Overview
The Lottery was established in 1971 under Section 24 of Chapter 10 of the Massachusetts General Laws. According to the Lottery’s website, its mission is “to operate in a manner that secures the integrity of the Lottery’s games and protects the well-being of its customers while maximizing revenues returned to the Commonwealth for the benefit of its cities and towns.”
The Lottery is governed by five commissioners: the State Treasurer, who serves as the chair; the Secretary of Public Safety; the Comptroller of the Commonwealth; and two people appointed by the Governor for terms that are coterminous with the Governor’s. The State Treasurer appoints the Lottery’s director, subject to the Governor’s approval. At least 45% of the Lottery’s revenue is paid to holders of winning tickets, no more than 15% may be used for operating costs, and the balance is distributed to the 351 cities and towns in Massachusetts.
The Lottery has six offices: its headquarters at 150 Mount Vernon Street in Dorchester and regional offices in Braintree, New Bedford, West Springfield, Lawrence, and Worcester.
As of June 30, 2024, the Lottery had 442 active employees. In fiscal years 2023 and 2024, the Lottery generated revenue of $6.1 billion and $6.2 billion, respectively, and in both fiscal years, it returned $1.2 billion in net profit to support the 351 cities and towns in the Commonwealth.
Licensing of Sales Agents
According to Section 2.05 of Title 961 of the Code of Massachusetts Regulations (CMR), the Lottery licenses retail businesses, or sales agents, to sell lottery tickets and register wagers on behalf of lottery players. To become a sales agent, applicants must undergo a licensing application process, which allows the Lottery to assess whether the applicant “will best serve the public interest and convenience and promote the sale of tickets,” according to 961 CMR 2.05.
If an application is approved, the sales agent must submit a renewal application annually thereafter. Renewal applications are also subject to review before approval of the renewal application, unless there were no ownership changes made to the application.
The Lottery uses an application management system to review both new and renewal applications. This system moves the applications through the following review stages:
Document Review
The first stage of the application review is the document review. During this stage, the Lottery’s Licensing Department examines all new applications and renewal applications where there are changes to ownership. A licensing representative verifies the ownership of the business, corporate structure, and the business’s tax identification number or the owner’s social security number on a Form W-9.1
If they find any discrepancies during the review, the licensing representative rejects the application and communicates instructions to the applicant on what they need to provide in order to move the application forward. Once the licensing representative approves the application in the document review stage, it progresses to the financial review and criminal background check stages concurrently.
Financial Review
The second stage includes the Lottery’s Credit and Collections Department, which conducts financial reviews of all new applications and renewal applications where there are changes to ownership.
For new applications, a credit and collections representative conducts credit checks on the owners of the business entity to ensure that at least one owner has acceptable credit. The assigned representative verifies that none of the owners have any past due state taxes, school loans, or child support payments. Additionally, the representative reviews any existing lottery license debt linked to a previous sales agent at the same business address. If a location has any outstanding debt, the Lottery will not approve a new license until that debt has been paid.
For new chain stores, nonprofit clubs, and fraternal organizations, a credit and collections representative assesses whether a corporate guarantee2 is necessary. If the Lottery’s director of credit and collections approves the corporate guarantee, it is attached to the application, and no additional steps are taken for new chain stores, nonprofit clubs, or fraternal organizations during this stage of the review. However, according to the Lottery’s “Licensing Department Procedures,” once a chain store is established, any additional chain locations must undergo an additional review to check for any lottery license debt from a previous owner of the location.
For renewal applications, the Licensing Department determines whether a new owner was added to the application or if a previous owner was removed from the application and notifies the Credit and Collections Department if there are any changes in ownership. If a new owner is added to the renewal application, a credit and collections representative performs a credit check on the new owner of the business to ensure that they have acceptable credit. If a previous owner was removed from the application, a credit and collections representative reviews the remaining owners’ credit reports and their history with the Lottery to ensure that the remaining owners have acceptable credit.
The Credit and Collections Department uses a credit reporting company to perform credit checks; the Office of the Comptroller of the Commonwealth’s (CTR’s) Intercept system3 to check for outstanding state taxes, school loans, and child support; and the Massachusetts Management Accounting and Reporting System and the Lottery’s central gaming system, which acts as the Lottery’s system of record for its sales agents, to check for existing license debt.
A credit and collections representative approves or rejects each of the reviews within the finance check. If a representative rejects any part of the financial review, the application cannot move forward until the applicant remediates it.
Criminal Background Check
The second stage also includes a criminal history background check. The Compliance and Security Department reviews the business owners listed on new and renewal applications, including those who have not completed a background check in the past four years. The compliance and security director or assistant director evaluates the application by conducting background checks on the business owners to ensure that they do not have any felony convictions, gaming-related offenses, or crimes related to moral character, such as violent crimes. The Compliance and Security Department uses a third-party provider to perform background checks.
According to the Lottery’s “Licensing Department Procedures,” the criminal history background check for the owner of a chain store’s head store carries over to each additional chain store. As a result, for additional chain store4 applications, no additional criminal history background checks are required unless the owner has not had a criminal history background check performed on them within the last four years.
The compliance and security director or assistant director reviews completed background checks and either rejects or approves the criminal history background check based on the results.
Site Assessment
The Lottery completes a site visit for all new store locations. If an application is approved in the financial review and criminal history background check, a sales representative performs a site assessment. A sales representative completes the site assessment by reviewing a pre-site assessment form, which provides an overview of the business location; performing an evaluation of the sales potential at the location; and determining whether the location meets all equipment requirements. Once the sales representative has completed the pre-site assessment form and completed the site assessment, the sales representative discusses acceptance or rejection of the site assessment with the Lottery regional manager and then either approves or rejects the site.
Once an application has moved through all stages of review, the Lottery sends an email to the applicant. If an applicant has met all of the Lottery’s requirements during the application review process, they receive an email stating that their application to become a sales agent has been approved. If, at any stage of the application review, the applicant does not meet the Lottery’s requirements, they receive an email stating that their application to become a sales agent has been denied, with instructions on how to file an appeal or resubmit their application with additional information, if desired.
Monitoring of Sales Agents
To become a sales agent, an applicant must agree to the terms of and sign the Lottery’s Sales Agent Agreement before receiving their lottery license. The Sales Agent Agreement contains a list of mutual promises and commitments. This includes details about the Lottery’s equipment that a field service technician will install at the sales agent’s store location, the sale of lottery tickets and products, any necessary bank account requirements, and information about sales agent compensation. Additionally, the agreement stipulates a sales agent’s assumption of liability and their responsibility to protect the Lottery from financial loss, along with other obligations. To ensure compliance with the Sales Agent Agreement, the Lottery actively monitors its sales agents as detailed below.
Bank Sweeps
The Lottery monitors its sales agents’ collections with regular bank sweeps, which are the process of collecting proceeds received from the sale of lottery tickets from sales agents’ designated lottery bank accounts. Sweeps are conducted on a weekly basis and proceeds are deposited in a Commonwealth of Massachusetts State Treasury account. The total amount to be electronically swept is verified by the Lottery’s Accounting Department and is transmitted to the Lottery’s host bank for collection. If the funds are not available on the first sweep, or if there are issues5 with the sales agent’s bank account, the Lottery’s host bank makes a second sweep attempt. If the sales agent does not have the dollar amount the Lottery attempted to sweep from the sales agent’s bank account, the unsuccessful bank sweep shows on a bank-generated report, which is sent to the Lottery every week. The bank sweeps included in this report are considered missed bank sweeps.
When the Credit and Collections Department finds that a sales agent has a missed bank sweep, a credit and collections representative contacts the sales agent, stating that a bank sweep was missed, stating the dollar amount of the missed bank sweep, and requesting payment be made immediately. The Lottery’s manager of credit and collections documents the missed bank sweep in the Lottery’s central gaming system.
The consequences of a sales agent missing a bank sweep vary. A missed bank sweep may result in a fine, deactivation of a sales agent’s lottery terminal, a lottery license suspension, and/or a hearing. Either the director or manager of credit and collections determines how to proceed, dependent on the risk to the Lottery and the sales agent’s history of missed bank sweeps.
According to the Lottery’s “Credit and Collections Department Policy and Procedures,” if a sales agent misses two consecutive weekly bank sweeps or three bank sweeps within a 12-month rolling period, the sales agent’s lottery terminal is deactivated until they complete a hearing, unless the Credit and Collections Department notes any extenuating circumstances, such as bank errors.
Cigar-, Electronic Nicotine Delivery System–, or Tobacco-Related Violations
According to Section 30B of Chapter 10 of the General Laws,
Upon receiving notice from the commissioner of revenue [DOR] that a retailer . . . has had a cigar, electronic nicotine delivery system or tobacco license suspended or revoked . . . the director of the state lottery shall suspend any license to sell lottery tickets or shares issued to the retailer, cigar retailer or electronic nicotine delivery system retailer.
When the Department of Revenue (DOR) communicates that a retailer’s cigar, electronic nicotine delivery system,6 or tobacco license has been suspended or revoked, the Lottery checks if the retailer is also a sales agent. If the retailer is subject to a suspension or revocation based on the law related to cigars and smoking tobacco excise tax violations, and is a sales agent, the Lottery records the following information on the Lottery’s cigar-, electronic nicotine delivery system–, and tobacco-related violations log: the date of DOR’s letter; the sales agent’s name and address; the specific General Laws violation; DOR’s suspension period of the retailer’s cigar, electronic nicotine delivery system, or tobacco license(s); DOR’s effective date of suspension; and whether the retailer requested a DOR appeal.
Before suspending a lottery license, the Lottery waits until either DOR’s suspension period has ended or DOR communicates the outcome of an appeal, which may reduce or eliminate the retailer’s suspension on their cigar, electronic nicotine delivery system, or tobacco license(s). If DOR eliminates the retailer’s suspension, the Lottery records this information in the cigar-, electronic nicotine delivery system–, and tobacco-related violations log and takes no further action. If DOR reduces the retailer’s suspension period, or if the suspension period has ended, the Lottery sends a certified letter to the sales agent, notifying the sales agent of their lottery license suspension and their option to request an appeal of the suspension.
The suspension period of a sales agent’s lottery license is dependent on DOR’s suspension period on the retailer’s cigar, electronic nicotine delivery system, or tobacco license. The Lottery uses the following guidelines, as documented in its “[General Laws Chapter 10, Section 30B]—Lottery Sales Agent Suspension Guidelines”:
For every fifteen (15) days of a cigar, electronic nicotine delivery system or tobacco license suspension . . . the Lottery will suspend the Lottery Agent license of said retailer for one (1) day. . . . If the number of days of the DOR suspension period is not divisible by 15, the Lottery will impose the suspension based on the number of complete 15-day periods of the DOR suspension. . . .
If an applicable retailer is subject to multiple concurrent DOR suspensions that trigger a Lottery Agent license suspension . . . the Lottery will suspend the Lottery Agent license based on the longer of the suspension periods implemented by the DOR. . . .
If an applicable retailer’s cigar, electronic nicotine delivery system or tobacco license is revoked for a knowing violation . . . the Lottery will suspend the Lottery Agent license for sixty (60) days.
Monitoring the Sale of Lottery Products to Minors
In accordance with Part A of Section V of the Lottery’s “Monitoring & Testing—Sale to Minors” policy, the Lottery is required to “regularly monitor and test a group of Agents, randomly selected from each sales region.” This is done to ensure that sales agents are not selling lottery products to minors (individuals under the age of 18).
According to the Lottery’s “Monitoring & Testing—Sales to Minors” policy, in order to monitor and test its sales agents, the Lottery hires and trains minors in their role of testing sales agents’ compliance. To test a sales agent’s compliance, either the assistant executive director’s designee or the senior compliance officer accompanies a minor to a sales agent’s location, where the minor attempts to purchase a lottery product. If the sales agent does not sell the lottery product to the minor, either the assistant executive director’s designee or the senior compliance officer records the compliance. If the sales agent sells the lottery product to a minor, either the assistant executive director’s designee or the senior compliance officer opens and records the incident in the sales agent’s case file, which may result in probation, suspension, or termination of the sales agent’s lottery license.
Suspending a Sales Agent’s Lottery License
If any of the investigations mentioned above result in a suspension of a sales agent’s lottery license, the department conducting the investigation notifies the Lottery’s Legal Department of the reasons for the suspension of the license.
The Legal Department then sends a letter to the sales agent, communicating the Lottery’s intent to suspend their lottery license. Within this letter, the Lottery provides the sales agent with the option to appeal the suspension by requesting a hearing within 20 days of the date of the letter. When a sales agent appeals a suspension, the Lottery sends a final letter to the sales agent after the hearing, communicating the suspension implementation that documents the results of the hearing and the timeline for the suspension.
If a sales agent’s lottery license is suspended, the Lottery’s Legal Department records the date the lottery license was suspended and the date the lottery license will be reactivated in the Lottery’s suspension log.
Additionally, the Legal Department communicates the suspension to the Licensing Department, which then updates the status of the sales agent’s lottery license to “inactive” in the Lottery’s central gaming system and includes a reason code to explain the rationale behind the suspension. With a suspended lottery license, the sales agent is unable to validate or make payouts for any claims for lottery products during the suspension period. Once a suspension period ends, a licensing representative reactivates the sales agent’s lottery license by changing the status back to “active” in the Lottery’s central gaming system.
| Date published: | November 26, 2025 |
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