Finance Chairmen to Unveil Margin Relief Proposal Impacting PA Lottery

Providing Additional Flexibility & Generating More Revenue 

HARRISBURG — Senators Mike Brubaker (R-36) and John Blake (D-22), Majority and Minority Chairmen of the Senate Finance Committee, have announced plans to introduce legislation that would provide additional flexibility to the Pennsylvania Lottery in how games are managed and marketed and, ultimately, generate more revenue for the Commonwealth.

Under their proposal, the mandated margin rate which determines the percentage of gaming proceeds going into the Lottery Fund would be lowered from 27 percent to 25 percent beginning in the 2014-15 Fiscal Year.  Historically, state law has required at least 30 percent of revenue from Lottery ticket sales be returned to the Lottery Fund to pay for programs benefiting older Pennsylvanians.  Act 53 of 2008 lowered the required margin to 27 percent through Fiscal Year 2010-11, and Act 23 of 2011 extended the 27 percent minimum return through Fiscal Year 2014-15.

Based upon the statutory margin mandate and the growing popularity of less profitable games, the Lottery must plan its product portfolio which includes the development, marketing and sales of 50-60 games across the span of a year in order to meet a 28.5 percent return.  Reduction of the profit margin has the ability to meet consumer demand and maximize sales and profits, according to the sponsors of the proposal.

“As this Commonwealth’s population of older citizens continues to grow and demand for Lottery-funded programs increases, this industry must grow profits to satisfy that demand.  By reducing the artificial margin mandate, the Lottery will have greater ability to fully meet this demand and maximize sales and profits at a time when additional revenues are needed to also meet the demand on our vital senior services and programs,” said Brubaker.

“Our proposal has the ability to expand marketing of the Lottery to drive an estimated $200 million in additional revenue to senior programs over the next five years,” Blake said.  “This is an opportunity to empower the Lottery management and staff to leverage their capabilities to better serve Pennsylvania and our seniors.”

The Pennsylvania Lottery is the only state Lottery that designates all of its proceeds to programs that benefit older residents, and one of only four states that have a minimal margin mandate.  In the last year, the Lottery generated more than $1.1 billion in profit at a 27 percent margin.

CONTACT:

Colleen Greer (Sen. Brubaker’s Office), 717-787-4420

Mark Shade (Sen. Blake’s Office), 717-787-9220