Auditor general: Illinois Lottery made illegal $20 million prepayment just ahead of budget stalemate
The Illinois auditor general found the Illinois Lottery in violation of a state finance law for paying $20 million to ensure that, even in the absence of a state budget, Illinois could continue to participate in the Mega Millions and Powerball games.
The Illinois Lottery made $20 million in prepayments to the Multi-State Lottery Association June 30, 2015, in violation of state finance laws, according to the Illinois auditor general.
The Illinois auditor general issued a report that found the Illinois Lottery made two $10 million payments so that in the absence of a state budget, Illinois could continue to participate in the Mega Millions and Powerball games run by the Multi-State Lottery Association.
According to the auditor general’s report, Illinois law requires agencies to make payments only for the years in which funds are appropriated, and Illinois Lottery’s prepayment of amounts due in fiscal year 2016 from fiscal year 2015 funds “violate[d] the State Finance Act and diminishe[d] the oversight and authority of the budgeting and appropriation process set forth by the legislature.”
Illinois Lottery representatives denied the organization did anything illegal and disagreed with the findings in the report.
The auditor general’s finding that lottery officials skirted state finance laws to get around the problems caused by budget gridlock is just the latest scandal involving the Illinois Lottery. State Rep. Jack Franks, D-Marengo, told the Belleville News-Democrat the report demonstrates the need for better supervision of the Illinois Lottery and noted, “[T]he lottery is being terribly run. It should be generating almost a billion dollars more than what it is.”
The lottery’s proceeds go chiefly toward education funding in Illinois. Due to revenues that fell hundreds of millions of dollars short of targets, Gov. Bruce Rauner in September 2015 fired Northstar Lottery Group, the private management company hired to run the lottery in 2010. The Illinois Lottery plans to hire a new manager to replace Northstar.
Due to the state’s budget gridlock and lack of funds appropriated for lottery payouts, the Illinois Lottery officially stopped paying winners of amounts over $25,000 in September 2015, and stopped payments to winners of over $600 in October 2015. After lawsuits filed against the lottery by holders of winning tickets, in December 2015, the General Assembly passed – and Rauner signed into law – a bill allocating $3.1 billion for lottery payouts, as well as payments to highway departments and social services providers.
The Illinois Lottery needs strong financial management to generate the best returns on its funds, and sharp oversight to ensure the organization follows laws designed to foster transparency and accountability in government financial transactions. The unfortunate results of politicians’ failure to pass a fiscally responsible budget – including the state’s $7 billion backlog of unpaid bills and cuts in social services – are only aggravated by shortcuts around rules designed to protect funds held by public officials.