Legislation would free up funds for bigger prizes

By Kate Northrop

A Pennsylvania bill that would effectively increase lottery prize payouts to players is awaiting final approval on the Governor's desk.

Pennsylvania lottery players may be raking in larger prizes if House Bill 1058 passes, which would reduce the required profit margins the Pennsylvania Lottery is required to take in for state programs.

House Bill 1058 has officially passed both the Senate and House, now awaiting a final signature from Governor Josh Shapiro. If passed, the proposed amendment would go into effect immediately, rather than enduring its original 60-day waiting period.

The new law would dramatically lower the percentage of lottery revenues dedicated to property tax relief and transit services for seniors aged 65 and older from 20% of total lottery revenues to 10% for fiscal years beginning after June 30, 2025.

While the change would technically reduce the direct funding stream for those benefits, the Lottery says it would free up lottery funds for higher prize payouts for players and in turn increase funds for state programs.

"I'm proud to announce my bill to increase Lottery profits that benefit senior programs has passed the General Assembly," State Representative and bill sponsor Melissa Shusterman said in a social media post. "Reducing the profit margin is a positive step toward ensuring the Lottery's financial stability and continued support for our seniors."

The intent of Shusterman's legislation was to "allow the Lottery to focus on maximizing gross profits instead of maintaining an arbitrary profit margin," she said in a hearing. While the required profit margin for senior programs would be lowered, Lottery officials and lawmakers argue that the freed-up funds will allow the agency to offer more big-ticket games and higher prizes, which would in turn attract more players, increase profits, and ultimately bring in millions of dollars more for those programs.

"This change will allow the Pennsylvania Lottery to more effectively compete with other forms of entertainment and put the Lottery on better financial footing," Shusterman said in a statement.

Lottery sales data for 2023-2024 has shown a 7.4% decline in scratch-off ticket sales but a shift toward higher price point tickets that cost as much as $50 and offer $5 million top prizes.

It would not have an impact on the overall odds of winning any game or prize, rather it would simply free up more money to fund larger prizes.

"The only thing that will change is that the Pennsylvania Lottery will be able to offer more of the higher price-point games that are popular with our players," Lottery Press Secretary Ewa Swope said in an email to Next Generation Newsroom. "Although it may seem counterintuitive, this artificial profit percentage mandate actually constrains the Lottery's ability to generate profit — and therefore more money for senior programs."

Without the repeal of the required profit margin, or at least a reduction, Swope said the Lottery would eventually have to "pull back" on games offering larger prizes "just to meet the artificial profit percentage requirement."

Shusterman said the Lottery believes the change will increase profits "to benefit senior programs by $1.2 billion over the next ten years."

The bill passed the House by a vote of 201-1 and the Senate by a vote of 49-1. It currently awaits Gov. Shapiro's signature for passage.