Powerball, Mega Millions to Halt Illinois Lottery Due to State’s Inability to Pay Winners

Both Powerball and Mega Millions Lotteries Will Pull Out of Illinois on June 30 due to the budget impasse.

by Mish

Neither lottery would comment on the record.

"Lottery spokesman Jason Schaumburg said Powerball would be suspended after the June 28 drawing, and Mega Millions would be suspended after the June 30 drawing if a budget deal isn’t reached.

He would not respond to questions about whether the decision to end sales of the popular interstate games was made by the Illinois Lottery or the organizations that administer the games.

“The Multi-State Lottery Association is focused on protecting the integrity of its games and the experience of its players,” association spokeswoman Anna Domoto said in a written statement to the Tribune. “Matters involving the Illinois Lottery should be directed to Illinois officials.”

Officials for Mega Millions could not be reached for comment.

In a series of stories published over the past six months, the Tribune found the company tasked with running the lottery — Northstar Lottery Group — failed to award more than 40 percent of the grand prizes in its biggest instant ticket games, sometimes ending games before any top prizes were claimed.

In 2015, the Illinois auditor general found lottery officials violated state finance law when they prepaid $20 million to the Multi-State Lottery Association to cover the costs of future multistate games as a budget impasse loomed.

Without a budget in place, the state is not authorized to make payments to the association or Mega Millions."

Now It’s Serious

Mary Pat at the Stump says Now, It’s Serious.

MP notes that while cash flow on lotteries is rising, so are admin costs.

Someone is siphoning off big bucks here.

Looking at my data set, of the 33 states where I have data going back to 1992, Illinois ranks 31st, at a compound annual growth rate of only 0.7%. The only two states with worse growth are Louisiana and Ohio (which actually saw its proceeds shrink). State #30 is neighboring state Indiana, which had 1.3% growth per year. Contrast that to a nationwide increase of 4.5% per year, for 23 years. Makes quite a difference.

MP notes that lottery proceded are about 2% of revenue. Speaking of revenue …

Corporate income tax collection is down 41.3%. Sales taxes are flat. How is this supposed to work?

Without a budget in place, the state is not authorized to make payments to the lotteries.

“Dear Contractor”

Illinois IOUs continue to mount and unpaid contractors have stopped work.

Will Powerball and Mega Millions be the force that gets Illinois to pass its first budget in three years?

I hope not because raising taxes is not the answer, but that is all the legislature wants to do.

Failed State

  1. On June 4, 2017, Politico reported How Illinois became America’s failed state.
  2. The Heratige Foundation beat Politico to the idea by a mile with its September 28, 2015 analysis Illinois: The Anatomy of a Failed Liberal State.
  3. The Chicago Tribune is behind the times with its January 3, 2017 analysis, Illinois in danger of becoming a failed state.

Illinois is not in danger of becoming a failed state, it is a failed state. I have been talking about this for years.

Five Desperately Needed Reforms

  1. Municipal bankruptcy legislation
  2. Pension reform
  3. Right-to-Work legislation
  4. End of prevailing wage laws
  5. Workers’ compensation reform

Number one on my list of Illinois reforms is bankruptcy legislation. It is the only hope for numerous Illinois cities whose hands are also tied by union-sponsored prevailing wage laws.

Despite massive gains in the stock market since 2009, Illinois pension plans have gotten deeper and deeper into the hole.

Even a modest pullback in the stock market will sink numerous Illinois pension plans. I expect much worse than a modest pullback.

Tax hikes are not the answer. Reform is the answer, and bankruptcy reform is at the top of the list.

Required Pension Contributions to Double or Triple

The same fate or worse faces Illinois.

Madigan Sponsored Problem

The problem is on Speaker Madigan’s side. He insists on tax hikes first and reforms second.

Governor Rauner has held out and I support that policy. Once the governor agrees to tax hikes, no reforms will ever take place.

Illinois is Bankrupt

Illinois is essentially bankrupt. Unfortunately, there is no provision for states to declare bankruptcy.

States can default, however, and default is an easy prediction for Illinois’ public union pensions.

Mike “Mish” Shedlock

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