7% % 13.4% % -9.3% % 7.1% % -2.6% % 0.6% % 0.8% % 0.9% % 1.0% % TERMINAL (ONLINE) GAME SALES 13 8/1/2018

16 Ticket Sales Per Capita Sales Average Weekly Sales Jan 2018 Aug 2018 Jan 2018 Aug 2018 Jan 2018 Aug % -5.7% % -1.0% % 2.8% % 11.0% % 12.7% % 7.1% % 4.0% % 8.6% % 1.5% % 8.8% % 2.7% % 2.9% % 1.6% % 1.4% % 1.3% % TOTAL TICKET SALES 14 8/1/2018

17 Instant (Scratch-off + Fast Play) versus Online (Terminal) Instant Ticket Sales Online Games Ticket Sales Total Ticket Sales Jan 2018 Aug 2018 Jan 2018 Aug 2018 Jan 2018 Aug Instant - percent of total Terminal Games - percent of total Jan 2018 Aug 2018 Jan 2018 Aug % 29.8% % 70.2% % 28.5% % 71.5% % 28.3% % 71.7% % 25.3% % 74.7% % 28.1% % 71.9% % 28.1% % 71.9% % 37.4% % 62.6% % 44.2% % 55.8% % 53.1% % 46.9% % 53.5% % 46.5% % 55.4% % 44.6% % 56.7% % 43.3% % 52.4% % 47.6% % 53.3% % 46.7% % 55.5% % 44.5% % 57.7% % 42.3% % 60.4% % 39.6% % 63.7% % 36.3% % 66.7% % 33.3% % 65.2% % 34.8% % 68.9% % 31.1% % 69.4% % 30.6% % 71.0% % 29.0% % 71.6% % 28.4% % 71.9% % 28.1% % 72.0% % 28.0% % 72.1% % 27.9% % % 15 8/1/2018

18 Other Income (Interest Earnings, Retailer Fees, On-Line Communication Fees, Prize Money Held in Reserve) 80% Unclaimed Prizes for Transfer Jan 2018 Aug 2018 Jan 2018 Aug /1/2018

19 Factors Affecting EETF Transfers Jan 2018 Aug 2018 Jan 2018 Aug 2018 Jan 2018 Aug 2018 Jan 2018 Aug 2018 Jan 2018 Aug 2018 Jan 2018 Aug 2018 Jan 2018 Aug 2018 Prize Percentage Scratch-off 73.04% 73.30% 73.04% 73.27% 73.04% 73.27% 73.04% 73.27% 73.04% 73.27% 73.04% 73.27% 73.27% Prize Percentage Terminal Games 51.68% 51.34% 50.43% 51.20% 50.43% 51.20% 50.43% 51.20% 50.43% 51.20% 50.43% 51.20% 51.20% Retailer Commission Rate 5.60% 5.50% 5.60% 5.60% 5.60% 5.60% 5.60% 5.60% 5.60% 5.60% 5.60% 5.60% 5.60% Administrative Appropriation $81.82 $82.40 $80.87 $81.60 $80.87 $80.90 $80.87 $80.90 $80.87 $80.90 $80.87 $80.90 $80.90 Vendor Rate Scratch-off 1.38% 1.37% 1.37% 1.36% 1.29% 1.28% 1.29% 1.28% 1.28% 1.28% 1.28% 1.28% 1.28% Vendor Rate Terminal Games 1.58% 1.56% 1.84% 1.84% 2.58% 2.63% 2.59% 2.65% 2.61% 2.67% 2.61% 2.68% 2.68% Unclaimed Prize Rate 1.25% 1.24% 1.25% 1.24% 1.25% 1.24% 1.25% 1.24% 1.25% 1.24% 1.25% 1.24% 1.24% Note: After transfers for prizes, fees, administrative expenses, and unclaimed prizes, net transfers to the EETF equal approximately 41.3% of terminal game ticket sales and 18.6% of scratch-off ticket sales. 17 8/1/2018

20 Calculation of Fiscal Year Distributions to EETF from Lottery Receipts Jan 2018 Aug 2018 Jan 2018 Aug 2018 Jan 2018 Aug 2018 Jan 2018 Aug 2018 Jan 2018 Aug 2018 Jan 2018 Aug 2018 Jan 2018 Aug 2018 % Week 51 scratch-off * % % % % % % % % % % % % % % Week 51 terminal games * % % % % % % % % % % % % % % Week 52 scratch-off * % % % % % % % % % % % % % % Week 52 terminal games * % % % % % % % % % % % % % % of Week 51 to subsequent year ** % % 0.00% 0.00% % % % % % % % % 0.00% % of Week 52 to subsequent year ** 85.43% 85.43% % % 29.20% 29.20% 44.72% 44.72% 61.40% 61.40% 71.43% 71.43% % % of scratch-off rec'd subsequent year % % % % % % % % % % % % % % of terminal games rec'd subsequent year % % % % % % % % % % % % % EETF Transfer rate scratch-off 18.73% 18.60% 18.79% 18.58% 18.90% 18.71% 18.91% 18.73% 18.93% 18.74% 18.95% 18.76% 18.77% EETF Transfer rate terminal games 39.89% 40.37% 40.93% 40.17% 40.21% 39.43% 40.22% 39.43% 40.22% 39.42% 40.23% 39.43% 39.44% * based on weekly sales figures for ** based on daily sales figures for January 2018 Forecast - Post Session Scratch-Off Sales Terminal Game Sales EETF transfer due from current year ticket sales and other income less collection lag loss (55.5) (30.9) (40.4) (45.9) (52.0) (60.6) plus collection lag gain from prior year Due to EETF from Lottery Receipts adjustment for estimated true-up payment in next fiscal year (6.0) (6.0) (6.0) (6.0) (6.0) (6.0) adjustment for delayed June transfer* Distribution to EETF from Lottery Receipts NOTE: Since the Lottery s inception, the conference has estimated transfers to EETF by examining the Lottery s weekly sales during the fiscal year. However, in practice there is a delay in the transfer of weekly sales receipts from the retailers to the Lottery. Depending on what day the fiscal year ends, this delay ranges from one to two weeks. Beginning with the November 2012 estimate, the conference based the expected transfers to EETF on the cash actually received by the Lottery during the fiscal year. While the conference will continue to develop the estimate based on weekly retailer sales, the results will be August 2018 Forecast Instant Game Sales (Scratch + Fast Play) Terminal Game Sales EETF transfer due from current year ticket sales and other income less collection lag loss (52.2) (27.0) (38.3) (43.2) (48.5) (52.0) (29.0) plus collection lag gain from prior year Due to EETF from Lottery Receipts adjustment for estimated true-up payment in next fiscal year (1.6) (1.6) (1.6) (1.6) (1.6) (1.6) (1.6) adjustment for delayed June transfer* Distribution to EETF from Lottery Receipts /1/2018