Montana Lottery Expensive To Run Twenty Percent Of Revenue Goes To Overhead, 2nd Among States

The Montana Lottery spends more of its revenue on administrative costs than do most state lotteries, but the director here says that’s not surprising.

Overhead costs tend to be higher in sparsely populated states with a lot of land, Jerry LaChere said.

“The more people you have, the easier it is to spread out your overhead costs,” he said.

Administrative expenses for the Montana Lottery have been running about 20 percent of gross revenue since the lottery began nine years ago. Thirty-six states have lotteries.

A U.S. Census report, released this summer and based on 1994 data, listed Montana No. 2 in the proportionate amount of gross lottery revenue spent for administration. The report showed the lottery spending 23 percent on those costs.

LaChere said the report underestimates Montana’s gross lottery revenues for 1994, thus slightly overstating the percentage of revenue spent on overhead.

The Census report listed Montana’s lottery revenue as $35.4 million for 1994, with $8 million of that money spent on administration.

LaChere said the correct revenue figure is $37.6 million, making the administrative expense about 21 percent. That puts Montana in third rather than second place on the list of lottery states. Nebraska ranks first and Oregon second in proportion of revenue spent for administration.

Nearly half of the Montana Lottery’s revenue goes for prizes and about one-fourth is returned to the state as profit, which has been spent primarily on public schools. Over the years, annual lottery revenue has accounted for no more than about 2 percent of state spending on public education.

Rep. Bob Pavlovich, D-Butte, sponsored the bill that led to creation of the Montana Lottery in 1987. The relatively high overhead costs are not discouraging, he said.

“It takes money to make money,” Pavlovich said.

A longstanding opponent of the lottery, Montana Senate President Bob Brown of Whitefish, said the games are a bad idea, whether the overhead is high or low.