North Carolina education lottery popular annual financial report

              NORTH CAROLINA EDUCATION LOTTERY
POPULAR ANNUAL FINANCIAL REPORT
FISCAL YEAR 2011
Commission Chairs Note.........2
Executive Directors Note........3
Beneficiaries……………............4
County Totals………………….….5
Games & Sales…………………...6
Financials……………………......12
Contact Information………....15
About The Popular Annual Financial Report
In This 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, 2011.
This report provides an overview of the NCEL's financial
condition and a brief analysis of where the money comes from
and where those dollars are spent.
Most of the information in this report is drawn from the
financial information appearing in the NCEL's FY 2011
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 with GAAP. The
CAFR, PAFR and the NCEL's Annual Report are available for
viewing on the NCEL's website at:
http://www.nc-educationlottery.org/about.aspx
COMMISSION CHAIR’S NOTE
2
More than five years ago, in September 2005, I accepted a call to
serve on the Education Lottery Commission and went to work with
other commissioners to create a new state lottery. This was new for
my generation, but looking back in history both our state and local
governments have used lotteries before to serve the public good. In
the 18th and 19th centuries, lotteries were used to raise the money to
build roads and bridges, clear waterways and build churches and
schools, including the nation’s first public university, the University
of North Carolina.
This time, in the 21st Century, the mission of the lottery is to raise
money for education programs in North Carolina. The lottery games
we have launched not only provide much enjoyment, entertainment
and additional compensation to our citizens but the money they raise
comes without cost to North Carolina taxpayers. We have now passed
$2 billion and counting in revenues for the state, dollars that have
paid for teacher salaries in grades K-3, the construction and repair of
schools in each of the 100 counties in this state, early childhood edu-cation
for at-risk four-year-olds, and college scholarships and finan-cial
aid to students based on need.
Your commissioners work without compensation. We come from dif-ferent
parts of the state and from different backgrounds, but we all
serve as volunteers. Our goal is to ensure that your lottery accom-plishes
its mission of serving the public good. I would like to share
with you a couple of the principles that have guided our lottery since
Day One. Our business is built on integrity, with a view always to
earn and deserve your trust. We employ a plethora of internal, exter-nal,
announced and unannounced audits and have been blessed with
unqualified, that is excellent results. Our organization has been
repeatedly recognized for quality and transparency, here at home and
nationally.
We strive to be good stewards of lottery dollars, always keeping in mind that we serve a public good – education in
North Carolina. While we are allowed to spend up to 8 percent of lottery revenues on administrative expenses – from
salaries and benefits to advertising and marketing – we have kept those expenses under 4.5 percent. In fact, as our reve-nues
have grown, our administrative expenses, in comparison, have declined. We know every dollar we save in adminis-trative
expenses is another dollar that will go to the education programs that we serve.
The declining economic climate during the past few years makes our increase in revenues and payments to our
“Beneficiaries” – the school children of North Carolina – simply astounding. If you have watched the lottery grow, as I
have, you have witnessed slow and careful steps forward with steady growth both in sales and in the transfers of lottery
proceeds to the state. In our first full year of operations, fiscal year 2007, we transferred $315 million. In fiscal year
2011, that increased to $447 million.
Finally, this record of growth could not have occurred without the hard work of our staff. Executive Director Alice Gar-land
and her crew make the work we do as commissioners easier and, on your behalf, we thank them for the dedication
they bring to their work providing fair, honest and fun lottery games. We pledge to continue to work to make the next
five years of the Education Lottery as successful as the first five years.
Robert A. Farris, Jr.
Executive director’s note
3
If you like a come from behind to win story like I do, then you’ll like the
story of the Education Lottery during its fifth fiscal year. For the first five
months, sales declined. We weren’t meeting our budget projections. We
were seeing sales drop in year-to-year comparisons. In December, we had
no choice but to revise our budget due to lower than expected sales. It
wasn’t fun looking at daily sales reports.
Now fast forward three months to March. The Education Lottery recorded
its best week of sales ever, its best month of sales ever and its best quarter
ever. By the end of June, when we closed the books on FY11, we
achieved our fifth consecutive year of growth in sales and return for edu-cation,
setting a new record for annual sales - $1.46 billion – and made
the largest transfer ever to the state - $446.9 million.
The turnaround came because we did what a lot of people do during chal-lenging
times. We returned to our core business and made it better. Dur-ing
those tough months in the fall, we put together a new plan for our in-stant
ticket games – the mainstay of the lottery. A beautiful and elegant
instant ticket, Carolina Black, went on sale in December. Then in January
we launched $200,000 a Year for Life, a game offering the highest top
instant prize in NCEL history. We then turned to our draw games, and
added afternoon drawings to Carolina Cash 4 and a Sunday afternoon
Carolina Pick 3 drawing. The additions meant both games offered draw-ings
twice a day, seven days a week. And in March, following a strategy
to give more attention to $5 instant games, we brought back the iconic
Ric Flair ticket as WOOOOOII. The second WOOOO game sold better
than the first one.
We not only had good products, but we were also slowly and steadily finding more places to sell them. Our sales team never
gave up. During a tough economic year we grew our retail base to 6,611 locations, up 6 percent from the year before. Two
major retail names in North Carolina – Harris Teeter grocery stores and Rite-Aid drug stores – became lottery retailers.
So by the time our fifth anniversary came around on March 30th, I knew it was going to be another good year for the lottery. I
knew then that we had enough momentum going that we would not only meet our original budget goal, but surpass it.
The lottery has succeeded in North Carolina because, while a government agency, it strives as much as possible to work like
an entrepreneurial sales organization. Our staff focuses relentlessly on sales so that we can raise as much money as possible
for the good cause we serve – public education in North Carolina. I am proud of the staff and glad to be associated with such
dedicated people.
The Education Lottery is proud of the success it has had in its first five years, the good luck of our winners, and the benefits
the lottery has brought to education in North Carolina, from prekindergarten classes to state universities and community col-lege
scholarships. We’ll keep working hard to provide fun and honest games to those who choose to play the lottery during
our next five years.
Alice Garland
Beneficiaries B ENEFICIARIES
Education beneficiaries received unprecedented support from the North Carolina Education Lottery in Fiscal Year 2011. Thanks to lottery
dollars, the salaries for 3,731 teachers in grades K-3 were completely funded, 32,750 North Carolina students received college scholarships,
30,767 additional four year olds were able to attend the nationally recognized More at Four prekindergarten program. Also, close to $100
million was distributed to the 100 counties across the state to help fund school construction projects and pay down school bonds.
In the 2011 Fiscal Year, the lottery achieved $1.46 billion in sales and transferred a total of $446.9 million to the State of North Carolina, with $419.47
million going to the lottery’s education beneficiaries and $26.6 million being reallocated to Medicaid funding by the NC General Assembly during last
year’s budget crisis. This transfer of funds from 2011brought the NCEL’s total contribution to education to just over $2 billion since our inception in
2006. We are extremely proud of this accomplishment.
As we move forward during these challenging economic times, the Legislature has the authority to adjust the allocation of lottery dollars each year in the
state budget. A new distribution formula was created during the 2011 legislative session and went into effect July 1, 2011. Here is a comparison and
breakdown of net proceeds as set by the legislature for fiscal year 2012 budget, as compared to what was originally set forth in the North Carolina State
Lottery Act (H. 1023) and the 2005 Appropriations Act (S. 622).
● Funded the salaries of 11,808 teachers in order to continue the goal of providing one teacher per 18 students in grades K-8.
Today, a larger amount of lottery funds pay teachers’ salaries, more than half of what the lottery raised for education.
Statewide, through the end of fiscal year 2011, lottery funds have:
● Paid for 100,913 four-year-olds, judged “at risk” of starting school behind their peers,
in the award winning More at Four program.
● Provided $711 million for 1,027 school construction projects across the state. In many
counties, this money has helped to purchase land, build additions to schools, pay down
school bonds and ultimately, keep property taxes lower for NC residents.
● Provided college financial aid, on a need basis, to 123,827 students at colleges,
universities, and community colleges located here in NC. To receive an education
lottery scholarship, the student must first qualify for the Pell Grant which is a federal
grant available to students whose families cannot afford to pay for college.
4
COUNTY TOTALS
Alamance $6,439,896 Currituck 973,274 Lee 3,075,399 Rockingham 3,862,070
Alexander 1,578,144 Dare 1,470,593 Lenoir 2,738,820 Rowan 5,783,542
Alleghany 525,926 Davidson 7,020,528 Lincoln 3,166,394 Rutherford 2,952,450
Anson 1,224,214 Davie 2,060,369 Macon 1,432,051 Sampson 3,690,468
Ashe 1,193,650 Duplin 2,776,233 Madison 792,802 Scotland 2,188,329
Avery 764,225 Durham 8,817,923 Martin 1,174,310 Stanly 3,117,779
Beaufort 2,097,451 Edgecombe 2,711,756 Mcdowell 1,834,953 Stokes 2,116,857
Bertie 1,087,583 Forsyth 14,387,694 Mecklenburg 37,875,668 Surry 3,280,290
Bladen 1,830,971 Franklin 2,252,349 Mitchell 583,461 Swain 691,677
Brunswick 3,838,722 Gaston 9,600,744 Montgomery 1,479,457 Transylvania 964,081
Buncombe 7,760,331 Gates 506,075 Moore 2,927,542 Tyrrell 180,548
Burke 4,273,387 Graham 407,117 Nash 4,746,794 Union 10,657,029
Cabarrus 9,133,129 Granville 2,372,027 New Hanover 7,684,318 Vance 2,085,766
Caldwell 3,368,386 Greene 1,065,499 Northampton 962,418 Wake 37,828,625
Camden 510,919 Guilford 22,545,061 Onslow 7,586,297 Warren 795,548
Carteret 2,358,352 Halifax 2,494,287 Orange 4,952,666 Washington 625,002
Caswell 874,854 Harnett 5,206,478 Pamlico 462,302 Watauga 1,327,102
Catawba 6,680,574 Haywood 2,185,098 Pasquotank 1,768,125 Wayne 6,336,187
Chatham 2,489,975 Henderson 3,692,253 Pender 2,308,431 Wilkes 3,456,956
Cherokee 1,070,005 Hertford 1,174,356 Perquimans 558,385 Wilson 3,434,340
Chowan 712,139 Hoke 3,031,324 Person 1,559,965 Yadkin 1,775,166
Clay 426,657 Hyde 210,240 Pitt 7,152,631 Yancey 662,824
Cleveland 4,989,333 Iredell 6,952,127 Polk 829,870 Unknown 115,911
Columbus 3,092,237 Jackson 1,113,765 Randolph 6,249,780 DPI Admin 3,285,445
Craven 4,124,284 Johnston 8,784,866 Richmond 2,358,216 Total 419,171,852
Cumberland 16,951,659 Jones 477,773 Robeson 8,009,964
FY 2011
Total to Date
Alamance $26,190,412 Currituck 4,046,458 Lee 13,987,278 Rockingham 18,272,170
Alexander 6,660,714 Dare 5,729,954 Lenoir 13,219,662 Rowan 26,249,867
Alleghany 2,370,957 Davidson 29,479,505 Lincoln 13,678,446 Rutherford 13,295,565
Anson 6,263,103 Davie 9,032,225 Macon 6,068,884 Sampson 16,841,906
Ashe 5,377,981 Duplin 12,464,119 Madison 3,126,462 Scotland 10,687,033
Avery 3,536,481 Durham 40,147,987 Martin 5,417,415 Stanly 14,280,497
Beaufort 8,988,872 Edgecombe 12,677,662 Mcdowell 8,014,594 Stokes 10,333,912
Bertie 5,044,601 Forsyth 63,761,564 Mecklenburg 167,341,835 Surry 15,852,671
Bladen 9,217,216 Franklin 9,866,498 Mitchell 2,669,995 Swain 2,889,541
Brunswick 15,881,367 Gaston 44,873,501 Montgomery 7,134,157 Transylvania 4,200,021
Buncombe 31,712,876 Gates 2,574,831 Moore 11,757,889 Tyrrell 881,431
Burke 19,806,145 Graham 1,824,018 Nash 21,305,892 Union 43,926,154
Cabarrus 39,654,455 Granville 10,839,685 New Hanover 32,680,232 Vance 9,845,384
Caldwell 14,146,165 Greene 4,988,319 Northampton 4,712,525 Wake 145,850,782
Camden 2,389,619 Guilford 102,110,958 Onslow 29,465,668 Warren 3,613,886
Carteret 9,940,406 Halifax 11,957,211 Orange 21,918,724 Washington 3,277,351
Caswell 4,133,728 Harnett 23,053,742 Pamlico 2,186,282 Watauga 5,910,822
Catawba 27,800,571 Haywood 8,859,152 Pasquotank 7,420,820 Wayne 29,638,293
Chatham 11,039,086 Henderson 14,890,955 Pender 9,628,549 Wilkes 16,163,116
Cherokee 4,835,610 Hertford 5,532,841 Perquimans 2,434,351 Wilson 15,622,124
Chowan 3,100,602 Hoke 12,757,296 Person 7,467,763 Yadkin 8,434,167
Clay 1,897,257 Hyde 954,429 Pitt 31,719,608 Yancey 2,978,862
Cleveland 24,346,121 Iredell 28,549,060 Polk 3,722,302 Unknown 464,093
Columbus 15,294,025 Jackson 4,833,087 Randolph 25,816,769 DPI Admin 28,436,827
Craven 16,663,208 Johnston 38,088,217 Richmond 11,800,187 Total 1,853,192,130
Cumberland 79,412,740 Jones 2,460,199 Robeson 38,491,576
5
GAMES
MEGA MILLIONS AND POWERBALL
The first full fiscal year of the cross-selling of Mega Millions was well received by players and retailers alike. Be-fore
the introduction of Mega Millions, Powerball had been the sole jackpot game available in the Tar Heel State.
The Mega Millions game has proven to be a winner for beneficiaries, players, and retailers alike. Sales for FY11 to-taled
more than $72 million, which led to more than $29 million returned to the education programs that the lottery
supports. Players received more than $32 million in prizes and retailer commissions exceeded $5 million.
Powerball sales remained strong, but were down from the previous year due to the introduction of Mega Millions.
Sales for FY11 totaled more than $138 million, which led to more than $55 million returned to education. Powerball
players received more than $32 million in prizes and retailer commissions exceeded $9 million.
6
Since startup, the NCEL has four players who claimed multi-million prizes in Powerball and Mega Millions.
King’s Mountain resident Jeff Wilson, who won $88.1 million in the June 20, 2009 Powerball drawing, gladly
stepped back into the spotlight in May 2011 to help celebrate the NCEL’s fifth anniversary. Wilson and his father
attended the NCEL 200 truck race at Charlotte Motor Speedway. Wilson helped judge a competition to choose the
race’s honorary starter and grand marshal alongside wrestling superstar Ric Flair and the speedway’s mascot
“Lugnut.” He later granted interviews and fielded questions about how his life changed following his windfall.
The Wilson Family Foundation, the family’s pipeline for charitable giving, established a grant to fund a monitoring
program for individuals convicted of alcohol-related crimes and donated to St. Jude Children’s Hospital, among
other charities.
Native North Carolinians Faye and Mike Manheim are the sole jackpot winners in the Mega Millions game through
June 31, 2011. The couple claimed their $12 million prize on July 7, 2010.
Jackie Alston was the first jackpot winner in NCEL history. Alston, then a corrections officer, claimed her $74.5
million Powerball prize in Feb. 2007.
JACKPOT WINNERS
Instant scratch-off games continued to measure up as the NCEL’s largest revenue stream with 59 percent of total
ticket sales in FY11. Sales in the category surpassed FY10 by more than $6.5 million to top $862 million.
A blend of fresh and familiar titles among $5 and $10 games combined for close to half of all scratch-off sales,
with 26.3 percent and 23.7 percent respectively. “Mega Bucks” continued its popularity, eclipsed at the $5 price
point only by newcomer “Carolina Black” which registered more than $26.3 million in sales. A new addition to the
“Bucks Family” of games, “Jumbo Bucks,” landed in second place among $10 titles behind mainstay “Cash Spec-tacular,”
which produced more than $60.3 million in sales.
The biggest prizes and the best odds made $20 instant tickets a big hit again in FY11 with 17.8 percent of sales. On
Jan. 25, 2011 the “$200,000 a Year for Life” game began, launching with three chances to win $200,000 a year for
life – the largest instant prize ever offered in North Carolina – and seven prizes of $50,000 a year for life. As popu-lar
as the chance to win “the prize of a lifetime” was, “$200 Million Extravaganza” remained the top-selling $20
ticket for a second straight year with $92.7 million in sales.
The “Harley Davidson” ticket led the pack of $3 games with $11.4 million in sales. Other scratch-offs at the price
point – such as “Lucky Cash Crossword” and “Bingo!” – offered unique play styles to drive 7.13 percent of scratch
-off sales.
At $2 per play, “Junior Big Ol’ Bucks” contributed $26.6 million and the $1 ticket “Quick Bucks” pitched in $7.3
million to FY11 totals. Altogether, the “Bucks Family” of games accounted for more than $110.9 million in instant
ticket purchases.
INSTANT GAMES
7
GAMES
Ticket sales for the Carolina Pick 3 game jumped 16 percent in fiscal
year 2011, making it the second most popular game based on sales. In
the game, players either pick three numbers on their own or do a
Quick Pick. If a players’ three numbers match the winning numbers
they win the game’s top prize of $500. Pick 3 sales were
$258,443,414, up from $222,777,592 in fiscal year 2010. One factor
behind the increased sales was the addition of a Sunday afternoon Pick
3 drawing on Feb. 27. The additional drawing meant that Pick 3 play-ers
had the opportunity to enter drawings twice a day, seven days a
week. In fiscal year 2011, Pick 3 sales represented almost 18 percent
of all ticket sales.
The game saw a new record payout on Sept. 6, 2010 when the 2-2-2
combination of triple numbers in the evening drawing led to $2.8 mil-lion
in prizes.
CAROLINA PICK 3
8
The Carolina Pick 4 game saw a big change on Feb. 27, 2011 as
afternoon drawings were added seven days a week. The addi-tional
drawings gave Pick 4 players two chances every day to try
their luck at winning the top prize of $5,000. The change proved
popular with players as tickets sales increased almost 14 percent
even though the extra afternoon drawings were only in place for
four months of the fiscal year. Pick 4 became the NCEL’s 5th
most popular game, earning $65,309,804 in ticket sales, up from
$57,370,252 in fiscal year 2010.
The game also saw a record prize payout when a combination of
the same four numbers was drawn for the first time in the game’s
history. Players who had those winning numbers (2-2-2-2) won
$645,000.
CAROLINA PICK 4
9
GAMES BENEFICIARIES
Ticket sales for Carolina Cash 5 amounted to $57,757,944, down 5 percent
from fiscal year 2010. The game represented about 4 percent of total sales for
the year. The Cash 5 jackpot was won 79 times in fiscal year 11. Since some
jackpots are shared, ninety players had tickets for winning jackpots and of
those 50 claimed wins of $100,000 or more. John Grabski of Charlotte won
the largest jackpot during the fiscal year, winning $773,609 in the April 21,
2011 drawing. The average top prize won in fiscal year 2011 was $205,057.
Cash 5 drawings occur nightly in concurrence with the Carolina Pick 4 and
Carolina Pick 3 drawings.
CAROLINA CASH 5
10
CASH SPLASH MILLIONAIRE RRAFFLE
The NCEL offered its third raffle game in its history during fiscal year 2011. The raffle was designed to create
three new millionaires in North Carolina. The NCEL paid initial taxes on the top prize so that the three top winners
would take home $1 million. The raffle also offered eight prizes of $50,000, 30 prizes of $5,000 and 560 prizes of
$500. Only 500,000 tickets were available to be sold. Tickets went on sale July 2, 2010 and the raffle drawing was
held on Sept. 20, 2010. Not all tickets sold. Raffle ticket sales were $5,986,380.
SALES
Region Instant Powerball Mega Millions Cash 5 Pick 4 Pick 3 Raffle
Ashville $ 63,643,637 $ 10,130,478 $ 5,064,699 $ 3,645,980 $ 1,098,370 $ 3,378,831 $ 391,520
Greensboro 131,990,529 21,936,962 12,459,205 9,363,247 8,436,721 28,328,441 948,700
Charlotte 227,926,639 41,312,436 20,326,141 14,406,416 10,242,018 34,159,647 1,506,500
Raleigh 325,531,516 51,049,934 27,475,987 22,754,613 29,906,401 127,910,577 2,558,880
Greenville 112,998,155 14,240,849 7,521,677 7,587,688 15,626,295 64,665,919 580,780
Total $ 8 62,090,476 $ 138,670,659 $ 72,847,709 $ 57,757,944 $ 65,309,804 $ 2 58,443,414 $ 1 ,455,120,006
% of Sales 59.0% 9.5% 5.0% 4.0% 4.5% 17.6% 0.4%
SALES BY REGION AND GAME
SALES BY REGION FY 2011
SALES BY GAME FY 2011 & 2010
11
Region Total
Ashville $ 87,353,514
Greensboro 213,463,805
Charlotte 349,879,797
Raleigh 587,187,908
Greenville 223,221,363
Total $ 1,461,106,386
% of Sales 100%
STATEMENT OF NET ASSETS:
The Statement of Net Assets presents the NCEL's financial position from a long‐term perspective. It reports all of the
NCEL's assets and liabilities.
FY 2011 FY 2010
ASSETS
Total current assets $ 30,345 $ 55,713
Noncurrent assets 36,586 26,414
Total Assets 66,931 82,127
LIABILITIES
Total current liabilities 30,217 56,092
Noncurrent Liabilities 36,714 26,035
Total Liabilities 66,931 82,127
NET ASSETS
Invested in capital assets 819 1,239
Unrestricted net assets (819) (1,239)
Total Net Assets $ ‐ $ ‐
Condensed Statement of Net Assets (in thousands)
*Readers wanting more detailed financial information should refer to the
NCEL's FY 2011 Comprehensive Annual Financial Report (CAFR) available on
the NCEL's website at: http://www.nc-educationlottery.org/about.aspx
The decrease in current assets resulted from a decrease in
the State Treasurer’s Security Lending Collateral and pulled
cash being held before being transferred to the State.
Current liabilities consist primarily of trade payables to
vendors, instant ticket prize liability, Powerball and Mega
Millions low‐tier liability and obligations under State Treas‐urer’s
Lending Agreements. In addition Current liabilities
consist of "Due to Other Funds" which represents the
amount of net revenues for the fiscal year not yet trans‐ferred
to the State as of June 30, 2011 but will be transferred
during fiscal year 2012. The remainder is due to other state
agencies for services provided to the NCEL.
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.
The NCEL’s investment in capital assets, net of accumulated depreciation in 2011 was $819 thousand which is approxi‐mately
$420,000 lower than 2010. 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.
Balance Increase Decrease Balance
Category July 1, 2010 June 30, 2011
Capital assets, depreciable
Furniture $ 29 $ ‐ $ ‐ $ 29
Equipment 2 ,653 211 (60) 2,804
Motorized equipment 67 ‐ ‐ 67
Total capital assets, depreciable 2 ,749 211 (60) 2,900
Less accumulated depreciation for
Furniture 23 4 ‐ 27
Equipment 1 ,435 609 (53) 1,991
Motorized equipment 52 11 ‐ 63
Total accumulated depreciation 1,510 624 (53) 2,081
Total capital assets, depreciable net 1,239 (413) (7) 819
Capital assets, net $ 1,239 $ (413) $ (7) $ 819
Capital assets are reported at their cost, and are depreciated over their estimated useful lives.
Activity for Capital Assets for Year Ended June 30, 2011 (in thousands)
12
financials
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 NCEL. Information in this section should provide the reader with a
general understanding of how the NCEL's resources are used.
Statement of Activities (in thousands)
OPERATING REVENUES:
Total gross lottery ticket sales for the
fiscal year 2011 were approximately
$1.461 billion as compared to $1.421
billion in fiscal year 2010. This
represents an increase of almost
$40 million.
On some of our instant games players
can scratch off a ticket and win
another ticket of the same value.
Those "free" tickets are referred to as
prize tickets and their value is
deducted from total sales.
The majority of Fees and Licenses
represent a weekly retailer
communication fee charged to active
retailers for terminal satellite
communications and an application
fee for new retailers and changes in
ownership.
OPERATING EXPENSES:
The following chart shows the major
components of NCEL operating
expenses and transfers as a
percentage of total revenues for the
June 30, 2011 and 2010 fiscal years:
FY 2011 FY 2010
Operating Revenues:
Gross Sales: $ 1,461,106 $ 1,421,313
Less: Prize Tickets and Bad Debt (1,527) (1,714)
Fees and Licenses 5,061 4,859
Total Operating Revenues 1,464,640 1,424,458
Operating Expenses:
Salaries, Wages, and Benefits 1 5,824 15,299
Lottery Prizes 862,996 8 35,302
Retailer Commissions 102,127 99,340
Retailer Incentive 592 394
Gaming Systems Services 23,482 22,639
Advertising 1 3,760 11,792
Marketing 2,358 2,239
Other Services 3,427 3,555
Furniture, Fixtures, and Equipment 933 376
Depreciation 624 583
Other General and Administrative Expenses 2,387 2,764
Total Operating Expenses 1,028,510 9 93,889
Operating Income 436,130 4 30,569
Nonoperating Revenues (Expenses):
Investment Earnings and
Other Miscellaneous Revenue (Expense) 1,175 2,699
Compulsive Gambling Contribution ( 1,000) (1,000)
Interest and Unclaimed Prizes to Fed Medicaid Program (9,370) ‐
Unclaimed Prizes to NC Education Lottery Fund (8,623) (14,894)
Net Revenues to the State of NC (418,248) (417,311)
Miscellaneous Nonoperating Expenses (64) (63)
Total Nonoperating Revenues (Expense) (436,130) (430,569)
Net Income ‐ ‐
Net Assets $ ‐ $ ‐
13
STATEMENT OF ACTIVITIES CONTINUED:
Section 18C‐162, NC General Statutes stipulates no more than 8% of the total annual revenues shall be allocated for
payment of expenses of the Lottery. Advertising expenses shall not exceed 1% of the total annual revenues.
Prizes, retailer commissions and gaming vendor charges all directly relate to sales. As expected, as sales have
increased and so have these expenses. In fiscal year 2011, prizes, commissions and gaming vendor charges
increased to $988 million from $957 million in 2010. The other expenses, which consist of advertising, salary and
benefits, professional fees, rent, maintenance, bad debt, depreciation and transfers, have remained at 4% of Total
Annual Revenues this year. Fiscal years 2011 and 2010 administrative expenses were $39 million and $37 million
respectively.
The following graph shows the relationship between sales and expense for the NCEL.
Nonoperating 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.
Nonoperating Expenses mainly consist of transfers from the NCEL to the State. These transfers consist of net reve‐nues
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 FY 2011 Comprehensive Annual Financial Report (CAFR) available on the NCEL's website at:
http://www.nc‐educationlottery.org/about.aspx
NONOPERATING REVENUE AND EXPENSE:
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Operating Revenues vs. Expense
financials
$‐
$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
FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
OPERATING REVENUES VS EXPENSE FY 2007 TO FY 2011
Total Operating Revenues Prize Expense Commissions Other Expenses
CONTACT INFORMATION
Any request for information about this report should be sent to the Public Information Officer at the North Carolina
Education Lottery, 2100 Yonkers Road, Raleigh, North Carolina 27604.
For more information please see our website at http://www.nc‐educationlottery.org
Also, follow us on facebook and twitter
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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, 2010. The Award for Outstanding Achievement in
Popular Annual Financial Reporting is a prestigious na-tional
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 conform to program standards of creativity, pres-entation,
understandability, and reader appeal.
An Award for Outstanding Achievement in Popular Annual
Financial Reporting is valid for a period of one year only.
We believe our current report continues to conform to the
Popular Annual Financial Reporting requirements, and we
are submitting it to GFOA.
2100 Yonkers Road, Raleigh NC 27604
AWARDS & Acknowledgments