Auditor Fitzpatrick releases report examining the impact of advertising expenditures on lottery proceeds

A new report from Missouri State Auditor Scott Fitzpatrick shows increased spending for advertising for the state's Lottery program has coincided with a reduction in the amount of money transferred to education. The new report gives the Missouri State Lottery Commission (Lottery) a "good" rating while noting additional trend analysis is needed to determine if continued advertising for lottery purposes is effective in driving lottery sales.

The report follows a 2023 report that found lottery proceeds increased significantly even as funding for the Lottery's advertising budget diminished significantly. The previous report found the advertising budget decreased by approximately $16.7 million from 2018 to 2023 while transfers of Lottery proceeds to education increased by more than $53 million in the same period of time. The report released today found a significant increase in advertising expenditures of approximately $5 million for Fiscal Year 2024 but saw total revenue generated by the Lottery decrease by more than $49 million and transfers to education decrease by more than $18 million.

"The amount of money generated by the Lottery for our system of public education is the best way to gauge whether the program is succeeding. In this case we've seen transfers to education increase while advertising budgets were nearly non-existent and then seen transfers diminish when the advertising budget was increased significantly. I realize there are a number of factors at play when looking at these trends, but  the information in our report should be helpful to lawmakers as they determine the amount they want to appropriate for advertising in the coming fiscal year," said Auditor Fitzpatrick.

According to national lottery data, Missouri's fiscal year 2024 advertising budget of 0.31 percent of sales ranks 44th out of the 46 states that sponsor a lottery. For Fiscal Year 2023, the Lottery had an advertising budget of 0.02 percent of sales, which was the smallest advertising budget of any of the 45 states (plus the District of Columbia) that sponsor a lottery.

Lottery officials indicated the changes in advertising expenditures are not the only factor that affects lottery sales, and multiple other factors can play a substantial role in lottery sales. According to Lottery officials, the size of the national jackpots are a significant factor for lottery sales, with jackpots greater than $500 million drawing more media attention and generating more revenue. The report found total lottery jackpots for the national jackpot games that Missouri participates in increased by 33% in fiscal year 2024 compared to fiscal year 2023. However, draw game ticket sales and overall lottery revenues stayed essentially the same, only decreasing slightly in fiscal year 2024.

The complete audit of the Missouri State Lottery Commission can be found here.