Fiscal Year Ended June 30, 2017
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, 2017. This report provided 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 FY2017 Comprehensive
Annual Financial Report (CAFR). The CAFR 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 CAFR, PAFR, and the NCEL’s Annual Report are
available for viewing on the NCEL’s website at https://www.nclottery.com/CorporateSocialResponsibility_Integrity
For the 11th year in a row, the N.C. Education Lottery finished its fiscal year by setting a new record for
lottery ticket sales, recording $2.43 billion in sales in fiscal year 2017. From those sales, the Education
Lottery raised $622.5 million for education programs in North Carolina.
The year marked two other significant milestones. In March 2017, the lottery completed a conversion to
a new operating system for sales and games, upgrading to the newest technology in the lottery industry.
The conversion completed a year-long effort by the lottery and its gaming vendors to install a new
operating system and instant ticket services.
In May, the lottery rebranded with a new look and logo. The lottery’s new logo kept the familiar
mountains to the sea scene, graced with a shooting star, but evolved into a dreamy look with its first
tagline, “Dream a little.” The new brand captures the essence of the lottery being in the business of
possibilities, offering joy and thrill to winners of prizes and raising money for education that helps to fulfill
the dreams of students and educators.
Instant tickets, or scratch-offs, continued to be the lottery’s most popular product, generating $1.69 billion
in sales, or 69.6 percent of revenue. The lottery launched 53 new instant games during the year,
including its second $30 game, Extreme Millions, which offered four $10 million prizes, 22 $1 million
prizes, and four additional $1 million prizes that could be won in second-chance drawings.
Lottery players were awarded $1.54 billion in prize money. During the year, prizes of $1 million or more
were won 59 times, including one prize of $10 million; two $1,000 a Day for Life top prizes in the Lucky
For Life game that were worth at least $7.2 million; and a record Carolina Cash 5 jackpot of $1.7 million.
Many winners put their money right back to work in the economy, by paying bills, buying new houses or
cars, taking vacations, saving and investing the money for retirement or college, or donating to personal
good causes.
The lottery ended the year with 6,863 retail locations across North Carolina. Retailers earned $170.5
million in sales commissions and incentives.
As the lottery completed FY17, total sales since the inception of the lottery stood at $18.28 billion and
the amount of money raised for education at $5.23 billion.
To get a sense of the lottery’s popularity, consider what happens every day across the state. Last year,
the lottery averaged $6.6 million a day in lottery ticket sales, $4.2 million in prizes, and $1.7 million a day
raised for education. More than 830,000 North Carolinians have joined the lottery’s Player’s Club, a
loyalty program where they can get lottery news, ask questions about lottery games, and enter second-chance
drawings and other promotions.
The lottery again received “a clean opinion” from independent auditors in its annual financial audit and
has met that standard, the highest available, in all of its annual financial audits. The lottery also
continued to be a leader in the U.S. lottery industry on responsible gaming. Alice Garland, the executive
director of the lottery became the first lottery or gaming industry professional to receive from the National
Council on Problem Gambling its Don Hulen Award for Advocacy. The award recognized Garland’s
leadership in expanding responsible gaming efforts across the United States.
The State Lottery Act directs the lottery to increase and maximize the available revenues for education
purposes. In FY17, a breakdown of lottery revenues showed 63.4 percent went to prizes, 25.6 percent
for education programs that the lottery serves, 7 percent in retailer commissions. The remaining 4
percent of revenues went to administrative expenses.
Lottery’s revenues exceeded projections and unallocated funds were placed in reserve funds. The
General Assembly also directed that $2.1 million in earnings go to the N.C. Alcohol Law Enforcement
and $1 million to the N.C. Problem Gambling Program.
The Education Lottery transfers
its net assets on a monthly
basis to the Office of State
Budget and Management to
the NC State Lottery Fund. The
monies were distributed in
fiscal year 2017 as outlined in
the budget approved by the
General Assembly.
The General Assembly made
the following allocation of
lottery dollars in its fiscal year
2017 budget to education
programs:
 $372.3 million to non-instructional
support
personnel
 $100 million for the
Public School Building
Capital Fund which
provides monies to North
Carolina counties to build
and repair schools
 $78.3 million, to the N.C.
Pre-K program to fund
seats in the pre-kindergarten
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
Alamance County 8,959,149 73,309,429 Johnston County 12,421,498 101,207,697
Alexander County 1,956,875 17,312,367 Jones County 583,545 5,683,107
Alleghany County 679,115 5,825,994 Lee County 4,245,849 36,154,545
Anson County 1,561,944 14,737,507 Lenoir County 3,612,354 32,759,577
Ashe County 1,450,597 13,283,412 Lincoln County 4,339,681 36,340,447
Avery County 941,011 8,597,107 Macon County 1,735,049 15,592,010
Beaufort County 2,779,156 23,577,066 Madison County 946,598 8,212,648
Bertie County 1,023,164 11,504,360 Martin County 1,357,948 13,024,291
Bladen County 2,106,162 20,741,806 McDow ell County 2,524,594 21,200,257
Brunsw ick County 5,148,781 42,917,516 Mecklenburg County 54,941,116 456,561,173
Buncombe County 10,940,844 90,114,893 Mitchell County 715,765 6,508,857
Burke County 5,274,882 47,829,238 Montgomery County 1,870,782 16,789,398
Cabarrus County 13,421,424 107,535,231 Moore County 4,404,761 34,592,289
Caldw ell County 4,513,045 37,513,850 Nash-Rocky Mount 5,867,072 52,972,882
Camden County 728,776 6,160,446 New Hanover County 10,855,870 90,301,826
Carteret County 3,393,246 27,678,350 Northampton County 942,301 10,323,109
Casw ell County 1,083,408 9,692,828 Onslow County 11,170,238 88,534,061
Cataw ba County 9,093,701 76,096,167 Orange County 7,260,127 59,847,300
Chatham County 3,478,272 28,961,560 Pamlico County 568,140 5,260,388
Cherokee County 1,483,344 12,470,464 Pasquotank County 2,282,697 19,855,668
Chow an County 858,225 7,864,782 Pender County 3,628,883 27,703,121
Clay County 562,876 4,945,168 Perquimans County 673,392 6,137,639
Cleveland County 6,184,588 57,397,127 Person County 1,927,463 17,792,798
Columbus County 3,703,444 34,870,802 Pitt County 9,774,307 84,386,968
Craven County 5,488,163 46,658,000 Polk County 957,515 8,800,152
Cumberland County 21,620,272 196,263,201 Randolph County 8,402,288 69,571,013
Currituck County 1,444,405 11,343,161 Richmond County 3,109,419 28,173,805
Dare County 1,965,064 16,069,411 Robeson County 9,986,706 93,279,459
Davidson County 9,250,713 78,193,520 Rockingham County 4,950,643 44,723,602
Davie County 2,588,628 22,759,568 Row an-Salisbury 7,447,146 65,863,742
Duplin County 3,892,605 32,976,251 Rutherford County 3,610,257 32,651,196
Durham County 12,618,971 108,087,472 Sampson County 4,657,524 41,688,383
Edgecombe County 3,005,020 29,592,560 Scotland County 2,723,866 25,289,856
Forsyth County 20,279,994 170,168,001 Stanly County 3,818,308 34,686,972
Franklin County 3,219,813 26,792,490 Stokes County 2,622,015 24,228,218
Gaston County 13,212,845 113,569,983 Surry County 4,370,729 38,962,744
Gates County 637,688 5,972,155 Sw ain County 889,903 7,652,893
Graham County 537,617 4,674,144 Transylvania County 1,351,941 11,077,869
Granville County 2,960,481 26,760,819 Tyrrell County 242,170 2,183,186
Greene County 1,281,592 11,698,731 Union County 15,377,410 120,551,797
Guilford County 30,858,222 266,386,819 Vance County 2,547,029 23,849,746
Halifax County 2,863,796 28,552,956 Wake County 57,148,834 438,216,374
Harnett County 7,698,303 62,146,533 Warren County 1,003,358 9,107,624
Hayw ood County 2,829,786 24,221,797 Washington County 738,833 7,357,569
Henderson County 5,207,722 41,905,808 Watauga County 1,851,044 16,065,776
Hertford County 1,387,358 13,304,050 Wayne County 7,905,297 72,076,760
Hoke County 3,771,751 32,998,606 Wilkes County 4,415,496 39,654,687
Hyde County 290,640 2,452,507 Wilson County 4,516,794 39,843,318
Iredell County 9,896,470 79,398,403 Yadkin County 2,231,919 20,214,660
Jackson County 1,400,283 12,178,738 Yancey County 838,474 7,438,820
The gross lottery ticket sales for
fiscal year 2017 totaled $2.428
billion as compared to $2.384
billion for fiscal year 2016 and
$1.972 billion for fiscal year
2015. This depicts an increase
of $44 million from 2016 and
$412 million from 2015.
Gross instant ticket sales were $1.695 billion for fiscal year 2017 compared with $1.617 billion for fiscal
year 2016 and $1.294 billion for fiscal year 2015, an increase of approximately $78 million from fiscal year
2016 and approximately $401 million from fiscal year 2015. The increase realized during fiscal year 2017
is attributable to several factors. In July, the “Bonus” family of games launched and combined for a total of
$121 million in sales during fiscal year 2017. Just in time for football season in August, the first “Carolina
Panthers” scratch-off game debuted and was such a hot seller, with total sales of $22 million, that the
game merited a reorder. In September, the “Platinum Payout” family of games launched and combined for
a total of $108 million in sales during fiscal year 2017. The NCEL’s first $30 scratch-off, “Ultimate Millions,”
which launched in fiscal year 2016 continued to deliver, with a sales total of $178 million. In December, the
second $30 scratch-off, “Extreme Millions,” launched and totaled sales of $157 million. The NCEL saw
continued strong performance of games featuring “Back Scratch,” an additional play area on the back of
the ticket, with the December launch of the $5 scratch-off “Mega Fortune”— totaling sales of $28 million
during the fiscal year. In February, another family of the popular multiplier scratch-off games was
introduced with the launch of “5X The Cash!,” “10X The Cash!,” “20X The Cash!,” and “50X The Cash!”
combining for sales of $104 million in the final two quarters of fiscal year 2017. In April, the “Taxes Paid”
family of games launched and combined for a total of $54 million in the final quarter. Additionally, scratch-off
games achieved robust growth at the following price points: $1, $5, and $30.
Draw game sales were $732 million for fiscal year 2017 compared to $766 million for fiscal year 2016 and
$678 million for fiscal year 2015, representing a $34 million decrease over fiscal year 2016 and a $54 million
increase over fiscal year 2015. In fiscal year 2016, draw game sales benefitted from a record-setting $1.5
billion jackpot in the multi-state game Powerball. The largest Powerball jackpot in fiscal year 2017 was $478
million during July. Powerball had sales of $146 million compared to $207 million the previous year, a
decrease of nearly $61 million. Mega Millions, the NCEL’s other multi-state game, reached a top jackpot
amount for fiscal year 2016 of $540 million during July, after reaching a top jackpot of $390 million in fiscal
year 2015. This resulted in sales of $53 million during fiscal year 2017, a decrease of nearly $4 million from
sales of $57 million in fiscal year 2016.
Instant Tickets 1,695,232,342 1,617,456,944 1,294,037,685
Powerball 148,510,627 208,736,913 130,058,625
Mega Millions 54,332,136 57,859,391 61,314,087
Pick 3 306,018,460 286,014,567 278,083,184
Pick 4 135,797,947 125,975,768 122,886,664
Cash 5* 68,275,475 62,010,371 64,928,960
All or Nothing - 12,651,658 19,549,252
Lucky for Life 19,904,592 12,885,532 -
Monopoly MC - - 1,361,520
Total Sales 2,428,071,579 2,383,591,144 1,972,219,976
*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.
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 Assets from year to year.
Readers wanting more
detailed financial information
should refer to the NCEL’s FY
2017 Comprehensive Annual
Financial Report (CAFR)
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, 2017 but will be transferred during fiscal year 2018.
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.
FY 2017 FY 2016 FY2015
ASSETS
Total current assets 100,151 128,400 73,811
Non-current assets 65,402 58,678 57,373
Capital assets, Dep. (net) 2,068 1,546 1,833
Total Assets 167,621 188,624 133,017
Deferred Outflows 6,614 1,327 1,471
LIABILITIES
Total current liabilities 96,461 124,272 70,200
Non-current liabilities 77,167 64,704 59,589
Total Liabilities 173,628 188,976 129,789
Deferred Inflows 607 975 4,699
NET ASSETS
Invested in capital assets 2,068 1,546 1,833
Unrestricted net assets (2,068) (1,546) (1,833)
Total Net Assets - - -
Balance
July 1, 2016
Increase Decrease
Balance
June 30, 2017
Capital assets, depreciable
Furniture 46 20 - 66
Equipment 4,053 1,044 - 5,097
Motorized equipment 80 - - 80
Computer software 1,010 - - 1,010
Total capital assets, depreciable 5,189 1,064 - 6,253
Less accumulated depreciation for
Furniture 40 3 - 43
Equipment 3,415 410 - 3,825
Motorized equipment 72 3 - 75
Computer software 116 126 - 242
Total accumulated depreciation 3,643 542 - 4,185
Total capital asset, depreciable net 1,546 522 - 2,068
Capital assets, net 1,546 522 - 2,068
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 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.
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, 2017, 2016, and 2015
fiscal years:
Operating Revenues:
Gross Sales: 2,428,071 2,383,591 1,972,220
Less: Prize Tickets and Bad Debt (536) 24 (5)
Fees and Licenses 5,308 5,361 5,271
Total Operating Revenues 2,432,843 2,388,976 1,977,486
Operating Expenses:
Salaries, Wages, and Benefits 21,299 19,739 18,738
Lottery Prizes 1,543,158 1,491,031 1,231,238
Retailer Commissions 169,439 166,437 137,767
Retailer Incentive 1,020 1,154 976
Gaming Systems Services 40,326 40,640 28,678
Advertising 20,110 19,973 19,098
Marketing 4,129 3,981 4,183
Other Services 4,869 5,141 4,304
Furniture, Fixtures, and Equipment 774 1,494 983
Depreciation 542 671 568
Other General and Administrative Expenses 2,855 2,539 2,952
Total Operating Expenses 1,808,521 1,752,800 1,449,485
Operating Income 624,322 636,176 528,001
Non-operating Revenues (Expenses):
Investment Earnings and Other Miscellaneous Revenue (Expense) 1,106 1,190 408
Compulsive Gambling Contribution (1,000) (1,000) (1,000)
ALE Gaming Enforcement (2,100) (2,100) (968)
Unclaimed Prizes to NC Education Lottery Fund (17,526) (13,696) (13,841)
Net Revenues to the State of NC (604,979) (620,572) (512,586)
Miscellaneous Non-operating Expenses 177 2 (14)
Total Non-operating Revenue (Expense) (624,322) (636,176) (528,001)
Net Income - - -
Net Assets - - -
$-
$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
FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 20 14 FY 2015 FY 2016 FY 2017
OPERATING REVENUES VS EXPENSES FY 2008 TO FY 2017
Total Operating Revenues Prize Expense Commissions Other 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 FY2017 Comprehensive Annual Financial Report (CAFR) available on the
NCEL’s website at https://www.nclottery.com/CorporateSocialResponsibility_Integrity
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, retailer commissions, and gaming vendor charges all directly relate to sales. As expected, as sales
have increased so have these expenses. In fiscal year 2017, prizes, commissions, and gaming vendor
chargers totaled $1,752 million as compared to $1,698 million and $1,398 million for fiscal years 2016 and
2015, respectively. The other expenses, which consist of advertising, salary and benefits, professional
fees, rent, maintenance, bad debt, depreciation, and transfers, have remained at four percent of Total
Annual Revenues this year. Fiscal years 2017 and 2016 administrative expenses were $56 million and
$55 million respectively.
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, 2016. 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 eight consecutive years (fiscal years ended 2008—2016). We believe our current
report continues to conform to the Popular Annual Financial Reporting requirements, and we
are submitting it to GFOA.
75 Copies of this public document were printed at a cost of $375.83 or $5.01 per copy.
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
2728 Capital Boulevard, Raleigh, NC 27604