BOSTON (Mass.gov) – The Office of State Auditor Suzanne M. Bump (OSA) released an audit showing improvements in oversight of lottery sales and game integrity at the Massachusetts State Lottery Commission (MSLC). The report pointed to deficiencies in criminal background record checks for lottery sales agents, reconciliation reports for terminated sales representatives, as well as the process the agency was using to prevent family members of lottery employees from claiming winning tickets, which is prohibited under state law. During the audit, which examined April 5, 2019 through March 31, 2020, the Lottery reported that it has taken steps to address the audit’s findings and recommendations.
The audit follows up on a previous report from the OSA that found similar issues related to criminal background checks not being performed regularly and incomplete settlement reports and activities by terminated lottery sales representatives.
“Although deficiencies still remain, today’s report makes clear the Lottery has made significant progress since our last audit and has taken our most recent recommendations seriously,” Bump said of the audit. “Right now, as our state recovers from COVID-19, the Lottery’s support for our cities and towns is vital. Moving forward, it will be critical for the Lottery to continue to use and implement all the technological tools at its disposal to continue to modernize and enhance financial security and game integrity.”
The audit showed the Lottery had not conducted Criminal Offender Record Information (CORI) reviews for 3,146 (32%) of the 9,732 active lottery sales agents. The Lottery began implementing a new computer system to assist with CORI checks in April 2019. Prior to this, the CORI review process was performed manually and was ineffective because it did not track the next date when the next CORI review was needed which, the audit notes resulted in a significant backlog of reviews. In its response to this finding, the Lottery reports that it has reduced the CORI backlog by nearly 100 percent.
Additionally, of the terminated lottery sales agents reviewed during the audit, 24 percent had information missing from their final settlement reconciliations. The audit notes, this resulted in there being a higher risk for ticket game books and lottery funds not being returned to MSLC. The Lottery has since followed up on the audit’s recommendations and has revised its policies to address terminated lottery sales agent reporting; this includes providing specific steps and requirements for processing instant ticket returns and collecting appropriate documentation.
Further, the audit reviewed lottery winner addresses for any matches with MSLC employees and found 39 claimants that had addresses that potentially matched. Additionally, there were 5,125 claims that could not be reviewed because addresses on claim forms were incomplete, inaccurate, or included post office boxes. Under state law, no ticket should be purchased and no prize should be paid to lottery employees or members of their family. Auditors presented these findings to Lottery management and in response, the Lottery performed an internal review which concluded that no ineligible player received a prize. The Lottery also stated that it will be implementing a new policy by June 30, 2021 to ensure that all customer service staff accurately record claimant name and address information at the time tickets are cashed.
MSLC was established in 1971 and is governed by five commissioners, including its chair which is the State Treasurer, as well as the Secretary of Public Safety, the Comptroller of the Commonwealth, and two people appointed by the Governor. The State Treasurer appoints the Lottery’s director which is subject to the Governor’s approval. The Lottery is headquartered in Dorchester and has five regional offices in Braintree, New Bedford, West Springfield, Woburn, and Worcester. During the audit period, MSLC had 375 employees. In fiscal year 2019, MSLC generated revenue of $5.509 billion and returned $1.104 billion in net profit to the Commonwealth.