In a bid to reverse its deficit Mexican lottery La Lotería Nacional para la Asistencia Pública (Lotenal) will merge with the other state lottery Pronósticos para la Asistencia Pública (Pronósticos).

Lotenal which owes $540m in back taxes will merge with Pronósticos as it "responds to the challenge set by President Andrés Manuel López Obrador," said the agency's director, Ernesto Prieto Ortega.

"It is a question of this decentralized body returning to the purpose for which it was founded in 1920: providing economic support to the activities the federal Executive is in charge of when it comes to the field of public assistance," he explained.

Once the financial rescue strategy is in place, Lotenal will seek to emulate the assistance campaigns of the 50's and 60's, when the lottery donated medical equipment to hospitals, schools, markets, parks, equipment and ambulances for remote municipalities, as well as wheelchairs according to Prieto Ortega.

"With the new strategy, it is intended that the Presidency of the Republic has more resources with which to deliver donations to the communities and municipalities of the country in cases of disaster; in those cases, Lotenal and Pronósticos would display their respective logos, during the delivery of donations by the president," said Prieto Ortega.

According to the official, Pronósticos operates with sound finances and is already the main seller of Lotenal's electronic lottery ticket, with 600 million pesos annually in sales.

Earlier this year President Andrés Manuel López Obrador said that he had entrusted the Lotenal with joining the government's new austerity policy, while urging the body to restore transparency and efficiency in the institution. At a press conference and speaking on behalf of Director General of Lotenal, coordinator of advisors Francisco Javier Ramírez Jaramillo said at the time that "it was time for this noble institution to grow once more" and added that the lottery had been handed a mandate by the President to change.

Lotenal has been present for over 240 years while Pronósticos went into operation in 1978 and initially let Mexicans make a bets on the outcome of the World Cup in Argentina. Soon afterwards it launched the weekly Progol product — a football [US soccer] betting game. Since then the lottery has considerably increased the number of products on offer. In 2006 Pronósticos was permitted to run lotteries as well as sports betting games and now runs instant tickets, Lotos, numbers games and lotteries.

The sales for Pronósticos are higher and its sales network is much more advanced than Lotenal, sales for which have been in decline for over ten years. In 2015 Mexico's Chief Audit Office confirmed that Lotenal was in a state of growing crisis, since the lottery had stopped making donations to public charities and was dependent on government money so that it could remain afloat and even pay out prizes in some cases. The audit calculated that the lottery had recorded a deficit of $100m in 2015 alone. As a result the Audit Office advised that the Executive branch dissolve the lottery altogether because it had failed to comply with its mandate which was to raise money for charitable causes.