The Maryland Lottery is run by the Maryland Lottery and Gaming Control Agency, which is an independent agency of the state government. The agency is responsible for overseeing all aspects of the Maryland Lottery, including game development, marketing, sales, security, prize payments, and more.
The Maryland Lottery has been in operation since 1973 when it was established by a voter referendum. For nearly 50 years, the Maryland Lottery has contributed billions of dollars to support important state programs and services. So who exactly is responsible for running this large and successful lottery operation?
Like most US lotteries, the Maryland Lottery is not managed directly by any state department. Instead, it is overseen by the Maryland Lottery and Gaming Control Agency. This independent agency was created specifically to administer the lottery and ensure its integrity, transparency, and responsible management.
The Maryland Lottery and Gaming Control Agency
The Maryland Lottery and Gaming Control Agency was established in 2012 when the Maryland General Assembly passed legislation to create a new agency that would be solely focused on the lottery. Prior to 2012, the lottery was managed by the State Lottery Agency, which fell under the Maryland Department of Labor, Licensing and Regulation.
By creating an independent agency, legislators aimed to ensure full accountability over lottery operations. The agency is governed by a five-member commission whose members are appointed by the Governor. Additionally, the agency must submit annual financial reports to the General Assembly. This governance structure provides oversight for Maryland residents.
Key Responsibilities
As the administrator of the Maryland Lottery, the Lottery and Gaming Control Agency has a broad range of responsibilities, including:
- Developing new lottery games and managing existing games
- Overseeing lottery marketing and advertising
- Recruiting and licensing lottery retailers
- Printing and distributing lottery tickets
- Operating computer gaming systems and drawing equipment
- Ensuring the security and integrity of lottery operations
- Paying out lottery prizes
- Remitting revenue to the state
Essentially, the agency handles all aspects of running a successful, ethical, and profitable state lottery. With over 200 employees and contractors, it takes a great deal of effort and expertise to perform these duties effectively.
Lottery Operations
To better understand the responsibilities of the Maryland Lottery and Gaming Control Agency, let’s take a closer look at the key facets of lottery operations that the agency manages.
Game Development
One of the agency’s most important jobs is developing new lottery games that will attract players. The agency’s Marketing and Product Development departments research trends, analyze sales data, and use focus groups to come up with new instant and draw game concepts. The agency gets input from other state lotteries and from its lottery vendor, Scientific Games.
Some popular games introduced in recent years include Cash4Life, Bonus Match 5, Racetrax, and various progressive jackpot games. New scratch-offs are launched every few weeks to keep the instant game selection fresh and exciting. The agency also creates promotional second chance contests to provide extra ways to win.
Marketing and Advertising
The Maryland Lottery spends about $12-15 million annually on advertising to promote new games and encourage playership. The agency develops statewide campaigns across TV, radio, billboards, digital media, social media, and in-store point-of-sale materials. Some campaigns are developed internally while others are created with help from advertising agencies and market research firms.
Marketing aims to highlight big jackpots as well as recent winners in Maryland. Messaging must follow responsible gaming practices and not overtly target underage or problem gamblers. The Maryland Lottery has won national awards for effective marketing that grows revenue while maintaining ethical standards.
Retailer Relations
The Maryland Lottery must cultivate relationships with retailers across the state to ensure widespread distribution of lottery products. There are currently over 4,400 Maryland Lottery retailers including grocery stores, convenience stores, liquor stores, restaurants, pharmacies, gas stations, and more. The agency recruits new retailers while providing ongoing support, education, and resources to existing retailers.
Field reps make in-person visits to help retailers merchandise tickets, comply with regulations, and train staff. Customer service teams assist retailers with inventory ordering, accounting, and addressing any issues. Retailers receive sales commissions up to 5% as compensation for their lottery sales.
Security and Integrity
Ensuring lottery integrity is paramount. The Maryland Lottery implements stringent security protocols over inventory, lottery draws, claims, and prize payments. Independent auditors regularly review all aspects of lottery operations. Retailers undergo background checks and their sales are closely monitored for anomalies.
Lottery drawings are conducted under tight supervision, often with law enforcement presence. Drawings are randomized and results tested. Claims are thoroughly validated before payout. The Maryland Lottery takes diligent measures to uphold public confidence in a fair and honest operation.
Information Technology
Advanced information technology and computer engineering are necessary to power key lottery functions. Computer gaming systems drive the operation of electronic instant ticket vending machines and self-service lottery terminals. Custom developed software controls inventory tracking and sales reporting.
Drawing equipment is engineered to randomly select numbers and balls must be routinely inspected and weighed. The website, mobile app, and player loyalty program integrate cutting-edge features for purchasing, playing, and checking tickets online. Continuous IT upgrades help keep the Maryland Lottery on the leading edge.
Oversight
Good governance is essential for a public lottery. The Maryland Lottery employs several mechanisms to ensure oversight and accountability.
Maryland Lottery and Gaming Control Commission
The Lottery and Gaming Control Agency is overseen by a five-member Commission appointed by Maryland’s Governor. Members are appointed to staggered 4-year terms and no more than three can represent the same political party. The Commission includes professionals with experience in law, business, finance, management, and auditing.
The Commission holds regular public meetings to review lottery policies, finances, operations, and regulatory matters. The Commission has final decision authority over game approvals, major procurement contracts, and regulation changes. This citizen advisory board provides oversight on behalf of Maryland residents.
Audits
The Maryland Lottery undergoes annual financial audits by an external accounting firm. These audits examine financial reporting, internal controls, retailer compensation, winner payments, and more. Operations are also subject to periodic audits by Maryland’s Office of Legislative Audits.
Audit findings and recommendations for improvement are reported directly to the Governor and General Assembly. Additionally, an Internal Audit department conducts ongoing reviews of agency practices to prevent deficiencies.
Reporting
The Maryland Lottery provides extensive public reporting to maintain transparency. The agency publishes an Annual Report summarizing financial results, beneficiary contributions, operations, retailer compensation, and material contracts. The Commission holds an annual public meeting to present this report.
A Sales & Revenues report is issued weekly detailing sales and income statistics for each game. Monthly Contributions reports show the allocation of net lottery revenues to good causes. The agency’s website provides direct access to recent reports as well as a comprehensive Data Library.
Importance to Maryland
The Maryland Lottery provides substantial funding to support important state programs and services. Since its inception in 1973, the lottery has contributed over $16 billion to the Maryland General Fund. In the most recent fiscal year, the lottery generated over $650 million for good causes across Maryland.
Major Beneficiaries
By law, the Maryland Lottery must transfer at least 95% of total revenues to the General Fund, with the remainder covering costs for operations, management, and prizes. The General Assembly allocates these funds through the annual budget process. Major initiatives supported include:
- Education – Provides supplements to public education funding across Maryland’s 23 counties and Baltimore City.
- Health and Human Resources – Supports addiction treatment, domestic violence programs, veterans assistance, health insurance access, and much more.
- Public Safety – Contributes to police aid for Maryland’s counties and municipalities.
- Business and Economic Development – Supports small business capital access programs and tourism efforts.
- Environmental Programs – Provides funding for Chesapeake Bay restoration, Program Open Space, and more.
Without the Maryland Lottery’s ongoing contributions, the state would need to find new revenues or make substantial budget cuts to these initiatives that residents rely on.
Supporting Small Businesses
In addition to beneficiary contributions, the Maryland Lottery supports small businesses across the state through its retailer network. The over 4,400 lottery retailers earn commissions for selling lottery products that can provide supplemental income. Retailers also benefit from increased store traffic and ancillary sales when customers come in to purchase lottery tickets.
The Maryland Lottery partners exclusively with Maryland-based companies for printing services and advertising. Numerous other in-state businesses provide goods and services that support lottery operations. In total, the lottery contributed over $40 million to Maryland businesses through operational spending and retailer commissions in fiscal year 2022.
Looking Ahead
After nearly 50 years of success and growth, what does the future hold for the Maryland Lottery and the agency that runs it? While forecasts are difficult, we can expect that the lottery will continue adapting with new technologies, games, and channels to attract the next generation of players.
The Maryland Lottery has proven adept at leveraging new opportunities, whether the initial adoption of daily numbers games or the recent launch of digital instant tickets online. Under its current management, the Maryland Lottery and Gaming Control Agency strives to keep the lottery fresh and entertaining for responsible adult players while upholding integrity and transparency.
Governor-appointed commissioners will continue providing oversight to guide the lottery through an evolving gaming landscape. The citizens of Maryland can expect the lottery to fulfill its public benefit mission with integrity under the steady guidance of the Maryland Lottery and Gaming Control Agency.
Conclusion
In summary, the Maryland Lottery and Gaming Control Agency serves as an independent government entity tasked with managing all aspects of lottery operations within the state. Appointed commissioners oversee the agency to ensure transparency and accountability to Maryland residents.
Through responsible stewardship, the Maryland Lottery has achieved remarkable growth and strong public trust over its nearly 50-year history. The lottery has contributed billions of dollars to vital state programs and services while providing business opportunities to retailers and suppliers. The agency’s effective governance remains critical to the lottery’s continued success in fulfilling its public mission.
