Pennsylvania Lottery Says State Must End Profit Mandate to Appease Changing Consumer Demand
The Pennsylvania Lottery is mandated by law to achieve at least a 20% profit on its sales from traditional games, which excludes its iLottery offerings. The profit mandate extends until June 30, 2029, yet lottery officials and Gov. Josh Shapiro (D) are urging state lawmakers in Harrisburg to abolish the yield statute.
Pennsylvania boasts one of the nation’s most lucrative lotteries, generating nearly $4.8 billion in conventional sales for the state’s 2023-24 fiscal year. The calendar year represented the 13th straight year that the Pennsylvania Lottery noted profits surpassing $1 billion, with the figure for 2023-24 exceeding $1.22 billion. The Pennsylvania Lottery mainly aids senior citizens in Pennsylvania.
Lottery officials indicate that the state could receive even greater funds if it abolishes the 20% profit regulation on scratchers. In the last ten years, lottery sales have transitioned from evening drawings to instant games and more expensive scratch-off tickets.
The $30 and $50 scratch-off tickets, on the other hand, usually require a significantly higher payout percentage and, as a result, may offer a lower profit margin for the lottery. Lottery representatives claim that shifting consumer habits, such as players preferring longer odds for the chance at winning a $5 million jackpot with a $50 scratch-off ticket, have made the 20% profit rule outdated.
Shapiro Looks to Gaming for Financial Support
In his Budget Address to the General Assembly last month for the 2025-26 fiscal year, Shapiro reaffirmed his stance that skill games, contentious slot-like gaming machines, need regulation and taxation. The Pennsylvania Lottery and the extensive, legal gaming sector strongly resist skill games, believing that these gray games siphon players from their businesses.
Shapiro aims to expand legal gaming through skill games to assist in funding his initiative of providing an extra $500 million to the least affluent schools in the commonwealth and designating an additional $290 million for public transportation projects. He concurs that the lottery might produce greater revenue if the 20% profit requirement were removed.
"To assist in these initiatives, the budget proposes … eliminating the minimum profit margin requirement to allow the Lottery more flexibility to offer higher-priced games that lottery players want,” Shapiro said.
The lottery believes that removing the profit rule could increase earnings, but the regulation restricts it from offering more $30 and $50 scratchers due to the risks associated. For instance, if the five top awards of $5 million offered in the $5,000,000 Lion’s Share scratcher are claimed rapidly, the state's net gain could be minimal after the $25 million payout.
The Pennsylvania Lottery presently offers 29 scratch-off games priced at $1, $2, $3, or $5. Only eight games are priced at $20 or $50.
Gaming Addiction Opposition
Naturally, there is resistance to permitting the Pennsylvania Lottery to provide more expensive scratch-off tickets. Andrew Shaffer, a resident of Pennsylvania and a member of the National Board of the Stop Predatory Gambling Foundation, a nonprofit organization based in Washington, DC, that aims to mitigate the detrimental effects of commercial gambling on individuals and communities, states that increased costs of play will result in greater losses for those already “affected by excessive lottery gambling.”
“The highest concentrations of lottery sales are in poor and disadvantaged communities, where disproportionately large numbers of people who lack access to good financial resources and education often spend what few investable resources they have buying a Lottery ticket instead of using those resources to improve their situation. Lotteries derive most of their revenue from a relatively small fraction of their players who are problem gamblers and gambling addicts, and ‘who are Black, lower-income, or high school dropouts,'” Shaffer said in remarks to Casino.org.
Shaffer remarked that the lottery is a "regressive tax imposed mainly on those who can least afford it." He asserts that numerous seniors in the state — those who gain from the lottery's funds through property tax and rent rebates, prescription aid, senior services, and complimentary transport to medical visits — are against the lottery promoting “addictive gambling products to their children and grandchildren.”