A Legislative Summary Document Regarding Texas Lottery Commission Page: 2 of 6
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Texas Lottery Commission
SAO Contact: Nick Villalpando
(512) 936-9500
Financial Profile
Legislative Appropriations Request Preparation
The Texas Lottery Commission (Lottery) projects revenues by using a trend analysis based on weekly sales for each game.
The lottery operator provides the sales data, and the Lottery's Marketing Division (Division) generates a trend line based on
52 weeks of data. The Division regularly validates the sales data provided by the lottery operator and analyzes problems with
its revenue predictions.
The Budget section of the Lottery's Financial Administration Division prepares the Legislative Appropriations Request
(LAR) with substantial input from the Executive Director, Charitable Bingo Operations Director, and others throughout the
agency. The Budget section compares each division's estimated expenditures to prior years to determine whether they are
reasonable. Any unusual variances are investigated and must be justified. The Commissioners approve all requests for
capital projects included in the LAR.
Although the Lottery uses revenue projection methods that should result in an accurate LAR, we noted an inconsistency in
the Lottery's reporting of revenue. The Lottery reports lottery ticket revenue differently in its LAR than in the Uniform
Statewide Accounting System (USAS). The Lottery reports estimated ticket sales revenue as a gross amount in the LAR, but
it reports actual ticket sales revenue in USAS as a net amount (sales less retailers' commissions and prizes paid), which is the
same way the revenues are collected. As a result, actual revenues recorded in USAS appear to be much less than those
estimated in the LAR. For example, in fiscal year 2001, actual net revenues were 53 percent below the gross estimate.
However, when comparing estimated gross revenues to actual gross, there was only a 4 percent difference.
Expenditures by Category
The table below shows the Lottery's expenditures by Comptroller of Public Accounts category as reported by the Lottery in
USAS for appropriation years 2000, 2001, and 2002. This data has not been audited. It is provided for informational
purposes to show how the Lottery has spent its funds. We obtained explanations from the Lottery for fluctuations across
years that appeared unusual.
Expenditures by Comptroller USAS Category Groups
Appropriation Appropriation Appropriation
Comptroller USAS Category Group Year 2000 Year 2001 Year 2002
Interfund Transfers/Other (Note A) $ 2,327,103,160 $ 2,196,492,944 $ 1,431,126,640
Lottery Winnings Paid 406,844,046 495,514,014 423,360,301
Other Expenditures 132,873,115 133,707,109 127,914,425
Printing and Reproduction 14,635,468 10,464,533 14,700,597
Salaries and Wagesa 11,984,464 12,650,004 13,752,155
Intergovernmental Payments 9,694,223 9,288,121 9,138,868
Rentals and Leases 4,919,311 5,535,963 5,097,890
Employee Benefits 2,487,917 2,656,820 3,083,385
Professional Services and Fees 1,674,068 4,513,896 4,518,297
Capital Outlay 959,134 527,188 728,628
Supplies and Materials 747,342 788,364 350,548
Communications and Utilities 601,433 567,689 418,629
Travel 394,960 407,895 430,371
January 2003 SAO No. 03-367
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Texas. Office of the State Auditor. A Legislative Summary Document Regarding Texas Lottery Commission, report, February 2003; Austin, Texas. (https://texashistory.unt.edu/ark:/67531/metapth517729/m1/2/?rotate=90: accessed July 16, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu.; crediting UNT Libraries Government Documents Department.