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Audit

Audit  Audit of the Massachusetts State Lottery Commission

Our office conducted a performance audit of the Massachusetts State Lottery Commission, referred to in this report as the Lottery, for the period July 1, 2022 through June 30, 2024.

Organization: Office of the State Auditor
Date published: November 26, 2025

Executive Summary

In accordance with Section 12 of Chapter 11 of the Massachusetts General Laws, the Office of the State Auditor has conducted a performance audit of the Massachusetts State Lottery Commission, referred to in this report as the Lottery, for the period July 1, 2022 through June 30, 2024.

The purpose of the audit was to determine the following:

  • whether the Lottery conducted financial reviews, criminal background checks, and site assessments, where applicable, before approving, denying, or renewing sales agents’ applications as required by Sections 3.2–3.4 and 4.2.2–4.2.3 of the Lottery’s “Licensing Department Procedures”;
  • whether the Lottery monitored its sales agents’ deposits of proceeds from Lottery sales and subsequently deactivated sales agents’ lottery terminals until a finance hearing was held for sales agents who were delinquent in the payment of proceeds in accordance with the Lottery’s “Credit and Collections Department Policy and Procedures”;
  • whether the Lottery enforced cigar-, electronic nicotine delivery system–, or tobacco-related suspensions as required in Section 2 of the Lottery’s “[General Laws Chapter 10, Section 30B]—Lottery Sales Agent Suspension Guidelines” policy;
  • whether the Lottery monitored its sales agents to ensure that they were not selling lottery products to minors, as required by Part A of Section V of the Lottery’s “Monitoring & Testing—Sale to Minors” policy; and
  • whether the Lottery maintained a record of suspension history when deactivating and reactivating a sales agent’s lottery license in accordance with Section 5.3 of the Lottery’s “Licensing Department Procedures.”

Below is a summary of our findings, the effects of those findings, and our recommendations, with links to each page listed.

  
Finding 1
 		The Lottery failed to provide evidence that it conducted financial reviews or criminal background checks for all its sales agent applicants, potentially allowing retailers who did not meet all licensing requirements to hold a lottery license.
EffectMaintaining all financial and criminal background check records is essential for the Lottery to demonstrate that its applicants have met all the requirements to become licensed sales agents. Failing to perform or provide proof of complete financial checks and criminal background checks makes it impossible to confirm that the Lottery has thoroughly reviewed applicants before approving them, which could increase the Lottery’s financial, compliance, and reputational risks.
Recommendations
 
  1. The Lottery should develop and implement monitoring controls to ensure that Lottery staff members review financial and criminal background checks on new and renewing applicants before approving or denying a sales agent application.
  2. The Lottery should ensure that it maintains all licensing records in accordance with the Massachusetts Statewide Records Retention Schedule.
Finding 2
 		The Lottery did not deactivate terminals for sales agents who had missed bank sweeps, as required by its “Credit and Collections Department Policies and Procedures.”
EffectBy not adhering to its policy, the Lottery risks inconsistencies in consequences for sales agents and threatens to undermine trust and damage the relationship between the Lottery and its sales agents. Maintaining clear and fair practices is essential to upholding the Lottery’s integrity. Additionally, without the timely collection of lottery proceeds, state revenues cannot be reported or transferred to the Department of Revenue (DOR), resulting in the delay of distribution of funds to the Commonwealth’s cities and towns.
Recommendations
 
  1. The Lottery should ensure that it deactivates its sales agents’ lottery terminals after they miss three bank sweeps within a 12-month period until a finance hearing determination and complete resolution occur.
  2. The Lottery should update its written “Credit and Collections Department Policies and Procedures” to reflect its current practices for missed bank sweeps.
Finding 3
 		The Lottery did not consistently implement suspensions for cigar-, electronic nicotine delivery system–, or tobacco-related violations for the correct number of days or at all, in violation of regulatory standards and possibly jeopardizing the integrity of the Lottery’s operations.
EffectIf the Lottery fails to adequately suspend sales agents for the specified duration or neglects to implement suspensions altogether, it creates an impression that violations are tolerated, significantly undermines accountability, and creates the appearance of favoritism as a potential explanation for disparate treatment. This not only jeopardizes the integrity of the Lottery’s operations but also permits a culture of disregard for regulatory standards.
Recommendations
 
  1. The Lottery should establish sufficient policies and procedures to monitor the receipt and review of cigar-, electronic nicotine delivery system–, and tobacco-related violations.
  2. The Lottery should establish monitoring controls to ensure that Lottery employees adhere to the specific number of days of suspension and not deviate from its policy.
Finding 4
 		The Lottery did not monitor and test its sales agents’ compliance with its requirement prohibiting the sale of Lottery products to minors, as required by the Lottery’s “Monitoring & Testing—Sale to Minors” policy.
EffectThe absence of monitoring and testing of sales agents’ compliance with the Lottery’s policy restricts its ability to effectively monitor the sale of lottery products to minors. This hampers the Lottery’s efforts to safeguard the public and promote responsible gaming behavior.
Recommendations
 
  1.  The Lottery should develop monitoring controls to ensure that sales agents comply with laws, regulations, and policies regarding the sale of Lottery products to minors.
  2. The Lottery should review, update, and reimplement its “Monitoring & Testing—Sales to Minors” policy.
Finding 5
 		The Lottery did not maintain an accurate record of the suspension history of its sales agents, affecting the evaluation, monitoring, and potential future enforcement of any violations by those agents.
EffectIf the Lottery fails to maintain accurate records of its sales agents’ suspension histories, it may struggle to effectively evaluate or monitor any violations by those agents who have suspensions. This lack of reliable information hinders the Lottery’s ability to assess the overall number and severity of violations associated with each sales agent. Consequently, the Lottery may make incorrect decisions because it is missing crucial information that could impact the public, such as a licensed sales agent continuing to operate despite being barred from selling lottery products. These inaccuracies could also lead to inappropriate future enforcement against sales agents whose first violation is thought to be a repeat violation, or whose repeat violation is thought to be their first of that kind.
Recommendations
 
  1. The Lottery should consistently review and update its “Licensing Department Procedures” to include details about assigning appropriate reason codes and comments to its suspended sales agents’ files within the central gaming system.
  2. The Lottery should implement a review process to ensure that the appropriate reason codes, comments, and suspension periods are documented in its central gaming system when suspending its sales agents.
Finding 6
 		The Lottery did not maintain a complete log of all cigar-, electronic nicotine delivery system–, and tobacco-related violations, which may result in inconsistent suspensions and/or sales agents potentially continuing to violate Lottery policies.
EffectIf the Lottery does not record all cigar-, electronic nicotine delivery system–, and tobacco-related violations in its cigar-, electronic nicotine delivery system–, and tobacco-related violations log, there may be inconsistent suspension processes and sales agents may potentially continue to violate Lottery policies.
Recommendations
 
  1. The Lottery should develop policies and procedures to ensure that the Lottery’s cigar-, electronic nicotine delivery system–, and tobacco-related violations log is complete, accurate, and up to date.
  2. The Lottery should collaborate with DOR to establish an agreement to create a centralized transmittal and tracking system that allows the Lottery and DOR access to all DOR suspensions, to ensure timely receipt of cigar-, electronic nicotine delivery system–, and tobacco-related violations and improved program management.

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