a report on tennessee lottery revenues, expenses, and net lottery proceeds presented to: the fiscal...
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A Report on Tennessee Lottery Revenues, Expenses, and Net Lottery Proceeds
Presented to: The Fiscal Review Committee
Presented by: Robert N. Currey
Tuesday, October 9, 2007
Tennessee General Assembly, Fiscal Review Committee, Robert Currey Slide 1
Outline
Lottery Ticket Sales Miscellaneous & Total Net Revenue Gaming Expenses Operating & Total Expenses Net Lottery Proceeds & After-School Funding FY07-08 – Weekly Sales to Date Game Trends Points to Note
Tennessee General Assembly, Fiscal Review Committee, Robert Currey Slide 2
Lottery Ticket Sales
Tennessee General Assembly, Fiscal Review Committee, Robert Currey Slide 3
Miscellaneous and Total Net Revenue
Tennessee General Assembly, Fiscal Review Committee, Robert Currey Slide 4
Gaming Expenses
Tennessee General Assembly, Fiscal Review Committee, Robert Currey Slide 5
Operating & Total Expenses
Tennessee General Assembly, Fiscal Review Committee, Robert Currey Slide 6
Net Lottery Proceeds & After-School Funding
Tennessee General Assembly, Fiscal Review Committee, Robert Currey Slide 7
FY07-08Weekly Sales to Date
Tennessee General Assembly, Fiscal Review Committee, Robert Currey Slide 8
Tennessee General Assembly, Fiscal Review Committee, Robert Currey Slide 9
Tennessee General Assembly, Fiscal Review Committee, Robert Currey Slide 10
Tennessee General Assembly, Fiscal Review Committee, Robert Currey Slide 11
Tennessee General Assembly, Fiscal Review Committee, Robert Currey Slide 12
Tennessee General Assembly, Fiscal Review Committee, Robert Currey Slide 13
Tennessee General Assembly, Fiscal Review Committee, Robert Currey Slide 14
Tennessee General Assembly, Fiscal Review Committee, Robert Currey Slide 15
Tennessee General Assembly, Fiscal Review Committee, Robert Currey Slide 16
Points to Note (1) Growth of Ticket Sales (gross) appears to be diminishing
18.0% in FY05-06 6.2% in FY06-07 2.3% in FY07-08 (YTD thru 10/06/07)…..Summer Seasonality
Growth of Total Expenses is diminishing 18.4% in FY05-06 8.4% in FY06-07
Total Expenses are growing faster than Total Net Revenues Last year expenses grew 8.4% Last year revenues grew 6.2%
Net Lottery Proceeds growth diminishing 18.4% in FY05-06 0.8% for FY06-07
Getting close to the profit maximization point.
Tennessee General Assembly, Fiscal Review Committee, Robert Currey Slide 17
Points to Note (2)
What’s needed for continued growth of net lottery proceeds? Hope for larger jackpots for Powerball and Lotto 5. Management MUST continue to find ways to increase sales. Cutting expenses is NOT a viable option because 95.6% of all
lottery expenses are directly related to ticket sales…if you cut expenses, sales will decrease.
Increase sales to an extent that revenue growth (dollars) exceeds expense growth (dollars).
Instant Games – Continue increasing the prize expense ratio until the “optimum prize expense point” is reached.
Marginal expense = Marginal revenue. Continue introducing new types of games such as Million Dollar
Madness (Raffle game), and HotTrax Champions. Perhaps, a matrix change to Lotto 5.
Tennessee General Assembly, Fiscal Review Committee, Robert Currey Slide 18
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