Montana Lottery reports $19 million general-fund transfer; warns open sports‑betting market could cut retail revenue

Bob Brown, director of the Montana State Lottery, told the Section A Appropriations Subcommittee that the lottery operates as an enterprise fund with no state general‑fund appropriation and that its mission is to "maximize the transfer of its net revenue to the state's general fund and to the Montana STEM scholarship." He said the lottery transferred about $19 million to the general fund and $2.25 million to the STEM scholarship in 2024.

Brown described the lottery as a small operation with 38 full‑time equivalent positions and a five‑member commission. The lottery pays retail sales agents commissions that range roughly from 3% to 5% depending on the product; Brown noted that a purchaser typically spends an additional $7 to $11 on non‑lottery items when visiting a retail location to buy a ticket.

Why it matters: the lottery is a revenue source for the state’s general fund and for scholarships. Changes to the sports‑betting market could shift revenue patterns and reduce ancillary local retail sales that benefit small businesses.

Sports betting and sales comparisons: Brown provided a Sports Bet Montana "at a glance" comparison showing roughly $63 million in fiscal‑year sports‑betting sales in Montana versus about $172 million in Wyoming (as presented by Brown). He told the committee most sports betting in Montana occurs at on‑site machines at licensed establishments and is geofenced to those locations; the mobile app requires the bettor to be physically in a licensed venue. "If it's to change, sports betting onto a wide open market, yes. I do see that as a problem," Brown said, adding that a wider online market could reduce retail traffic and the ancillary sales that local businesses receive.

Policy mechanics and unclaimed prizes: Brown explained that unclaimed prizes go to the general fund and cited an unclaimed Montana Millionaire ticket and roughly $800,000–$900,000 in unclaimed scratch tickets as examples that benefitted state revenues. He said the STEM scholarship allocation is a fixed first payment of $2.25 million that is paid before the remaining net transfer to the general fund.

Budget presentation and requests: the lottery requested an approximate 1.9% increase for the 2027 biennium, largely reflecting present‑law adjustments for personal services and fixed costs; the agency's authority is mainly proprietary and statutory, and its FY2024 spend rate was about 95% of appropriation authority. Brown and the governor's budget office offered to provide additional breakout charts that show the proportion of sales that become prize payouts, operating costs, vendor fees, commissions and the net transfer to the state over multiple years, as requested by committee members.

No committee votes were recorded; members asked for historical data on the percentage of sales returning to the state and questioned the likely effect of pending sports‑betting bills on lottery revenue and small retailers.