Annual Report - Nebraska Lottery

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5. Capital Assets Capital asset activity for the year ended June 30, 2005, was as follows: Beginning Ending Balance Increases Decreases Balance Total Capital Assets $ 417,965 $ 29,733 $ - $ 447,698 Total Accumulated Depreciation 377,334 26,588 - 403,922 Total Capital Assets, Net $ 40,631 $ 3,145 $ - $ 43,776 6. On-Line Games During the fiscal year ended June 30, 2005, the Nebraska Lottery offered a variety of on-line games as described in the following table. Game Name Operated by Nebraska’s Share of Prize Reserves POWERBALL ® MUSL $ 1,629,427 NEBRASKA PICK 5® Nebraska Lottery n/a NEBRASKA PICK 3® Nebraska Lottery n/a 2by2 ® MUSL 114,487 $ 1,743,914 The Nebraska Lottery is a member of the Multi-State Lottery Association (MUSL) which operates games on behalf of participating state lotteries. Each MUSL member sells on-line game tickets through its agents and makes weekly payments to MUSL in an amount equal to each game’s prize structure, less amounts retained for prizes paid directly to the winners by each member lottery. MUSL maintains prize reserve funds on each game to serve as a contingency reserve to protect from unforeseen prize liabilities. The money in these reserve funds are to be used at the discretion of the MUSL Board of Directors. The prize reserve funds are refundable to MUSL members if MUSL disbands or if a member leaves MUSL. Members leaving MUSL must wait one year before receiving their remaining share of the prize reserve funds. The Powerball® grand prize can be paid either as annual installments or a lump sum cash payment, depending on the selection of the winner when claiming the prize. If the winner selects annual installments, MUSL purchases bonds which are held in trust to fund the future installments. Maturities are staggered in order to provide adequate cash flow for each installment. MUSL is responsible for paying amounts owed to the grand prize winners. The assets and related liabilities are reflected in MUSL’s financial statements and, therefore, are not reflected in the Nebraska Lottery’s financial statements. . 7. Significant Compliance Requirements Neb. Rev. Stat. Section 9-812 R.S.Supp., 2004 requires until January 1, 2008 a portion of the dollar amount of the lottery tickets, which have been sold, on an annualized basis to be transferred to the beneficiary funds, except that the dollar amount transferred shall not be less than the dollar amount transferred to the funds in fiscal year 2003. Of the money remaining after the payment of prizes and operating expenses, the first five hundred thousand dollars shall be transferred to the Compulsive Gamblers Assistance Fund. Thereafter, twenty-four and three-fourths percent shall be transferred to the Education Innovation Fund, twenty-four and three-fourths percent shall be transferred to the Nebraska Scholarship Fund, forty-nine and one-half percent shall be transferred to the Nebraska Environmental Trust Fund, and one percent shall be transferred to the Compulsive Gamblers Assistance Fund. Due to the passing of Constitutional Amendment 4, from January 1, 2005 and forward, of the money remaining after the payment of prizes and operating expenses, the first five hundred thousand dollars shall be transferred to the Compulsive Gamblers Assistance Fund. Thereafter, twenty- 29
two and one-fourth percent shall be transferred to the Education Innovation Fund, twenty-two and one-fourth percent shall be transferred to the Nebraska Scholarship Fund, forty-four and one-half percent shall be transferred to the Environmental Trust Fund, ten percent shall be transferred to the State Fair Support and Improvement Cash Fund, and one percent shall be transferred to the Compulsive Gamblers Assistance Fund. The funds transferred to the Education Innovation Fund, for fiscal years 2004 and 2005, shall be allocated to the General Fund after operating expenses for the Excellence in Education Council are deducted. The Nebraska Lottery develops game structures to comply with the minimum prize provision of its enabling legislation, which requires a minimum of forty percent must be paid in prizes. Prizes are redeemable for 180 days after game end or applicable on-line drawing. The Nebraska Lottery compares the social security number of each winner that has a per wager prize in excess of $500 against a list of social security numbers having an outstanding State tax liability or delinquent child support payments. Any delinquent payments are withheld from winnings and forwarded to the appropriate State agency. During the fiscal year the Nebraska Lottery collected $3,918 in delinquent State taxes and $5,815 in delinquent child support payments. As required under its enabling legislation, transfers of $22,195,478 were made to other funds during the fiscal year. In addition to the above transfers, a transfer of $5,000,000 was made by the State Treasurer from the State Lottery Operation Trust Fund to the General Fund on July 15, 2004, as required by Neb. Rev. Stat. Section 9-812 R.S.Supp., 2004. Operating Transfers In/Out will not balance and Due To/From Other Funds will not balance, within the Nebraska Lottery’s financial statements, as the Nebraska Lottery only represents part of the State’s primary government. 8. Net Assets The Nebraska Lottery's unrestricted net assets represent funds not legally restricted for any specific purpose. The funds, however, may only be used to fund additional prize pay-outs, transfers to the beneficiary funds or additional operating expenses of the Nebraska Lottery. It is management’s intention to use the unrestricted net assets to fund additional prize pay-outs, retailer incentives, and other game enhancements. 30
Page 2 and 3: annual report july 1, 2004 through
Page 4 and 5: G E N E R A L I N F O R M A T I O N
Page 6 and 7: L O T T O D E V E L O P M E N T S I
Page 8 and 9: deferring rather than canceling the
Page 10 and 11: S C R A T C H $10 SCRATCH GAMES The
Page 12 and 13: DESIGN ‘EM CONTEST During January
Page 14 and 15: R E L A T I O N S H I P S A N D R E
Page 16 and 17: Scratch 1. Skagway Discount Store,
Page 18 and 19: 6/2005--$6.3 million Compulsive Gam
Page 20 and 21: Kathy Kuhlmann, Hastings Powerball
Page 22 and 23: F I N A N C I A L S T A T E M E N T
Page 24 and 25: statement of N E T A S S E T S ASSE
Page 26 and 27: statement of C A S H F L O W S For
Page 28 and 29: egardless of the timing of related
Page 30 and 31: The Nebraska Lottery financial stat

Annual Report - Nebraska Lottery

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