LOTTERY HISTORY

Massachusetts State Lottery Commission Information Packet 1972 - 2000 Massachusetts State Lottery 60 Columbian Street Braintree, MA 02184 Shannon P. O’Brien Treasurer and Receiver General Jay Mitchell Executive Director Massachusetts State Lottery Commission The Massachusetts State Lottery was established by the legislature in 1971 in response to the need for revenues for the 351 cities and towns of the Commonwealth. To provide an operating structure for the Lottery, the Legislature established a 5-member commission that includes the State Treasurer as Chairperson, the Secretary of Public Safety, the State Comptroller, and two gubernatorial appointees. The Commissioners oversee and provide final approval of the types of games, the consumer prices of games, the prize structures of games, the methods of prize payment, and the licensing of agents. The Lottery Commission meets on a regular basis to discuss all Lottery operations. Honorable Shannon P. O’Brien State Treasurer & Receiver General Honorable Jane Perlov Secretary of Public Safety Honorable Martin J. Benison Comptroller Mr. Philip H. Grandchamp Esquire 2 LOTTERY HISTORY 1971: September 27th: Legislation to create a Massachusetts state lottery was enacted. The Lottery’s mission was to provide a source of revenue for the Commonwealth’s 351 cities and towns. 1972: March 22nd: The Lottery began with sales of tickets for “The Game”. Tickets cost $.50, and the first drawing was held on April 6, 1972 at Faneuil Hall in Boston. Seven people won $50,000. “The Game” was played on a weekly basis. May 8th: The first $1 million prize was won on “The Game”. 1973: The Legislature transferred supervision of Beano from the Department of Public Safety to the State Lottery Commission. This Division later became known as Charitable Gaming. 1974: May: Massachusetts became the first state to sell Instant Lottery Tickets as an alternative to the weekly jackpot game. “The Instant Game” was the first instant ticket, with a top instant prize of $10,000. There were also three monthly drawings in the Instant Game, for $100,000 and $1,000/year for life. 1975: March: “The Game” was changed to the “Big Money Game,” with a guaranteed top prize of $500,000 instead of $50,000. September: A half-hour, weekly television game show based on the “Big Money Game” was introduced. The show was televised for 10 years. 1976: April 10th: The daily Numbers Game was introduced, allowing players an opportunity to select their own numbers, the type of bet, the dollar amount, and the length of time they wanted to play. 1978: The Massachusetts Lottery introduced the first Lotto game in the country. The game was a pick 6 numbers out of 49 game with building jackpots. The game was cancelled after only thirteen weeks due to weak business and the failure to produce large jackpots. 3 1981: The Lottery installed its first on-line terminals at agent locations throughout the state. 1982: November 16th: Megabucks was introduced. Players were required to pick 6 out of 30 numbers and the minimum jackpot was $400,000. December: The first jackpot over $1 million was won. 1983: March: The daily Numbers Game drawings were televised. 1984: March: Six people split a national record jackpot of $18.2 million in the Megabucks game. July: Megabucks went from 1 drawing per week to 2 drawings per week. Those drawings were televised. 1987: May 1st: Mass Millions was introduced, requiring players to choose 6 out of 46 numbers. 1988: Quic-pics were introduced. 1991: March: Mass Cash was introduced, requiring players to select 5 out of 35 numbers for a chance to win a one-time pay-out of $100,000. 1992: April 6th: The Lottery marked its 20th anniversary with an outdoor celebration at Faneuil Hall Marketplace, where the first drawing of “The Game” took place. A new instant game “Wild 20” was introduced to celebrate the Lottery’s anniversary. (It was the Lottery’s first $2 instant ticket). November: The first $5 ticket, “Holiday Bonus” was introduced. 4 1993: July: Legislation was passed, authorizing the Lottery to launch Keno. September 30th: The first Keno drawing was conducted. 1995: January: In an effort to enhance its existing games, the Lottery launched a new TV game show called Bonus Bonanza. (Bonus Bonanza aired through March 1998) 1996: August: Massachusetts joined 5 other states to create a multi-state lottery game. “The Big Game” was established, featuring a minimum jackpot of $5 million. The Big Game was successful in recapturing customers who were attracted to other multi-state lottery games and was able to draw in new customers as well. 1997: The Lottery installed a new state-of-the-art $60 million computer system from Digital Technologies. The project involved a nearly simultaneous conversion to new terminals at almost 6000 retail locations across the state. The new system replaced terminal models that were 15 to 17 years old. The new system offered displays of bets and winnings for customers, as well as increased volume capability and reliability for sales agents. 1999: April: Maria Grasso, a live-in babysitter from Boston’s Beacon Hill neighborhood wins the $197 million Big Game jackpot, the largest jackpot in state history and the second-largest in national history. May: New Jersey joined the Big Game Consortium, bringing the total number of participating states to seven. November: The Millennium Spectacular game, the Lottery’s first ten-dollar instant game makes its debut. Offering an 80% prize pay-out, five $4 million prizes, and five $2 million prizes, tickets sell at a record-setting pace. 2000: May: The Big Game jackpot reaches $363 million, a national record. The Lottery sets a one-day sales record of $11.3 million on May 9, 2000, the day of the $363 million drawing. The jackpot was split between two winners, one in Michigan and one in Illinois. 5 July: State Treasurer Shannon P. O’Brien applauds changes in the state’s charitable gaming laws. The law allows Bingo games to include progressive games with payouts of up to $3,000 (up from a maximum prize of $500); it allows for a larger pool of people eligible to be volunteer workers at Bingo events; and it allows local organizations broader discretion in the sale of charitable gaming tickets. November: The Lottery launches the $400,000,000 Spectacular instant game. This second $10 instant ticket offers an 80% prize payout, including 20 $1 million prizes and 10 $4 million prizes. The $4 million prize is billed as the top instant prize in the world. 6 PRODUCTS Instant Games In May 1974, the Massachusetts State Lottery introduced the instant game-- a game that would revolutionize the Lottery industry in the United States. An instant game is a scratch-off ticket with hidden prizes. It allows players to find out immediately if they have won. Instant games continue to be the most popular and successful Lottery product, accounting for nearly 67% of total sales. Different game themes and prize structures are periodically introduced (approximately six launches a year of three or four games) to sustain player interest. Currently, the Lottery sells $1, $2, $3, and $5 instant tickets. In FY00 twenty-two new instant games were introduced, including the Millennium Spectacular instant game—the first $10 game in state history. The Millennium Spectacular offered nearly an 80% prize pay-out, including five $4 million prizes, and five $2 million prizes. The first ten-dollar game sold out faster than any instant game in Lottery history, generating as much as $25 million dollars a week in gross revenues for this one game alone. As a result, the Lottery launched its second $10 instant game, called the $400,000,000 Spectacular, in November 2000. To start, the game offered ten $4 million prizes and twenty $1 million prizes. Overall, instant games offer nearly a 74% prize pay-out, one of the highest pay-out percentages in the country. Prizes have ranged from $1 to $1 million a year for life. Total gross instant game sales were $2.4 billion in FY00. Massachusetts Stae Lottery Instant Tickets Sale by Year (in thousands) $2,472,876 2,500,000 2,000,000 $2,161,154 $2,085,330 $2,071,628 $1,973,491 $1,793,759 $1,591,667 Sales (in thousands) 1,500,000 $1,211,137 $895,840 1,000,000 $671,598 500,000 $746,662 0 FY90 FY91 FY92 FY93 FY94 FY95 Fiscal Year FY96 FY97 FY98 FY99 FY00 7 Keno Legislation was passed in July of 1993, authorizing the development of Keno. The first numbers were drawn on September 30,1993. Keno is a “lotto” style game in which winning numbers are drawn approximately every five minutes. Players select from one to twelve numbers or “spots” for each game. A computer then randomly chooses twenty winning numbers from 1-80 and displays them on a Keno monitor. Players win by matching some, all, or in some cases, none of the numbers they have chosen to the numbers chosen by the computer. Since its inception, Keno has enjoyed remarkable success and growth, becoming one of the Lottery’s most popular games. Although the number of licensed Keno agents did not increase, Keno sales rose to a record $572 million in FY00, a 6.3% increase over FY99. Massachusetts State Lottery Keno Sales by Year (in thousands) $600,000 $572,442 $538,346 $470,213 $500,000 $432,530 $380,835 $299,535 $400,000 Sales (in thousands) $300,000 $200,000 $100,000 $65,163 $0 FY94 FY95 FY96 FY97 Fiscal Year FY98 FY99 FY00 8 The Numbers Game The Numbers Game is the oldest game still offered by the Massachusetts Lottery. The first drawing was on April 10, 1976. Originally designed to compete with the illegal numbers game, the Lottery’s Numbers Game gives players an opportunity to select their numbers, the type of bet, the length of time and dollar amount (beginning at $.25) they would like to play. For the first five years of the game, the Lottery employed an off-line system, which required a network of couriers to pick up betting slips daily from nearly 1800 locations across the state. These slips were then delivered to Lottery headquarters in Braintree for microfilming and recording. In 1981, that process stopped when the Lottery acquired the most sophisticated computer betting terminals on the market at that time. These terminals were replaced in 1997. Today players can place bets right up until shortly before the 7:57 p.m. drawing. Sales of the Numbers Game have remained consistently strong in recent years, accounting for about 10% of the Lottery’s total sales. The Numbers game is drawn seven days a week. The drawings are broadcast live on WBZTV. Massachusetts State Lottery Numbers Game Sales by Year (in thousands) $500,000 $450,000 $400,000 $350,000 $466,715 $462,299 $444,611 $437,531 $427,272 $431,492 $414,493 $382,313 $385,018$376,730 $378,852 $376,952 Sales (in thousands) $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $0 FY89 FY90 FY91 FY92 FY93 FY94 FY95 Fiscal Year FY96 FY97 FY98 FY99 FY00 9 Megabucks Megabucks was introduced on November 16, 1982. When first introduced, it consisted of choosing 6 numbers from a field of 30 and featured a jackpot prize that would increase with each drawing until won. On May 7, 1983, the number field was increased to 36 numbers. Propelling the growth of Megabucks was a number of growing jackpots, beginning with the first jackpot prize of $1,089,860, won one month after the game began. The first jackpot over $2 million was in July of 1983. In November of the same year, the jackpot reached $3.8 million. In February and March of 1984, three drawings failed to produce a winner, and launched what the media referred to as “Megamania.” As a result, Massachusetts produced a then national record jackpot of $18.2 million, which was shared by six winners. In the wake of “Megamania,” analysis showed that Lottery players preferred larger jackpots of $10 million or more. In an effort to meet this demand, on March 24, 1991 the field of numbers in Megabucks was increased from 36 to 42. This expansion increased the odds of winning, and the “roll-overs” immediately resulted in higher jackpots. The largest Megabucks jackpot to date is $21,714,520. When first introduced, Megabucks was the fastest growing game in the history of the Massachusetts State Lottery. However, in recent years sales have declined. In FY00 sales totaled $55,314,000, a 14.4% decrease from FY99 sales. Megabucks is drawn every Wednesday and Saturday at 11:20 p.m. The drawing is broadcast live on WBZ-TV. 10 Massachusetts State Lottery Megabucks Sales by Year (in thousands) $350,000 $311,383 $300,000 $284,129 $242,703 $250,000 Sales (in thousands) $200,000 $156,377 $153,221 $150,000 $125,292 $111,728 $94,287 $83,600 $74,752 $64,603 $100,000 $55,314 $50,000 $0 FY89 FY90 FY91 FY92 FY93 FY94 FY95 Fiscal Year FY96 FY97 FY98 FY99 FY00 MEGABUCKS PRIZE STRUCTURE Match All six numbers 5 of 6 4 of 6 3 of 6 MEGABUCKS Pick 6 of 42 Win Probability Jackpot $1,500 $75 Free Bet 1: 1: 1: 1: 5,245,786 24,286.05 555.11 36.74 Prize Pool Allocation (average) 57.9% 12.4% 27% 2.7% ~ 50% Prize Pool 11 Mass Millions Mass Millions was launched on April 20, 1987. It was designed to respond to the players’ interest in playing games that offered more substantial jackpots. The first drawing of the Mass Millions game was on Friday, May 1, 1987. Mass Millions is another number selection game. Originally, players chose six numbers out of a field of 46. In March of 1991, the field of numbers was increased from 46 to 49, and the lower tier prize structure was enhanced. A second weekly drawing was also added. Players who match five of the six winning numbers plus a bonus number win $50,000. The largest Mass Millions jackpot ever was $42 million. Sales for FY00 totaled $52,874,000, a 16.8% decrease from FY99. The Mass Millions numbers are drawn on Monday and Thursday at 11:20 p.m. The drawings are broadcast live on WBZ-TV. Massachusetts State Lottery Mass Millions Sales by Year (in thousands) $160,000 $142,732 $140,000 $139,503 $117,740 $95,577 $87,689 $65,694 $63,517 $52,874 $120,000 $116,673 $111,199 $104,438 $95,738 $75,918 Sales (in thousands) $100,000 $80,000 $60,000 $40,000 $13,761 $20,000 $0 FY87 FY88 FY89 FY90 FY91 FY92 FY93 FY94 Fiscal Year FY95 FY96 FY97 FY98 FY99 FY00 Match All six numbers 5 of 6 + bonus # 5 of 6 4 of 6 3 of 6 MASS MILLIONS PRIZE STRUCTURE Pick 6 of 49 Win Probability Jackpot $50,000 $3,000 $100 Free Bet ~ 1: 13,983,816 1: 2,330,636 1: 55,491.3 1: 1,032.4 1: 55.7 55% Prize Pool Prize Pool Allocation (average) 66.9% 3.9% 9.8% 17.6% 1.8% 12 Mass Cash Mass Cash became the Lottery’s fourth online game in March 1991. Mass Cash was created to offer players the opportunity to win a one-time pay-out of $100,000 by selecting five winning numbers out of 35. Players were attracted to the favorable odds and the frequency with which the top prize was won. There were ten $100,000 winners on the first drawing, and over thirty winners of $100,000 within one month of the game’s introduction. Mass Cash sales totaled $50,709,000 in FY00, a 5.5% decrease over FY99. The Mass Cash winning numbers are drawn on Tuesday and Friday at 11:20 p.m. The drawings are broadcast live on WBZ-TV. Massachusetts State Lottery Mass Cash Sales by Year (in thousands) $98,117 $100,000 $90,000 $80,000 $70,000 $93,531 $90,291 $81,038 $76,283 $67,398 $59,758 $53,674 $50,709 Sales (in thousands) $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 FY91 FY92 FY93 FY94 FY95 FY96 Fiscal Year FY97 FY98 $31,063 FY99 FY00 MASS CASH PRIZE STRUCTURE Match All five 4 of 5 3 of 5 Win $100,000 $250 $10 MASS CASH Pick 5 of 35 Probability 1: 324,632 1: 2,164.21 1: 74.63 Prize Pool Allocation (average) 55.2% 20.7% 24.0% ~ 55.8% Prize Pool 13 The Big Game Massachusetts officially entered a multi-state lottery on August 9, 1996 when it joined five other states in a super jackpot game called The Big Game. The Big Game offers a minimum jackpot of $5 million, but jackpots are, on average, over $40 million and have climbed as high as $197 million. Sales of the Big Game began on August 31, 1996, and the first drawing was September 6, 1996. The Big Game expanded to two drawings per week on February 10, 1998. The Big Game is a pick 5 out of 50 game, plus the Big Money Ball. The Big Money Ball was originally chosen from a field of 25, until January 1999 when the matrix was changed to create larger jackpots. The Big Money ball is now chosen from a field of 36 numbers. Not only has the Big Game provided more excitement for Lottery players, it has also gained customers attracted to other multi-state games. Massachusetts joined the Big Game consortium at a time when Powerball was generating a great deal of excitement in neighboring states. The Big Game has not only captured the attention of those customers, but has also attracted new ones. The Big Game received the most attention in Massachusetts in April of 1999, when the jackpot climbed to $197 million—at that time the largest jackpot in state history, and the second-largest in US history. Maria Grasso, a live-in babysitter from Boston’s Beacon Hill neighborhood, claimed the jackpot. Since Maria Grasso’s jackpot, the Big Game has set a new record for jackpot amounts, reaching $363 million in May of 2000. That jackpot—the largest in US history—was split between two winners, one in Michigan and one in Illinois. The original Big Game states were Massachusetts, Georgia, Illinois, Maryland, Michigan, and Virginia. New Jersey joined the consortium in 1999. The Big Game is the only jackpot game offered in Massachusetts that allows jackpot winners to collect their prize in one lump-sum payout. Called the “cash option”, the total is usually about half of the total amount of the estimated jackpot. If players do not elect the cash option, jackpots are paid out over 26 years. Big Game gross sales totaled $110,448,000 in FY00, a 15% increase over FY99. The Big Game numbers are drawn in Atlanta, Georgia on Tuesdays and Fridays at 11:10 p.m. These drawings are broadcast on WBZ-TV. 14 Massachusetts State Lottery Big Game Sales by Year (in thousands) $120,000 $110,448 $96,034 $100,000 Sales (in thousands) $80,000 $56,262 $60,000 $55,233 $40,000 $20,000 $0 FY97 FY98 FIscal Year FY99 FY00 THE BIG GAME PRIZE STRUCTURE Pick 5 out of 50 and 1 out of 36 Match Win Probability Prize Pool Allocation (average): 64.08% 13.76% 2.95% 3.10% 2.60% 4.54% 1.86% 3.91% 3.20% 5 plus big money ball 5 4 plus big money ball 4 3 plus big money ball 3 2 plus big money ball 1 plus big money ball big money ball Jackpot $150,000 $5,000 $150 $100 $5 $5 $2 $1 1: 1: 1: 1: 1: 1: 1: 1: 1: 76,275,360 2,179,296 339,001.6 9,685.6 7,704.6 220.1 537.5 102.4 62.4 ~ 50% Prize Pool 15 Pull Tabs In 1992, the Lottery began licensing certain agents, primarily restaurants, bars and private clubs to sell Pull Tabs. Pull Tab tickets offer a variety of popular themes, from patriotic to holiday-based. The player pulls a tab on the card to reveal symbols that indicate if he or she has won, and what the prize is. The Massachusetts Lottery currently offers 8 games priced $.50 to $2 per ticket. The Pull Tab game is somewhat different from all other Lottery products in that there are fixed costs associated with them. As a result, profits rather than sales are calculated. Profits for FY00 were $3,563,000, a 9% decrease over FY99. Massachusetts State Lottery Pull Tab Sales by Year (in thousands) $7,000 $5,853 $6,000 $6,346 $4,961 $5,000 $4,605 $3,910 $3,563 Sales (in thousands) $4,000 $3,165 $3,000 $3,342 $2,000 $1,576 $1,000 $0 FY92 FY93 FY94 FY95 FY96 Fiscal Year FY97 FY98 FY99 FY00 16 Charitable Gaming Bingo (Beano) was legalized in Massachusetts on September 29, 1971. Effective September 4, 1973, control of the operation of Bingo was transferred from the state Department of Public Safety to the Massachusetts State Lottery Commission. As a result, the Lottery is responsible for collecting the state’s 5% tax on gross receipts from all Beano games, raffles, and bazaars. These events are held as fundraisers by charitable organizations, churches, and schools. Organizations raise money through Bingo games and the sale of Charity Game tickets, which are supplied by the Lottery. In 2000, the Massachusetts State Legislature passed the first significant changes to the state’s Charitable Gaming laws in 20 years. The new statute, which was signed into law in July, includes four major initiatives: first, it increases prizes by allowing progressive games that offer payouts of up to $3,000 (up from the previous maximum prize of $500); second, it doubles the top prizes for regular bingo games, raising maximum prizes from $50 to $100, and allows organizations to offer 50/50 games with prizes up to $1200; third, it allows for a larger pool of people eligible to be volunteers at bingo events; and fourth, it allows organizations broader discretion in the sale of charitable gaming tickets. The new bingo law, which was designed to make bingo games more exciting and viable, took effect in October of 2000 Since then, the Lottery’s Charitable Gaming staff has been working closely with charitable gaming licensees to implement the new law so that it will indeed enable them improve their games. While charitable gaming activities generated $26 million in net revenue in 2000 for worthy causes across the state, gross revenues ($167.6 million in 2000) from these fundraising endeavors have steadily declined in recent years. The Lottery Commission anticipates that the Bingo law passed in 2000 will give Bingo organizations the tools to reverse the decline in revenues, and enable them to continue raising money for worthy causes including education, youth sports, senior citizens organizations, and other charities. Massachusetts State Lottery Charitable Gaming Gross Revenues by Year (in thousands) $300,000 $254,700 $267,800 $248,200 $243,400 $252,200 $233,300 $222,000 $211,700 $200,600 $190,100 $175,400 $167,600 $250,000 $200,000 Sales (in thousands) $150,000 $100,000 $50,000 $1989 1990 1991 1992 1993 1994 1995 Calendar Year 1996 1997 1998 1999 2000 Bazaars Raffles Charity Tickets Bingo 17 REVENUES Massachusetts State Lottery Gross Revenues by Year (in thousands) $4,000,000 $3,500,000 $3,715,671 $3,381,616 $3,225,321 $3,214,256 $3,050,883 $2,815,659 $2,471,741 $2,032,730 $1,730,164 $1,605,496 $1,584,106 $1,464,338 $3,000,000 Sales (in thousands) $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $0 FY89 FY90 FY91 FY92 FY93 FY94 FY95 Fiscal Year FY96 FY97 FY98 FY99 FY00 Massachusetts State Lottery Revenues by Game FY 2000 $55,314,000 $52,874,000 Megabucks 1% $572,442,000 $50,709,000 Mass Cash 1% $376,952,000 Keno 16% Mass Millions 1% Instant Games Big Game Numbers Game Mass Cash Keno Megabucks Mass Millions Numbers Game 10% $110,448,000 Big Game 3% $2,472,876,000 Instant Games 68% 18 Massachusetts State Lottery Gross Revenue Breakdown FY00 Cities & Towns 23% Administrative Expenses 1.8% Commissions & Bonuses 5.7% Prizes 69.5% 19