Agency cites higher start-up costs, lower margins and less betting activity than it expected

Oregon Lottery Director Barry Pack will present some unwelcome news at the Lottery Commission's monthly meeting on Feb. 28. Scoreboard, the agency's new mobile sports betting app, will lose money for the fiscal year that ends June 30.

"Lottery will have a loss of $5.3 [million] from the program for the first nine months of FY '20," Pack said in a memo prepared for that meeting.

Prior to launching Scoreboard last October, lottery officials presented lawmakers with projections showing the agency expected sports to be profitable in its first year — making $6.3 million — and pick up speed after that.

Those projections can be found in the table below.

At the Lottery Commission's January meeting, agency officials warned commissioners that results were not as good as expected.

"Original projections have been revised downward to reflect evolving estimates around black market capture rate, lack of NCAA wagering, tax withholding, intrastate competition, margin and product technical issues," officials said in a presentation slide.

This month, Pack put firm numbers on that downward revision, leaving the agency's sports-betting business $11.5 million short of where the lottery had once hoped to finish the year.

Lottery spokesman Matt Shelby attributes the shortfall to a variety of issues.

"We launched a new game (sports) and a new sales channel (mobile) this year, and we knew we would have significant up-front investment," Shelby says in an email. "We also captured all expenses related to launching the game, including indirect ones. Some of those indirect expenses were already represented in other budget areas, and it was a matter of moving them into the sports column."

The lottery put a big emphasis on Scoreboard, its first new major initiative in more than a decade. The agency hoped to use sports betting to attract new gamblers as its existing clientele ages out. The agency's zeal to enter the new arena involved a hurried contracting process and has at times resulted in pushback from legislators.

Last year, legislative leaders attempted quell some of the unhappiness about sports betting by allocating the profits from the new endeavor to helping pay down the state's $25 billion unfunded pension liability — but for now, at least, there are no profits to allocate.

Lottery officials have been working on that, Shelby notes, by seeking legislative approval to make Scoreboard more attractive by including betting on college games as an option. The answer from the Capitol: no dice.

"The ability to offer collegiate wagering would speed our progress towards profitability — increasing revenue with very little additional expense," Shelby says. "But there doesn't seem to be much appetite for that in the Legislature."

(Click to display full-size in gallery)Prior to launching Scoreboard last October, lottery officials presented lawmakers with projections showing the agency expected sports to be profitable in its first year — making $6.3 million — and pick up speed after that.

(Click to display full-size in gallery)This month, firm numbers painted a not-so-rosy picture, leaving the agency's sports-betting business $11.5 million short of where the lottery had once hoped to finish the year.