A state lawmaker is calling for an investigation of the Illinois Lottery after a recent audit revealed it had violated the state finance law.
The audit found that the Lottery circumvented the state’s budget impasse by prepaying $20 million to take part in future multistate lottery games, such as Powerball and Mega Millions.
State Rep. Jack Franks, D-Marengo, said he wants either Illinois State Attorney General Lisa Madigan or Gov. Bruce Rauner’s Office of Executive Inspector General to investigate the Lottery’s alleged legal violation — an allegation the Lottery initially accepted but has changed its stance on and now denies.
“At this time law enforcement should be involved,” said Franks, one of the Lottery’s most vocal critics in the Illinois General Assembly.
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At this time law enforcement should be involved.
State Rep. Jack Franks
Franks, the chairman of the House’s State Government Administration Committee, said he’d be happy to hold hearings on the Lottery’s violation of state law.
“But I don’t want to step on law enforcement,” Franks said.
Maura Possely, a spokeswoman for Madigan, said her office is reviewing the audit’s findings.
Catherine Kelly, a spokeswoman for Rauner, issued a statement saying there was never an allegation that any act by the Lottery was unlawful and unethical, “and for Rep. Franks to suggest as much demonstrates the lack of understanding on the issue.”
The Illinois Lottery transferred money to multistate lottery winners at the time they were owed pursuant to its contract and state law, Kelly wrote.
“Initial audit reports are often wrong and need to be corrected, as this report was,” she wrote. “An auditor’s misunderstanding of the Lottery’s contractual obligations led to an error in an audit report that is in the process of being corrected. Nothing more, nothing less.”
Initial audit reports are often wrong and need to be corrected, as this report was. An auditor’s misunderstanding of the Lottery’s contractual obligations led to an error in an audit report that is in the process of being corrected. Nothing more, nothing less.
Catherine Kelly, spokeswoman for Gov. Bruce Rauner
Meanwhile, a Lottery spokesman has announced it will change its earlier stance of accepting the auditor’s findings that it had broken the state law.
The audit, issued May 5, found that in June 2015, 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 multistate lottery games. The law requires money be used in the same year in which it was appropriated.
The audit also noted that the Lottery had accepted the findings.
But Lottery spokesman Steve Rossi, in response to questions from the News-Democrat, said it was a mistake to accept the auditor’s report, and that the Lottery is working to change those findings.
“An appropriate response to the Auditor General’s report is under review,” Rossi wrote in an email. “The deliberations referred to the decision-making process that was undertaken by Lottery personnel in order to ensure that its contractual obligations were being met prior to the end of the fiscal year.”
In addition, he wrote, “It was entirely appropriate and legal for the Lottery to make the transfers when it did at the end of fiscal year 2015 because these receipts were the property of the multistate consortiums, not Illinois, at that time.”
For its part, the auditor is standing by its earlier findings — that the Lottery indeed had broken the state finance law.
“(T)he auditors determined the Lottery did not comply with the State Finance Act as well as the Illinois Lottery Law,” Jim Dahlquist, the administrative manager of the Auditor’s office, wrote in an email.
“We stand by the finding,” Dahlquist wrote. “We will follow up on the finding in our next compliance examination of the Department of the Lottery to determine what actions it has taken in response to the finding.”
The auditors determined the Lottery did not comply with the State Finance Act as well as the Illinois Lottery Law. We stand by the finding.
Jim Dahlquist, state auditor
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.
Meanwhile, Illinois is poised to enter a second fiscal year without a budget. As a result, on Thursday, Illinois Comptroller Leslie Munger warned that without a new budget agreement, Illinois will again stop paying lottery winners.
Lottery head resigns due to medical condition
The head of the Illinois Lottery has resigned from the position after undergoing surgery.
Gov. Bruce Rauner’s administration said Friday that lottery Director B. R. Lane has a “serious medical condition.”
Rauner has appointed Tim McDevitt as interim leader of the agency. He currently serves as Rauner’s deputy director of government transformation and metrics.
Lane has held the $142,000-a-year position since last year. She is a former executive with an Indiana-based computerized gambling company called International Game Technology. She replaced former agency leader Michael Jones.
During Lane’s tenure, Illinois reached an agreement to terminate the contract of Northstar Lottery Group, the private company managing the state’s lottery. The move came after a legislative report revealed the Lottery lost money, reducing the funds it generates for state programming by $125 million.