Oregon Lottery Profits Down 49% After Strong Start To The Year

Mandatory statewide shuttering of businesses during the COVID-19 pandemic saw Oregon Lottery’s net profit for March drop 49% from the same month last year, according to a recently released financial report.

Including sales of traditional lottery tickets, video slot machines and online sports betting, Oregon Lottery’s overall net profit last month was $37.6 million, down 49% from $74 million in March of 2019.

Video slot games took the biggest hit with a net profit of $28.1 million for the month, a 54% decrease from last year’s $60.9 million performance.

Oregon Gov. Kate Brown issued a mandatory statewide order on March 16 for bars and restaurants – the primary retailers of Oregon Lottery video slot games – to close to all businesses other than takeout or delivery.

Traditional lottery ticket sales saw a net profit of $9.5 million in March, a 27% reduction from 2019 figures.

Scoreboard, the lottery’s online sports betting product, saw a net loss of $44,000 last month after accruing positive net profits in January and February.

Oregon Lottery sales have earned more than $12 billion for state programs since being formed in 1985, contributing more than $726 million toward state programs in 2018 alone.

Over the years, voters have allocated lottery proceeds to support public schools (53%), economic development (25.5%), state parks (7.5%), and a number of other state programs.

According to a lottery spokesperson, although sports betting revenue is expected to be less than other games, proceeds will likely be allocated to the state pension fund.

A closer look at Scoreboard

Scoreboard went live on Oct. 26, 2019. In the relatively short time span since its launch, the lottery’s newest product has been plagued by problems.

The app accrued a net loss in each of its first three months, including a loss of $1.5 million for six days of operation in October, as well as more moderate losses of $307,000 and $271,000 in November and December, respectively.

On the plus side, Scoreboard turned a net profit over the first two months of 2020, accruing $82,000 in January and $437,000 in February.

On the whole, however, the sportsbook has lost $1.57 million over the first six months of operation, despite accruing net revenue of more than $6.9 million.

A Feb. 28 memo from Oregon Lottery Director Barry Pack to the overseeing lottery commission gave an updated financial projection for Scoreboard’s performance, predicting a loss of $5.3 million over the first nine months of 2020.

Technology provider SBTech, which has been absorbed by daily fantasy sports and sports betting behemoth DraftKings, is currently partnered with Oregon Lottery and responsible for the Scoreboard platform.

SBTech issues

SBTech has been roundly criticized for the unfavorable terms of its contract with Oregon Lottery, largely in regard to excessive service fees.

The full terms of the contract were only revealed recently after a lengthy back-and-forth court battle with members of the media.

The office of the state’s attorney general eventually ordered the lottery to reveal the uncensored contract in its entirety.

Less than a month later, on March 27, SBTech was the victim of a sophisticated cyberattack, which forced the company to take down its partners’ more than 50 gaming sites worldwide.

Scoreboard was back online by April 2, but the majority of SBTech’s US partners remained offline for a costly three-week span of time.

The computer breach delayed the DraftKings merger and caused the terms of the deal to change, in order to require SBTech to set aside $30 million to cover potential claims that might result from the cyberattack.