Lottery challenges auditor general’s findings

The Illinois Lottery is challenging the findings of an audit released May 5 that concluded it had broken the state finance law, but the Auditor General’s office is disputing the department’s claims.

Acting director of the Illinois Lottery, Tim McDevitt, tried to clear up confusion about why it had made two payments of $10 million so the state could participate in the future multi-state lottery games of Mega Millions and Powerball.

The May 5 audit stated the Lottery said it made the transfers in order to skirt the budget impasse. The payments, made on the day before the impasse began, in fiscal year 2015, were meant for fiscal year 2016 purchases, which the audit found was a violation of the law.

“When Powerball and Mega Millions players buy tickets for those games in Illinois, a portion of the ticket price is designated to pay winners in other states,” McDevitt wrote to Auditor General Frank J. Mautino on June 13.

McDevitt explained that the $20 million “came from Lottery players, not tax receipts or the General Fund,” and that the Lottery had to pay the funds because it was in the department’s contract.

Moreover, he wrote, the funds didn’t belong to Illinois but instead belonged to the multi-state game groups themselves, which includes Illinois.

McDevitt said the Illinois Lottery held the ticket money “in an escrow-like manner” until it needed to be transferred to the Virginia State Lottery, which handles the finances for Illinois’s participation in the two popular multi-state games.

McDevitt did not identify the fund that the Lottery used to hold ticket money, but the Auditor General did.

In his response to the Lottery on June 27, Mautino included invoices of the two $10 million transfers that showed the money had come from the State Lottery Fund, which state law says was created to “consist of all revenues received from ... the sale of lottery tickets or shares.”

The Treasurer’s Office confirmed that the State Lottery Fund is an appropriated account, which means that it takes legislative approval to be spent, but due to the impending budget impasse, the department wasn’t going to have it. Missing the payment could have meant that Illinois wouldn’t have been able to participate in the Lottery, which has generated close to $300 million in sales in 2016 alone.

“If you continue to disagree with the findings,” Mautino wrote to the Lottery, “we encourage you to seek a formal written opinion on the matter from the Office of Attorney General.”

As of Friday, Annie Thompson, a spokeswoman for the Attorney General, confirmed that the office hasn’t received the request.

This story was originally published July 5, 2016 at 12:21 PM with the headline "Lottery challenges auditor general’s findings."