Lottery officials report steady revenue growth but defend legal basis for new online Powerball pilot

Rebecca Paul, president of the Tennessee Education Lottery Corporation, briefed the Finance, Ways and Means Committee on lottery revenues since inception and described a limited pilot of online Powerball sales through a mobile application.

Paul said the lottery has generated about $31.4 billion in gross revenues since it began, has transferred about $7.7 billion for education purposes and has awarded more than 2.2 million scholarships and grants. She said the lottery’s product mix is typically about 80% instant games and 20% draw games, and that the agency’s year‑to‑date and projected fiscal figures remain sensitive to jackpot cycles and to competition from sports wagering.

On a question from lawmakers, Paul and Chief Financial Officer Andy Davis described an online Powerball pilot launched in January that allows purchasers on Apple devices to buy Powerball tickets through ACH transfers. Paul said the lottery did not advertise the pilot, limited it to Powerball and Apple devices, and that early usage is small — roughly 300 registered users and less than $3,000 in sales at the time of the committee hearing. She said the platform was developed by IGT under the terms of the vendor contract and that the lottery’s board approved the platform in August before launch.

Representative Justin W. West (committee member) asked how the lottery could offer ACH purchases in light of Tennessee Code Annotated 4‑51‑108, which contains a “cash only” sentence for sales to the public. Paul said the lottery’s enabling legislation allows the corporation itself to accept other forms of payment even though retailers must accept cash only; she agreed to provide the committee with the legal opinion and the board minutes that approved the platform. Lawmakers requested the written legal analysis and the board minutes; Paul said she would provide them.

On retail impacts, Paul said evidence from other jurisdictions that offer online sales shows retail sales commonly increase after online channels begin, citing Michigan, New Hampshire, Kentucky and Pennsylvania as examples. On vendor and privacy questions she said the platform uses identity and age verification technology (provider named) and geolocation to ensure purchases occur inside Tennessee, and that vendor IGT must meet data‑security and privacy obligations under its contract.

Davis presented a revenue and expense projection for FY25 including estimates by game category and budgeted prize and vendor payments. He projected net lottery proceeds to education in FY25 in the range of $455–$475 million and indicated conservative growth assumptions for future years.

Committee members pressed on advertising and “other gaming” line items in the lottery budget, vendor contracting for the app (IGT), and whether retailers would be harmed by an expansion of online sales. Paul said launch costs were borne by IGT under a contract concession and that the lottery has not yet shifted broader retail strategy. She agreed to provide the requested legal opinions and board minutes to the committee.

No formal votes were taken during the presentation.