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Audit: Illinois Lottery broke law to get around budget impasse

Illinois LotteryIllinois Lottery: Audit: Illinois Lottery broke law to get around budget impasse
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Eleven months ago, just as the state budget impasse was about to take hold, the Illinois Lottery violated state finance law by prepaying $20 million to take part in future multi-state lottery games, according to an Auditor General's report.

Lottery officials made the prepayment because they were worried that a budget stalemate could prevent the state from participating in the Multi-State Lottery Association's future Powerball and Mega Millions games, according to the audit.

The state's Lottery Department disputes the audit's findings and says no laws were broken.

The audit found that the Illinois Lottery made two $10 million payments on June 30, 2015 — the day before the budget fiasco began that has caused many state and not-for-profit agencies to lay off workers and deny services to thousands of families. Specifically, the payments failed to comply with a state finance law which says that appropriated money can be spent only in the year for which it was appropriated, according to the audit.

The audit found that the Lottery "inappropriately prepaid amounts from their fiscal year 2015 appropriation to the Multi-State Lottery Association to fund fiscal year 2016 Multi-State Lottery Association payment obligations."

"Failure to pay expenditures from the proper fiscal year's appropriation violates the State Finance Act and diminishes the oversight and authority of the budgeting and appropriation process set forth by the legislature," the auditor wrote.

"In discussing these conditions, Lottery management indicated the budget impasse at June 30 and certain unforeseen subsequent events resulted in the issues identified," according to the audit. The Illinois Lottery prepaid prize money "to ensure the Department could continue to participate in the multi-state Lottery games," the audit states.

Nellie Viner, the lottery agency's attorney, disputed the auditor's findings in an email to the News-Democrat on Friday.

"(T)hese June 2015 transfers were in compliance with the terms of our (multi-state clearinghouse) contract and fully in compliance with the provisions of the State Finance Act," she wrote, adding that "any report" that the transfers "were 'illegal' would be both factually and legally wrong."

State Rep. Jack Franks, D-Marengo, who is a vocal critic of the Lottery Department, said the audit's finding are "a big problem" related to poor supervision of the Lottery.

"We need someone who can mind the store," Franks said. "First of all, the lottery is being terribly run. It should be generating almost a billion dollars more than what it is. Which is a big, big problem."

The need to improve the Illinois Lottery's performance is long overdue in view of the deep cuts in services many schools and social service agenices are enduring, according to Franks.

As a testament to the fury built up over the budget impasse, Pay Now Illinois, a group of 64 agencies with state contracts, sued Illinois for $100 million in backpay on May 4.

Since Illinois has gone without a budget, the state's bills have been piling up — to the tune of $7.1 billion, as of Friday — affecting the incomes and services of thousands of public workers and the people they serve.

The Illinois Lottery channels the bulk of its revenue to education funding.

If the lottery were run correctly "and generating the revenue other states are able to generate on a per capita basis, it would alleviate a lot of our ... school funding issues because we'd be able to use those funds for those measures," Franks said.

The audit states that the $20 million was paid to the Multi-State Lottery Association, a collection of 37 state lotteries that operates the Powerball game, and, in a different section, the Virginia State Lottery, a collection of 10 state lotteries, including Illinois, that operates the Mega Millions game. The two groups license the games to each other.

The audit noted that "the (Illinois Lottery) agrees (with the Auditor General's findings) and will continue to review procedures to ensure it is in compliance with the Lottery Law."

The auditor's report is the latest reminder of the troubled history of the Illinois Lottery, which is in the middle of tug-of-war between Gov. Bruce Rauner and Chicago-based Northstar Lottery Group, which manages the Illinois Lottery, over its future.

The Illinois State Lottery garnered unwanted national headlines last July 1, when it suspended payouts on jackpots of $25,000 or more because of the state budget impasse. In October, the moratorium on jackpot payouts was extended to winnings above $600. After an outcry, and the filing of a class-action lawsuit for nearly $300 million by winners impatient for their cash, Rauner and the legislature passed a law in December that allowed the lottery to resume jackpot payouts.

What's more, for years the Illinois Lottery and Northstar have been criticized for disappointing financial performances. In 2013, Lottery officials even said Northstar owed the state a $20 million penalty for not hitting promised revenue targets.

Rauner's administration is seeking to replace Northstar with a new manager on the grounds the Chicago-based company has failed to meet promised revenue targets.

In 2010, under then-Gov. Pat Quinn, the state signed a deal with Northstar to take over the Illinois lottery. Northstar had pledged to sell $851 million in tickets in 2012, but instead only sold $757 million, resulting in the $20 million penalty, according to news accounts.

Meanwhile, state lawmakers are working to pass a law to make Internet lottery ticket sales permanent. The lottery wants to guarantee online sales as a way to entice other bidders for the lottery management contract. The law allowing online sales had expired in March, though Illinois residents can still buy tickets online.

Belleville News-Democrat

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15 comments. Last comment 6 months ago by OneTrickpony.
Page 1 of 2
music*'s avatar - nw bookeep.jpg
Happy California
United States
Member #157856
August 2, 2014
1506 Posts
Offline
Posted: May 21, 2016, 6:47 pm - IP Logged

 I believe that most of these politicians are up for a vote to keep their jobs this November.

 Illinois voters should vote for new members of their State legislature.  Maybe even a new Executive branch.

 Lottery money does not add to the budget it just replaces the amount transferred out by the politicians.

Confused

 I've been rich and I've been poor. Believe me, rich is better. 

 Attributed to Joe E. Lewis and others

    dr65's avatar - black panther.jpg
    Pennsylvania
    United States
    Member #74096
    May 2, 2009
    22860 Posts
    Offline
    Posted: May 21, 2016, 7:09 pm - IP Logged

    June 30, 2015 they make 2 $10m payouts to ensure their participation in MM & PB. Then

    July 1st, 2015 they halt payments then halt them over $600 in Oct.

    Some bozo stated there is something very wrong because the lottery should be making $1b more?

    Do you think??

    So they don't want to pay winners but pay $20m so everything appears right...until now.

    Layoffs too..how DIRTY is that? 

    Everyone remotely involved with that decision ESPECIALLY the top dogs should be thrown

    out...not laid off, not pat on the wrists, not suspended with pay but FIRED. The state should receive

    a ban on certain games for a period. Camelot needs to get back on the boat and someone

    needs to get their head out of their behind.

    The people of the state suffered because of the state. The reason this won't be a big deal is 

    money. They need it and someone needs to be the fallguy...its too bad it won't be someone

    it needs to be.

    Shame on them.

      ArizonaDream's avatar - Lottery-009.jpg

      United States
      Member #169277
      October 10, 2015
      630 Posts
      Offline
      Posted: May 21, 2016, 7:16 pm - IP Logged

      I thought the lotterie's finances were separate from the state budget, at least until the profits were transferred into the general/education funds?

        Coin Toss's avatar - shape barbed.jpg
        Zeta Reticuli Star System
        United States
        Member #30470
        January 17, 2006
        10345 Posts
        Offline
        Posted: May 21, 2016, 8:09 pm - IP Logged

         I believe that most of these politicians are up for a vote to keep their jobs this November.

         Illinois voters should vote for new members of their State legislature.  Maybe even a new Executive branch.

         Lottery money does not add to the budget it just replaces the amount transferred out by the politicians.

        Confused

        music*,

        There's a saying in Illinois, The dog barks in Chicago and wags its tail in Springfield.

        All anyone has to do to win election in Illinois is get Cook County (Chicago).

        Another saying is, "My grandfather voted Republican until the day he died, now he's been voting Democrat ever since".

        Those who run the lotteries love it when players look for consistency in something that's designed not to have any.

        Lep

        There is one and only one 'proven' system, and that is to book the action. No matter the game, let the players pick their own losers.

          lejardin's avatar - Lottery-014.jpg

          United States
          Member #118609
          November 4, 2011
          931 Posts
          Offline
          Posted: May 21, 2016, 8:11 pm - IP Logged

          It should be generating more than a billion more than it is?  How in the world can they miss THAT mark? 

          Yea big problem to put it mildly, fire them all and do another in depth audit.

            Groppo's avatar - cat anm.gif

            United States
            Member #162631
            January 7, 2015
            502 Posts
            Offline
            Posted: May 21, 2016, 8:38 pm - IP Logged

            .
            OK, I'm less informed than the vast majority here.


            I do remember some time back, when Illinois was 'broke' and couldn't pay winners their millions and such.


            So, here's this article, but it's too political for me.


            Can someone please give me the Reader's Digest version of this article for me?


            After all, if it's important enough for Todd to post, then all of us 'regulars' should be equally interested and informed.

            This is no slam against Todd's work/research, but hey, if you're like me, and you don't know,  you don't know.
            So, I ask because Lotto is pretty much my main interest these days.

            Thank you all for your consideration, as I wait for the BIG WINNER to find one of my tickets, some day.


            I'm on the East Coast, far away from Illinois, but interested in what's going on, just the same

             

            Mr. GroppoD

            • Don't chase the numbers you play.
            • Play only numbers you've already played, plus however many random picks.
            • But, ALWAYS the regular numbers you play.  This will make you a winner, not a chaser.
                      (so far, though, I've yet to win any significant lotto prize)
              music*'s avatar - nw bookeep.jpg
              Happy California
              United States
              Member #157856
              August 2, 2014
              1506 Posts
              Offline
              Posted: May 22, 2016, 3:57 am - IP Logged

              music*,

              There's a saying in Illinois, The dog barks in Chicago and wags its tail in Springfield.

              All anyone has to do to win election in Illinois is get Cook County (Chicago).

              Another saying is, "My grandfather voted Republican until the day he died, now he's been voting Democrat ever since".

              Coin Toss, Thank You for the sayings and the quote. President JFK has Cook County to thank for his win. How history would have been different had Nixon won that race in 1960. What would have Nixon done with the Cuban missile crisis? Would Nixon have got us involved in Vietnam?Group Hug

               I've been rich and I've been poor. Believe me, rich is better. 

               Attributed to Joe E. Lewis and others

                Slick Nick's avatar - Lottery-035.jpg
                Rochester
                United States
                Member #103282
                January 1, 2011
                603 Posts
                Offline
                Posted: May 22, 2016, 9:03 am - IP Logged

                Nothing but a circus! Smash

                Money is a terrible master, but a great servant...Smile

                  rcbbuckeye's avatar - Lottery-043.jpg
                  Texas
                  United States
                  Member #55889
                  October 23, 2007
                  5588 Posts
                  Offline
                  Posted: May 22, 2016, 9:44 am - IP Logged

                  Coin Toss, Thank You for the sayings and the quote. President JFK has Cook County to thank for his win. How history would have been different had Nixon won that race in 1960. What would have Nixon done with the Cuban missile crisis? Would Nixon have got us involved in Vietnam?Group Hug

                  I've often asked myself those questions over the years.

                  CAN'T WIN IF YOU'RE NOT IN

                  A DOLLAR AND A DREAM (OR $2)


                    United States
                    Member #106134
                    February 13, 2011
                    806 Posts
                    Offline
                    Posted: May 22, 2016, 10:49 am - IP Logged

                    I live next to IL and people from Missouri like to joke that the country of Venezuela is in excellent financial shape compared to the state of Illinois lol.

                    Oh, and Venezuela is probably even less corrupt too.

                      pickone4me's avatar - 021414tvlies zpsa453b327.jpg
                      Wisconsin
                      United States
                      Member #104962
                      January 23, 2011
                      1075 Posts
                      Offline
                      Posted: May 22, 2016, 2:38 pm - IP Logged

                      I live next to IL and people from Missouri like to joke that the country of Venezuela is in excellent financial shape compared to the state of Illinois lol.

                      Oh, and Venezuela is probably even less corrupt too.

                      Actually people are starving there fights have broke out, they can't even keep the electricity on,   hyper inflation has caused everything to be unaffordable there too, all thanks to the failure called socialism.  It could happen here. 

                      But getting on topic, no surprise Illinois broke the law,  it's the chicago way.

                      Trump 2016!

                        LiveInGreenBay's avatar - driver
                        Green Bay
                        United States
                        Member #169391
                        October 15, 2015
                        1239 Posts
                        Offline
                        Posted: May 22, 2016, 3:40 pm - IP Logged

                        .
                        OK, I'm less informed than the vast majority here.


                        I do remember some time back, when Illinois was 'broke' and couldn't pay winners their millions and such.


                        So, here's this article, but it's too political for me.


                        Can someone please give me the Reader's Digest version of this article for me?


                        After all, if it's important enough for Todd to post, then all of us 'regulars' should be equally interested and informed.

                        This is no slam against Todd's work/research, but hey, if you're like me, and you don't know,  you don't know.
                        So, I ask because Lotto is pretty much my main interest these days.

                        Thank you all for your consideration, as I wait for the BIG WINNER to find one of my tickets, some day.


                        I'm on the East Coast, far away from Illinois, but interested in what's going on, just the same

                         

                        Mr. GroppoD

                        Groppo you want a condensed version?  Here it is...Margaret Thatcher once said " The problem with socialism is eventually you run out of other people's money".  In other words...Stop voting democrat!

                        Never give up.  Banana

                          Groppo's avatar - cat anm.gif

                          United States
                          Member #162631
                          January 7, 2015
                          502 Posts
                          Offline
                          Posted: May 22, 2016, 9:50 pm - IP Logged

                          Groppo you want a condensed version?  Here it is...Margaret Thatcher once said " The problem with socialism is eventually you run out of other people's money".  In other words...Stop voting democrat!

                          .

                          Mr. I live in Green Bay,(who reminds me of a young Ward Cleaver, driving to his first  job interview.)

                          I've never voted. Period.

                          But, it would certainly not be Democrat.

                          Go TRUMP, all the way! 

                          Mr. Groppo

                          • Don't chase the numbers you play.
                          • Play only numbers you've already played, plus however many random picks.
                          • But, ALWAYS the regular numbers you play.  This will make you a winner, not a chaser.
                                    (so far, though, I've yet to win any significant lotto prize)
                            Avatar
                            Kentucky
                            United States
                            Member #32652
                            February 14, 2006
                            7295 Posts
                            Offline
                            Posted: May 22, 2016, 10:33 pm - IP Logged

                            .
                            OK, I'm less informed than the vast majority here.


                            I do remember some time back, when Illinois was 'broke' and couldn't pay winners their millions and such.


                            So, here's this article, but it's too political for me.


                            Can someone please give me the Reader's Digest version of this article for me?


                            After all, if it's important enough for Todd to post, then all of us 'regulars' should be equally interested and informed.

                            This is no slam against Todd's work/research, but hey, if you're like me, and you don't know,  you don't know.
                            So, I ask because Lotto is pretty much my main interest these days.

                            Thank you all for your consideration, as I wait for the BIG WINNER to find one of my tickets, some day.


                            I'm on the East Coast, far away from Illinois, but interested in what's going on, just the same

                             

                            Mr. GroppoD

                            "Can someone please give me the Reader's Digest version of this article for me?"

                            Apparently the Illinois Lottery knew there was a good possibility the state legislators would not pass the budget so they decided to pre-pay their part in future multi-state lottery games. By doing that the lottery could continue selling PB and MM tickets.

                            State Rep. Jack Franks, D-Marengo, who is a vocal critic of the Lottery Department, said the audit's finding are "a big problem" related to poor supervision of the Lottery.

                            A vocal critic who is part of the legislators failing to pass the budget and now blaming the lottery pretty much sums up the hypocrisy in Illinois.