PDF, 3MB - Illinois Lottery

State of IllinoisDepartment of RevenueIllinois Lottery2010 Annual ReportA Win, Win...Celebration!

Table of ContentsLetter from the SuperintendentInstant gamesOnline GamesEvents & PromotionsRetailersState Lottery Fund Audited Financial StatementsIndependent Auditors' ReportFinancial StatementsStatement of Net AssetsStatements of Revenues, Expenses andChanges in Net AssetsStatements of Cash FlowsNotes to Financial StatementsSupplementary InformationSchedule of Changes in Accrued Prizes PayableSchedule of Other Operating ExpensesIndependent Auditors' Report on Internal Control OverFinancial Reporting and on Compliance and OtherMatters Based on an Audit of Financial StatementsPerformed in Accordance with Government AuditingStandardsDeferred Prize Winners Trust Fund Audited Financial StatementsIndependent Auditors' ReportFinancial StatementsStatement of Net AssetsStatements of Changes in Net AssetsNotes to Financial StatementsIndependent Auditors' Report on Internal Control OverFinancial Reporting and on Compliance and OtherMatters Based on an Audit of Financial StatementsPerformed in Accordance with Government Auditing Standards

Dear Friends,Since 1974, the Illinois Lottery has thrived by providing innovative products that players want topurchase. This is no easy task. Thanks to extensive market research, a varied product portfolio,and creative advertising/promotions, FY2010 ended with sales of $2.2billion—the highest level in our 36-year history! This achievement also marksthe eighth year in a row that sales increased, and the third consecutive yearsales exceeded $2 billion.Our success in the marketplace allowed us to transfer $615 million to theCommon School Fund, and more than $32 million to the new Capital ProjectsFund. In addition, through the sale of cause-specific “specialty instantgames,” the Lottery generated more than $4.3 million for a wide array ofbenevolent organizations across the state.Jodie WinnettThese achievements were made possible by adjusting the demands of anever-changing marketplace. Because Lottery players want variety and multiple play/win options,we began offering Powerball®, the popular multi-state game, on January 31, 2010. We also added aPowerplay and Megaplier option to the Powerball® and Mega Millions® games. This small butsignificant change allows participating players to boost second-tier prizes in the popular multistategames to a life-changing $1 million.Instant tickets once again anchored our portfolio, accounting for $1.2 billion in total sales. Wekept the popular suite of games fresh with new additions, including our first-ever $30 instantgame. A 2nd-chance promotion for another first-time instant ticket, Blackhawks Cash, attractedmore than 40,000 2nd-chance entries. The Wedding of Your Dreams promotion saw an incredible800 percent increase in entries from the previous year, and confirmed the Illinois Lottery’s reputationfor innovation and growth.Throughout FY2010, we strengthened ties to our invaluable retailers by offering a series of retailerpromotions. Similarly, we reached out to players by attending summertime events across Illinois.Meeting with players and retailers face-to-face, we heard firsthand what makes the Illinois Lotterysuch an engaging experience, and what we can do to make it even more attractive.With continued input from players, retailers, and loyal Lottery employees, I look forward to evenbetter things in FY2011.Sincerely,Jodie WinnettActing Illinois Lottery Superintendent

2010 Instant GamesPicking a Winner! Heading into FY2010, theIllinois Lottery had a good feeling about theChicago Blackhawks. In January we partneredwith the eventual NHL champions to introduce$2 Blackhawks Cash. A launch promotionfeatured 16 air-hockey tournaments thatdrew large crowds across the state. The Blackhawksthemselves increased interest in thegame with dominant on-ice performances thatgarnered the Hawks their First Stanley Cup in49 years! At right is Acting Lottery SuperintendentJodie Winnett with Chicago Blackhawkslegend Bobby Hull.Big News, Big Sales: The debutof $3,000,000 Cash Spectacularmarked an important milestone inIllinois Lottery history. The Lottery’sfirst $30 instant game, CashSpectacular featured 20 prizes between$1 million and $3 million, aswell as the largest prize-payoutpercentage of any instant gameever created by the Lottery.Cash Spectacular’s success cameas no surprise, as it offered twothings Lottery players have alwayshighly valued: great oddsand variety. Throughout the fiscalyear, we introduced several excitingnew tickets that delivered onboth promises. From July 1, 2009to June 30, 2010, instants broughtin $1.2 billion, accounting for 55percent of total Lottery sales.Giving Back to Illinois: Specialty tickets are anotherway to give back to the state of Illinois andare an important part of our offerings. In recognitionof World AIDS Day, we partnered with theIllinois Department of Public Health to unveil thenew Red Ribbon Bonus Bucks scratch-off, with 100percent of net proceeds supporting HIV/AIDSpreventioneducation and awareness across Illinois.To commemorate Veteran’s Day, Illinois GovernorPat Quinn helped us announce the launch ofStars & Stripes, the latest addition to our Veteran’sCash family of games, which has to dateawarded more than $8.3 million to veterans’ organizationsstatewide.Another new ticket, It’s Double Time, benefitsthe National Multiple Sclerosis (MS) Society,and numerous groups involved in fight againstbreast cancer benefited from Ticket For TheCure.Thanks to these games, an array of service organizationsreceived substantial monies to helptheir respective causes. In all, more than $1.13million was raised for Illinois veteran groups,$1.02 million to improve the lives of people livingwith AIDS, $1.28 million to help create a worldfree of Multiple Sclerosis and $860,000 for thebattle against breast cancer!

2010 Online GamesPowerball® Addition Adds up to Record Sales Year. Look closely at theIllinois Lottery’s string of record-breaking sales years and you’ll see theessential role played by online games: Millionaire Raffle, Pick 3, Pick 4,Little Lotto, Lotto, Mega Millions® and, new for FY2010, Powerball®.Instant and online games each account for roughly half of overall revenues.This was the case in FY2010,when the online sales totaled $1 billion,representing nearly 45 percent of totalLottery sales. The online games’ continuedstrong showing reflects the Lottery’sability to make calculatedimprovements to a given game withoutjeopardizing the game’s identity orthe quality of the player experience.Knowing Lottery fans place a premium on variety, in FY2010 we expandedonline game offerings. After consultation with Lotteriesthroughout the country, the popular multi-state game Powerball® cameto Illinois (and most other states, too). As a result, Illinois now offerstwo multi-state jackpot games with four chances per week to win multimillion-dollarjackpots!Adding to the Powerball® excitement is the Powerplay option, whichallows players to increase all non-jackpot prizes, including the match-5#prize, which grows from $200,000 to $1 million with Powerplay. Seeingthe opportunity to adapt this new feature to its sister game, Megaplierwas creating, providing Mega Millions® players a variety of prize multiplieroptions--the same prize multiplication option as Powerplay doesfor Powerball®.Lotto winner Loyd Elam is a good man witha heart of gold--and he has an award to proveit! Upon winning $7 million in Lotto in 1991, Elamand his wife decided to share their good fortuneby annually treating a busload of under-privilegedchildren from the Lincoln area to a Chicago Cubsgame at Wrigley Field.The 20th and final chapter in this Robin Hood-likestory was written June 30, 2010 when the Cubsplayed the Pirates; among the crowd that daywere 38 kids attending their first Cubs game,courtesy of Elam. “It’s been a great ride; I’ve reallyenjoyed it,” says Elam, 71.Jackpot Games Generate Sales and Dreams Alike! During FY2010, Lotto, MegaMillions® and Powerball® continued their long tradition of capturing the public’simagination with eye-popping jackpots—and making plenty of newspaper headlines inthe process.Dane and Julie Colby created big news for the small town of Hennepin when theybought the grand-prize winning ticket for a $20 millionMega Millions® drawing in March. While Mega Millions®is well known for its life-changing jackpots, theperennial favorite Lotto was hot at both ends of the fiscalyear. Lotto made Dick and Sue Buxton of Peoria $11.5million richer in July 2009, while Chicagoan DonaldLynn won a $12.25 million Lotto prize in June 2010, generatinga lot of media interest. The Little Lotto game,although not usually in the headlines, enjoyed a loyalfollowing in FY2010, with over 220 players winningjackpots (mostly $100,000 and up)!Overall, Mega Millions lived up to its name in FY2010,bringing in $221 million in total sales, second only toPick 3, which garnered sales of $301 million. With solidperformances from Millionaire Raffle, Little Lotto and Pick 4, in addition to impressivesummertime runs from Lotto, FY2010 closed with yet another record sales year!Friday’sJackpot is:$220 Million$143 million cash-value (estimated)Boiling Hot!Join the Excitement...Buy one today!Dane Colby (right) and his wifeJulie won $20 million!Acting Lottery Supt Jodie Winnett (far right) presents an$11.5 million check to Sue and Dick Buxton of Peoria, one of10 Lotto jackpot winners in FY2010.

Events and PromotionsThe Lottery’s continued success depends on our capacity to develop productsthat players want to buy--and retailers are excited to sell. We develop this capacityin many ways, including the old-fashioned way: by visiting with playersface-to-face.Nowhere is this direct player interaction more prevalent than the diversefairs, festivals and parades the Lottery participates in annually. Over theyears, the Lottery has become a fixture at many of these beloved events. Westrengthened this bond in FY10, while creating several innovative, experientialpromotions that delighted the public and exposed our brand to new audiences.Building on Proud Traditions: In August 2009, the Lottery participated in the80th Bud Billiken Parade, the largest African-American parade in the nation.Taking our place among the parade’s320 entries, the Lottery greeted a 1.5-million-strong Chicago crowd. Wealso joined the fun at the city’s PuertoRican Fest, Fiesta Back of the Yards,Cupula Festival, African Festival ofthe Arts and Cinco de Mayo events.Taste of Chicago attendees enjoyedhands-on fun at Lottery booths, and,for yet another year, we had a colorfulentry in city’s Pride Parade.Our interactive Lottery stations were abig hit everywhere we went. Full-partner participation at both Illinois StateFairs allowed us to meet tens of thousands of people from across Illinois andhear their thoughts firsthand.Ho, Ho, Ho! To celebrate the holidays, we launched an integrated“Joy Someone” campaign. While light-hearted television commercialsinvited viewers to choose holiday instant tickets as gifts, weliterally drove home the message with an experiential promotioncalled “Taxi Karaoke.” Each night for one week during the holidayseason, the Lottery set up four Illinois Lottery-branded cabs in frontof a popular Chicago bar. Engaging street teams approached and encouragedpatrons to spread some holiday cheer by singing a song forall to enjoy, in exchange for a free taxi ride. Appreciated by revelersand reporters alike, “Taxi Karaoke” promoted the “Joy Someone”campaign, while also finding a new way to communicate the quintessentialLottery attribute—fun!The Cashalance Casual Lottery players sometimeswait until jackpots jackpots reach $100 million beforepurchasing a ticket. But anyone would be plenty excitedto win $12 million, the starting jackpot for MegaMillions. To give players an idea of exactly how muchmoney the starting Mega Millions jackpot offers, wecreated the Cashalance. Visitors at the James R. Thompson Center took turns spinning theLottery prize wheel, which awarded an assortment of prizes including a 26-week Mega Millionssubscription. Participants also had the opportunity to take a photo inside the Cashalancephoto booth, which simulates the appearance of $12 million in cash. This concept wasalso used successfully in a statewide advertsing campaign.To publicize the St. Patrick’s Day Raffle, theLottery capitalized on the success of the Cashalancephoto booth. We invited players to get“Leprechauned” by taking snapshots of theirfriends and family being transformed into one ofthe small and mischievous sprites. Our ownteam of Lucky Leprechauns was on hand to helpparticipants try on leprechaun hats and learn theIrish jig.One fateful autumn morning, Michael Myers, Freddy Kruegerand winged reapers descended on downtown Chicago. Lucky forcommuters, the infamous characters only wanted to hand outcandy and spread the word about the Lottery’s Halloween Raffle.The event gave us a fun and memorable way to generate excitementaround the Raffle, which sold out in 30 days.Having a Ball—Literally! Our relationship with sporting events grew even stronger in FY2010.Two separate activation events at Chicago’s United Center let us mix with Bulls and Blackhawksfans. We also mingled with Chicago Cubs faithful at Wrigley Field (giving long-sufferingfans something to celebrate). In September we were at Soldier Field, when MississippiValley State took on Alabama State in the Chicago Football Classic—an annual event that celebratesthe excellence of America’s Historically Black Colleges and Universities.

Lottery Retailers Rule!Lottery Retailers=Front-line AmbassadorsFor every jackpot that grabbed headlinesduring FY2010, there were thousands ofpeople like Becky Lueken quietly workingbehind the scenes to promote and sell theLottery. Becky has served nearly threedecades as an Illinois Lottery retailer at theSandwich Country Market (and sold Lotteryfor 25 years at the state’s longest runningfair--the DeKalb County Sandwich Fair).Becky’s achievements were recognized witha special commendation during FY2010. Thisenduring partnership illustrates the emphasis Becky Lueken (left), owner of Sandwichon building strong relationships with retailers—atradition that pays dividends for all Lottery Sales Rep Paula Parentice markingCountry Market, receives a plaque fromconcerned.Becky’s 25th year a the DeKalb CountySandwich Fair.Luck plays a role in all Lottery wins; just ask Andy Shah, owner of the Rt. 31Pantry in West Dundee. He received a trio of four-leaf clovers from a regular customerwho is also an avid Illinois Lottery player. The player promised Andy theclovers would bring him good luck. Four months after taping the clovers to hisLottery terminal, Andy sold a $1 millionAnniversary Millions ticket, earning hisstore a $10,000 bonus in the process.Andy Shaw believes a customer’s gift of atrio of four-leaf clovers may have played arole in him selling a winning $1millionAnniversay Cash ticket.In response to his good fortune, Andysaid, “Now it’s time for the customer whogave me the clovers to win big.” Andy isone of 7,300 Illinois Lottery retailers whohave similar relationships with loyal patrons.Retailers play a unique, front-linerole in promoting the Lottery and its products.In return, top retailers receive ahealthy dose of customer loyalty, a 5 percentcommission on every Lottery ticketsold, and a 1 percent selling bonus forwinning tickets of $1,000 or more (nettingthe retailer, potentially, up to $500,000)!Share and Share AlikeMillionaire Raffle drawings are exciting and unique.They feature a limited number of tickets (500,000) and aset drawing date that can arrive before all available ticketshave sold. Thanks to tireless efforts at the retaillevel, both FY2010 Raffle games sold out prior to theirdrawing dates. All told, eight lucky players won$1 million prizes, ten won $100,000, while 1,000 playerstook home $1,000 prizes. Retailers won, too, collectingover $1 million in commissions and bonuses.Coleman Hughley of CDENT soldone of eight grand-prize MillionaireRaffle tickets in FY2010.Anton Dzierzynski received a $200,000 bonus when hisFood Mart in Hennepin sold a $20 million Mega Millionsticket. Anton used most of the bonus to invest in new equipment and improvecustomers’ shopping experience. Similarly, when Tony Nijher’s BP store sold an $11.5million Lotto ticket, Tony used much of his $115,000 bonus on his retail location. Inaddition to new equipment, however, Tony also invested in the workers who keep hisPeoria Heights BP store running smoothly. In addition to hosting an employee poolparty, Tony gave each employee an $800 check. That’s one nice boss!Nicky and Geeta Patel of Andy’s Food Market in Loves Park sell from over 110 instant-game facings.Andy’s is a mecca for area Lottery players, whose winnings are prominently displayed for all to see.