Taking a look at the Tennessee Lottery

Do you play the Tennessee Education Lottery? As for me, when the big games get in the high dollar mode, i.e. one recently went over $1 billion, I do get some tickets. But I am not real high on gambling. I do not oppose the games, machines, cards, etc., but I do worry about younger people and the addiction factor. This craze over sports gambling seems a little scary to me. Be that as it may, I was generally unfamiliar with what/how/why of the way things work at the Lottery until this past week. My contact won $1,000 on a scratcher, instant winner card. I agreed to accompany him to collect from the Tennessee Lottery. Turns out if you win over $800 you must go to a district office to collect. Now, this is where I become a little agitated. The Lottery has its home office in, of course, Nashville. There are three other district offices in the state: Memphis, Chattanooga and Knoxville. At one point, I recall there was an office in Johnson City. Apparently, the Lottery now believes the state stops at Knoxville! I thought that notion had died: The Tri-Cities and the rest of what I still call Upper East Tennessee does not exist. Given the instant game yielded $1,000, we had to drive down to the Cedar Bluff exit on I-40/75 in Knoxville and go over to Kingston Pike to a small strip center, and there, at the end of the building was the Lottery office. I can assure you that the Knoxville Lottery office is rather small (I only saw two employees) and it was furnished with six chairs. No extravagances there. My contact walked up to the counter, and the employee asked if he had his Social Security card. When he said "no," without allowing him to present the document requirements he had researched, the employee said "we can't help you." He then asked the employee to look at his documentation, and the employee finally said "okay." The Lottery employee took the documents and came back in short order with a check for $1,000 and precautionary warning about tax liability. We headed to P.F. Chang's. This encounter prompted me to do a little research about the Tennessee Lottery. It is interesting to review some of the annual reports of the Lottery. We have chosen to discuss the initial annual report of 2004 and the 2025 annual report. Also, reviewed was the Financial and Compliance Audit Report of the Tennessee Education Lottery Corporation for the year ended June 30, 2025, by the Tennessee Office of the Comptroller. There was an audit of the Lottery by the Office of the Tennessee Comptroller of the Treasury in 2004. While various persons have served on the Lottery board of directors, Rebecca Paul has been the president and CEO since the Lottery's inception in 2004. She runs a tight ship. The 2025 annual report is more of a summary than the 2004 annual report. The 2025 report tells us that in the academic year 2024-2025, a record number of Lottery-funded scholarships and grants were awarded. In all, 169,412 Tennessee students received one of 13 different awards totaling $505 million, 6.8% higher than in 2024. (2025 annual report). The total number of awards since 2004 is over 2.3 million. A pie chart in the 2025 report, "Where the Money Goes" contains the following: education 25.2%, retailers 7.0%, vendor fees 2.4%, non-direct expenses 1.5%, and prizes 63.0%. Total gross ticket revenues for 2025 were over $1.8 billion, bringing the total to more than $32 billion since inception. (2025 annual report). The 2024 annual report shows as to where the money goes, 55.4% went to winners, 31.0% to education, 7.1% to operational costs and 6.5% to retailers. We were unsuccessful in obtaining a complete copy of the 2004 audit report. However, net operating revenues were $393,010,000. For 2025, net operating revenues were $1,702,374,000. Relative to the 2025 audit: (1) the Opinion of the Financial Statements is unmodified; (2) the Audit Report contains no findings; (3) there were no findings in the prior Audit Report. That is excellent. The annual reports and Financial and Compliance Audit Reports are all available online. We are not accountants, but the financials of the Lottery appear in order. Almost $8 billion has been raised for education since the Lottery's inception. Now, we do think they could use a few more chairs in Knoxville. However, as discussed, why not a district office in the Tri-Cities? Or, at least send a mobile unit up to the mountains sometimes. If the Johnson City office was closed because there were too few winners, send us some of those Middle Tennessee scratchers. Bill Bovender practices law in Kingsport. You can email him at bovender@hsdlaw.com.