Indiana’s private lottery operator generates record profit
INDIANAPOLIS (AP) — The private company running most of Indiana’s lottery operations generated a record profit this past year, but still fell short of its original contract’s goal.
Hoosier Lottery officials say the lottery transferred $306 million into state coffers during the recently ended fiscal year. That’s about $6 million more than the minimum IGT Indiana must meet to avoid paying shortfall penalties.
The $306 million was a result of sales of nearly $1.3 billion, and was driven by six large jackpots ranging from $390 million to $759 million.
By exceeding the $300 million incentive net income threshold, IGT Indiana earned its first incentive payment since the state decided to outsource most of its lottery operations more than five years ago. The company received a $9.1 million incentive payment.
But the lottery’s record-setting profit still fell short of IGT Indiana’s original 15-year contract’s target of bringing in $410 million by 2018. That contract was renegotiated in 2015 to set new income targets.
Indiana’s lottery proceeds go toward the State Teachers Retirement Fund, police and firefighters’ pensions and reducing auto excise taxes.
IGT Indiana was required to bring in a net profit of $410 million by the end of June 2018 under the company’s initial 2013 state contract. But the “provider net income” still hasn’t reached the $320 million goal the company initially agreed to bring in during fiscal year 2015.
The company’s original contract was rewritten and replaced in 2015 with more obtainable financial goals, resulting in less shortfall payments from IGT Indiana to the state. Executive Director Sara Taylor defended the contract changes last year.
“The marketplace has changed some since the initial agreement was put in place and I think both parties felt that we were two years into a long-term arrangement that we thought had successes and potential for even more successes,” she said.