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Wisconsin Lottery | |
Department of Revenue | |
July 2013 | |
Report Highlights | |
A 1987 amendment to the Wisconsin Constitution allowed the Legislature
to create a state lottery and required that its net proceeds be distributed
for property tax relief. The Wisconsin Lottery began operations the
following year and has been managed by the Department of Revenue
(DOR) since 1995. Lottery tickets are the Wisconsin Lottery’s primary
revenue source and are sold at more than
As authorized by In conducting the program evaluation, we:
Revenues and Expenses
Wisconsin Lottery sales increased
from
Lottery ticket sales vary by county.
In
In
Other expenses included retailer
compensation, game development
and production costs, product
information costs, and staff salaries
and fringe benefits. The number of
full-time equivalent (FTE) positions
authorized for the Wisconsin
Lottery decreased from
Property Tax Relief
The Wisconsin Constitution
requires that net proceeds from
the Wisconsin Lottery be used
exclusively for property tax relief
for Wisconsin residents. From
Statutes require that each year
at least 50 percent of Wisconsin
Lottery sales be returned to players
as prize payments. In
Lottery Game Management
Effective game development and management help to maximize sales revenue and increase the net proceeds available to fund property tax relief. To maximize net proceeds, the Wisconsin Lottery regularly reviews the number and types of instant games it offers, and uses product information funds appropriated by the Legislature to publicize its games.
To improve instant game
management, the Wisconsin
Lottery decided to sell fewer
games concurrently, ensure that
an assortment of games is available
at a number of different prices,
and focus staff resources on
developing new game styles,
such as combining scratch-off
and pull-tab games. The Wisconsin
Lottery also continues to introduce
higher-priced instant games in
response to player demand. In
Periodically, the Wisconsin Lottery
pays licensing fees for the use
of trademarked or copyrighted
properties. These fees totaled
While all lottery games generate revenue to be used for property tax relief, we question whether the additional expenses associated with trademarked and copyrighted properties maximizes the net revenue available for this purpose.
Retailer Compensation
Wisconsin Lottery tickets are sold
in numerous types of retail outlets.
Convenience stores represented
Retailers that sell Wisconsin Lottery tickets are compensated at statutorily established commission rates and through the Retailer Performance Program. The Retailer Performance Program has three components: a bonus for retailers that sell winning tickets, short-term incentives for retailers that purchase a certain number of tickets or upgrade the lottery products they offer, and sales incentives for retailers that increase their sales.
In
Section Wisconsin Lottery officials attributed the overpayment to administrative and procedural errors and have taken steps to reduce the chance an overpayment occurs in the future by improving the reconciliation process between Wisconsin Lottery records and the State’s accounting system. Although it is difficult to quantify the effect of winning ticket bonuses and sales incentives on Wisconsin Lottery sales, each short-term incentive is developed with specific goals and estimates for return on expense. Wisconsin Lottery officials calculate the return on expense as the increase in sales above what would have been expected if an incentive had not been offered. They indicated that a return on expense ratio of 3:1 is the minimum return a short-term incentive must generate for it to recover its costs and not affect the proceeds available for property tax relief.
The Wisconsin Lottery offered
five short-term incentives in
Recommendations
We include recommendations for the Wisconsin Lottery to:
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