Lottery projects uneven revenue, seeks security and accessibility upgrades as VLT policy debate continues

Charlie McIntyre, director of the New Hampshire Lottery, told the Finance - Division II committee that the lottery’s revenues hit a record in fiscal 2024 but are expected to decline in the near term and remain sensitive to jackpot cycles and interest rates. McIntyre said the agency is asking lawmakers to fund updates to its security and public-entry systems and to consider policy language on video lottery terminals that appears in multiple bills, including HB 728 and the governor’s budget.

McIntyre said the lottery’s gross sales have grown from roughly $250 million a decade ago to about $633 million now, and that Powerball and scratch tickets remain the largest revenue sources. “Every Powerball ticket we sell, 40¢ that is profit,” McIntyre said. He attributed FY2024’s exceptional transfers to the Education Trust Fund to a run of unusually large jackpots and higher interest rates that inflated Powerball prize pools.

Why it matters: Lottery revenue flows to the state’s Education Trust Fund, so changes in sales or prizes affect the dollars available for education. Committee members pressed for more detail on rising operating costs and on how new gaming activity could change long-term revenue estimates.

At the hearing, lawmakers and lottery officials discussed three linked issues: (1) recent revenue and profitability trends, (2) the agency’s operating-cost increases and staffing levels, and (3) requests for capital improvements and facility security. McIntyre told lawmakers the agency runs “very much like a business” with divisions for sales, marketing, security, finance and investigations, and that the Lottery is audited annually by the Legislative Budget Assistant audit team.

Operating costs and staffing: Legislators flagged a sharp rise in operating expenses from 2022 to 2025. Representative Palvin cited a 76% increase and urged detailed line-item explanations. McIntyre and Jim Juris, the lottery’s chief financial officer, attributed the increases to several factors: a negotiated 10% collective-bargaining increase, new hires to regulate an expanding gaming footprint (including charitable gaming rooms and new machines), higher advertising costs to support product growth, upgrades by the state Office of Information Technology (OIT), and a newly authorized Salesforce-based customer-tracking application. McIntyre said the lottery rarely spends every dollar allocated in its budget; unspent appropriations remain with the agency’s revenue stream and increase prize/transfer funds.

On workforce numbers, McIntyre said the agency has 84 employees including three commissioners (about 81 operational staff), with 13 budgeted vacancies currently unfilled; he confirmed the vacancies are funded positions.

Capital and security requests: The lottery asked the committee to consider funding two prioritized needs: modernizing an aging building surveillance system and upgrading the public entrance for ADA compliance and employee safety. McIntyre described the surveillance system as running on a single PC with Windows 7 and said the agency fears a catastrophic failure would leave no recorded evidence. He cited an OIT estimate of about $100,000 to replace the surveillance system and modernize cameras and servers. He also described proposed changes to harden the sales office — covering low walls, replacing clear glass doors and improving access control — to reduce confrontations that may occur when claimants are upset by prize offsets (for example, child support collections).

Policy questions and VLTs: Committee members pressed the lottery on how proposed policy changes could affect revenue. McIntyre and staff described three places where language about video lottery terminals (VLTs) and related activity appears: a standalone House bill (HB 728), the governor’s budget bill (HB 2), and other trailer-bill language. The agency said revenue estimates vary depending on assumptions about machine counts, per-machine revenue and the revenue split with operators. McIntyre described a modeling assumption of roughly $300 “win per unit per day” and said his projection assumed about 4,400 machines operating by fiscal 2027, which he estimated would yield on the order of several hundred million dollars in gross gambling revenue (the agency’s staff presented the $300-per-unit-per-day assumption and a resulting gross figure to legislators during the hearing).

McIntyre also described how the distribution of proceeds could change under proposals in the governor’s budget that would increase the state’s share of some machine revenue. He emphasized that policy choices — such as the split between operator and state shares, and any local-option rules for municipalities — determine the ultimate fiscal outcome and that some policy options are being handled in other committees.

Internet sales and geofencing: The lottery described its internet-based products and geolocation controls. McIntyre said about 85% of sports-betting activity is mobile (internet) and that the platforms use a vendor called GeoComply to block wagers placed from outside the state or from locations where the wager would not be valid. He said the system is tested and designed to block wagers when users are crossing state lines.

Scratch-ticket authorization: McIntyre noted trailer-bill language that would raise the statutory authorization for scratch-ticket purchases during the biennium from $6,000,000 to $15,000,000, reflecting higher scratch-ticket sales in recent years. He said the change would not itself increase the budget authority but would allow the agency to issue more tickets consistent with demand.

Follow-ups and next steps: Committee members asked for detailed line-item explanations of the operating-cost increases, and McIntyre and Juris agreed to provide more granular information. The lottery also noted it will present audit follow-up items to the fiscal committee next month. No formal votes were taken during the hearing; the VLT policy language and any changes to appropriations remain subject to separate committee action and to bills pending in the House and Senate.

Ending: Lawmakers signaled continued scrutiny of the lottery’s requests given overall state budget constraints and asked staff to return with detailed expense and staffing breakdowns to inform future appropriations and policy decisions.