Record lottery ticket sales means $81 million jackpot for state government

TOPEKA – Record sales of lottery tickets led to a record profit for state government last year, the director of the Kansas Lottery told lawmakers Tuesday.

“As a result of the record sales year, the lottery was able to transfer to the state’s financial coffers approximately $72 million, a record amount,” acting Lottery Director Dennis Taylor said in a report to the Senate Federal and State Affairs Committee.

In addition, lottery winners paid about $9 million in income taxes on their winnings, for a total profit to the state of about $81 million.

The amounts Taylor reported are for traditional lottery sales only, and do not include income from the casino operations that the lottery technically owns and operates.

By law, most lottery income goes to fund economic development projects, with smaller amounts earmarked for the state general fund and prison construction and maintenance. A tiny fraction goes to a fund to fight gambling addiction.

Bigger jackpots in the Powerball and Mega Millions games fueled lottery sales in the 2012 fiscal year, Taylor said.

That included a world record jackpot of $656 million that was shared by three winners – including one in Kansas — in the multi-state Mega Millions game.

Lottery ticket sales in fiscal 2012 totaled slightly more than $246 million. The state paid out $139 million in prizes and about $14.4 million in commissions to retailers.

Taylor reported to the committee on his third day on the job, after moving to the lottery department from the state Department of Administration.

The lottery also worked last year to improve security, including implementing a process called “keyless validation,” Taylor said.

That allows players to validate their own tickets by running them under a bar-code reader before they turn them in for payment.

That guards against the possibility that unscrupulous clerks who work for lottery retailers could tell customers they had lost, and then pocket the winnings themselves.

In addition, the lottery is using undercover investigators to root out another way of cheating at the sales counter called “micro-scratching,” Taylor said.

“Micro-scratching is the term used when a clerk removes a tiny amount of latex from the play area of a scratch ticket in an effort to determine if the ticket has a prize,” Taylor said in his report. “If the ticket has a prize, the clerk purchases and cashes the ticket. If there is no prize, the ticket is sold to an unsuspecting customer.”