New York State Gaming Commission: Comprehensive Annual Financial Report 2020

We are pleased to present the Comprehensive Annual Financial Report on the aid to education earning aspects
(Traditional Lottery and Video Lottery) of the New York State Gaming Commission (“Commission”) for the fiscal
year ended March 31, 2020. This report has been prepared by the Financial Management Unit of the Commission. The Commission is responsible for the accuracy and fairness of all information included in this report.

To the best of our knowledge, the report presents fairly in all material respects the financial position of the
enterprise portions of the Commission and the results of its operations for the period covered.

For the purposes of this Comprehensive Annual Financial Report, the financial results, positions, and activities
of the Commission’s Division of Lottery and Division of Gaming’s Video Gaming Unit are referred to jointly as
the Lottery. This combination is utilized since both operations are lottery based and statutorily provide aid to
education in New York State. The placement of these two education supporting operations into different
divisions of the Commission was effective on February 1, 2013.
The report is presented in three sections: Introductory, Financial, and Statistical. The Introductory Section
contains this transmittal letter, which provides an overview of the Lottery and its annual report, and the Commission’s organizational chart which lists principal officials and their positions within the agency.

The Financial Section contains the Lottery’s audited financial statements, the notes to the statements, required supplementary
information, and the independent auditor’s report. It also includes Management’s Discussion and Analysis
which is supplementary information to the statements and offers readers a general overview and analysis of
the Lottery’s financial position and activities for the years covered by the statements. The Statistical Section
includes certain financial, economic, and demographic data for the State of New York and Lottery over the last
10 years.

The New York Lottery was established in 1967 as a result of a constitutional amendment. It is currently administered by the Division of Lottery, as part of the Commission. It is operated in accordance with provisions of the
New York State Lottery for Education Law (Tax Law Article 34). The mission of the Lottery is to raise revenue
for education in the State of New York through the administration of lottery games. The mission of the Video
Gaming Unit of the Gaming Division is to operate and administer the Video Lottery program games and central
system to raise revenue for aid to education.

The Lottery is included within the financial reporting entity of the State of New York as an enterprise fund. This
report represents only the financial position and activities of the Lottery and not the corresponding financial
position and activities of the State of New York or other portions of the Commission.

COMPREHENSIVE ANNUAL FINANCIAL REPORT 2020
History of the New York Lottery

In November 1966, a Constitutional Amendment was approved by 61 percent of New York voters to establish the New York Lottery. Subsequently, Article 1, Section 9 of the Constitution of the State of New York was adopted to allow lotteries operated by the State, with net proceeds to be applied to aid for education. New York was the second state, behind New Hampshire, to conduct Lottery sales. A lottery commission was established as a division of the Department of Taxation and Finance and the first lottery ticket was sold in New York in June 1967.
Administrative responsibilities for the Lottery were later transferred to the New York State Racing and Wagering Board. The Lottery was then reconstituted in 1976, and the Division of the Lottery was established as an independent division of the State Department of Taxation and Finance. In November 1978, a popular European game called “Lotto” was introduced in New York with an initial jackpot of
$250,000. A networked system of play was introduced in September 1980 and the excitement of “Lottomania”
began in New York. Also, in September 1980, the Daily Numbers three-digit game began, followed by the Win 4
four-digit game in 1981. These staple games kicked off a period of unprecedented growth in New York Lottery
sales.

In 1987, a Keno game called “Pick 10” was introduced. It was followed in January 1992 by the addition of Take
Five – a pari-mutuel game with a smaller, but more winnable jackpot than Lotto. At the beginning of 1994, new
instant game technology was integrated into Lottery retailer sales terminals statewide. These new features
improved management of instant game tickets, accounting, security, and validation. For the first time, Lottery retailers were able to pay prizes regardless of the place of purchase, order tickets through a telemarketing system, and receive automatic shipments of all new instant game launches. As a result, instant game sales increased
from $298 million in 1994 to over $1 billion by 1997.

In 1995, legislation authorized the implementation of Quick Draw, a monitor game offering more play options
and prizes than Pick 10. Quick Draw sales commenced in September 1995 and the game is now offered in 7,800locations statewide in varied types of establishments.

In 2001, the State Legislature permitted New York’s entry into a multi-jurisdictional lottery game and authorized
video lottery gaming at certain pari-mutuel racetracks. In May 2002, the New York Lottery and the Ohio Lottery
joined the participants of The Big Game and formed the new Mega Millions multi-jurisdictional game.

The first video lottery gaming facility in the State opened in January 2004. Video lottery gaming terminals operate as electronic lottery games allowing multiple players to compete for prizes awarded as a result of random drawings. Results are secured within the centrally located monitoring and control system. Video gaming facilities are now operational at eight racetracks and two off-track betting locations throughout the State.

In 2009, the Mega Millions consortium began discussions with the Multi-State Lottery Association (MUSL), the
administrators of the national Powerball game, to cross sell each other’s games. The member states of each
consortium subsequently ratified an agreement that authorized the New York Lottery to join the multi-state
Powerball game and sales commenced in January 2010. The addition of this second multi-state game allows
the Lottery to offer New Yorkers the largest jackpot games in the nation four days per week.

On February 1, 2013, the Division of Lottery was merged with the New York State Racing and Wagering Board
into a single oversight entity called the New York State Gaming Commission. The Commission has overall responsibility for regulation and enforcement of all gaming activity in New York State including horse racing, charitable gaming, and casino gaming. The Division of Lottery was given responsibility to administer all traditionallottery games while the Division of Gaming operates and administers the Video Lottery gaming program.

COMPREHENSIVE ANNUAL FINANCIAL REPORT Traditional Lottery Games

MEGA MILLIONS is a multi-jurisdictional game in which the New York Lottery participates with 47
other U.S. lottery jurisdictions. Players choose five numbers from a pool of 70 and one number
from a pool of 25 numbers. A player wins the jackpot by matching all six winning numbers drawn.
Prizes ranging from $2 to $1,000,000 can be won by matching one to five numbers. Players can
select to receive the jackpot in annual installments or in one lump sum payment. Tickets cost
two dollars and drawings are held twice per week, every Tuesday and Friday. Mega Millions is
also available by subscription. A Megaplier feature gives players a chance to increase their nonjackpot prizes up to five times. A Just the Jackpot option gives players the chance to win the
jackpot only at a cost of three dollars for two plays.
POWERBALL is a multi-jurisdictional game in which the New York Lottery participates with 48
other U.S. lottery jurisdictions. Players choose five numbers from a pool of 69 and one number
from a pool of 26 numbers. A player wins the jackpot by matching all six winning numbers drawn.
Prizes ranging from $4 to $1,000,000 can be won by matching one to five numbers. Players can
select to receive the jackpot in annual installments or in one lump sum payment. Tickets cost two
dollars and drawings are held twice per week, every Wednesday and Saturday. A Power Play
multiplier feature gives players a chance to increase their non-jackpot prizes.
LOTTO is played by choosing six numbers from a pool of 59 and offers two plays for one dollar. A
player wins the jackpot by matching all six winning numbers drawn, but can also win other prizes
by matching at least three winning numbers. Players can select to receive the jackpot in annual
installments or in one lump sum payment. Drawings are held twice per week, every Wednesday
and Saturday. Lotto is also available by subscription.
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In June 2014, the Lottery launched Cash4Life, the first draw game in New York that offers “for-life” prizes at both
the first- and second-prize levels. First prize is $1,000 a day for life and second prize is $1,000 a week for life.
This multi-state game was launched with New Jersey and now a total of nine states participate in this game.
Effective July 1, 2019, the Lottery became a member of the MUSL. MUSL is a non-profit, government benefit association owned and operated by its member lotteries. MUSL included 35 state lotteries as well as the lotteries
of the District of Columbia, Puerto Rico and the U.S. Virgin Islands as of March 31, 2020. MUSL performs certain
administrative and marketing functions on behalf of its members. Through membership in MUSL, the Lottery
participates in the multi-jurisdictional lottery games of Powerball and Mega Millions.
The New York Lottery offers players the chance to participate in various draw and instant games through a
retailer network of approximately 15,800 retailers. Current offerings include nine draw games, as well as the
introduction of approximately 40 new instant games each year. The wide variety of Lottery games offer different
methods of play, ranges of jackpot prizes, and convenience aspects that make playing the games fun, easy, and
exciting entertainment.
CASH4LIFE is played by choosing five numbers from a pool of 60 and one number from a pool
of 4 numbers. A player can win one of two jackpot prizes – a jackpot of $1,000 a day for life by
matching all six winning numbers drawn or a jackpot of $1,000 a week for life by matching the
first five numbers drawn. A player can also win other prizes by matching at least two of the winning numbers. Players can select to receive the jackpot in annual installments or in one lump
sum payment. Tickets cost two dollars and drawings are held twice per week, every Monday and
Thursday. Since July 2019, drawings have been held every night. This game was launched in
June 2014. Cash4Life is also available by subscription.
COMPREHENSIVE ANNUAL FINANCIAL REPORT 2020
QUICK DRAW is played by choosing one to 10 numbers from a pool of 80. A player wins prizes
ranging from $1 to $100,000 based on how many numbers they match to the 20 winning numbers
drawn by the Lottery. Wagers begin at one dollar. An Extra multiplier feature gives players a
chance to increase their prize. Drawings are held every four minutes on a daily basis except for
the half-hour from 3:30 a.m. to 4:00 a.m.
SCRATCH-OFF GAMES are played by scratching a covering from pre-printed tickets to reveal
prizes. There are a large variety of games and price points available for sale at any given time.
NUMBERS is played by choosing a three-digit number. A player wins prizes ranging from $25
to $500 by matching the winning numbers drawn. Wagers begin at fifty cents and drawings are
held twice per day. An Instant Win feature also allows players to win up to $500 instantly for
an additional one dollar wager by matching one or more of their numbers to numbers randomly
generated and printed on the ticket.
WIN 4 is played by choosing a four-digit number. A player wins prizes ranging from $25 to
$5,000 by matching the winning numbers drawn. Wagers begin at fifty cents and drawings are
held twice per day. An Instant Win feature also allows players to win up to $500 instantly for
an additional one dollar wager by matching one or more of their Win 4 numbers to numbers randomly generated and printed on the ticket.
TAKE 5 is played by choosing five numbers from a pool of 39. A player wins the jackpot by matching all five winning numbers drawn, but can also win other prizes by matching at least two of the
winning numbers. Tickets cost one dollar and drawings are held every night. An Instant Win feature also allows players to win prizes instantly for an additional one dollar wager by matching one
or more of their Take 5 numbers to the numbers randomly generated and printed on the ticket.
PICK 10 is played by choosing 10 numbers from a pool of 80. A player wins the jackpot of
$500,000 if all 10 of their numbers are included among 20 winning numbers drawn by the Lottery.
Wagers begin at one dollar. Other prizes can also be won by matching six, seven, eight, nine, or
none of the winning numbers drawn. Drawings are held every night.
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COMPREHENSIVE ANNUAL FINANCIAL REPORT 2020
Video Lottery Gaming
On January 28, 2004, the New York Lottery commenced video lottery gaming operations with the opening of
Saratoga Gaming & Raceway (now Saratoga Casino Hotel) in Saratoga Springs. Since that date, the Lottery has
opened nine additional video gaming facilities across the State (not including Nassau OTB video lottery terminals located at Resorts World Casino). As of March 31, 2020, eight of the ten facilities continue as video lottery
gaming operations, running a statewide total of approximately 16,800 video lottery terminals. Tioga Downs
Casino converted to a commercial casino on December 1, 2016. Monticello Casino & Raceway ceased its video
lottery operations as of April 23, 2019.
Video lottery gaming was initially conducted 16 hours per day at each gaming facility, but legislation effective
August 11, 2010 allowed an additional four hours per day. Most games utilize a central determinant system that
draws winners from a centralized finite prize pool, similar to the administration of an instant scratch-off game.
New York also offers electronic table games in some locations which use mechanical devices or computerized
random number generators to determine results for groups of players. By statute, video lottery games must pay
out a minimum of 90 percent in prizes.

New York State Video Gaming Facility Locations
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COMPREHENSIVE ANNUAL FINANCIAL REPORT 2020
Resorts World Casino New York City is located at Aqueduct Racetrack in Queens
County. Owned by the State of New York and operated by Genting NY, LLC, Resorts
World Casino opened on October 28, 2011, and operates 5,548 video gaming machines.
Pursuant to an agreement with Nassau Regional Off-Track Betting Corporation (Nassau
OTB), Resorts World Casino also houses and operates 1,000 video lottery terminals for
Nassau OTB.
Empire City Casino at Yonkers Raceway is located in the city of Yonkers. Owned
and operated by MGM Resorts, Empire City Casino opened on October 11, 2006, and
operates approximately 4,713 video lottery terminals.
Saratoga Casino Hotel is located in the city of Saratoga Springs. Owned and
operated by Saratoga Casino Holdings LLC, Saratoga Casino Hotel opened on January
28, 2004, and operates 1,095 video lottery terminals.
Finger Lakes Gaming & Racetrack is located in the town of Farmington. Owned and
operated by Delaware North Companies, Incorporated, Finger Lakes Gaming & Racetrack opened on February 18, 2004, and operates 1,175 video lottery terminals.
Hamburg Gaming at the Fairgrounds is located in the town of Hamburg. Owned
by the Erie County Agricultural Society and operated by Delaware North Companies,
Incorporated, Hamburg Gaming opened on March 17, 2004, and operates 929 video
lottery terminals.
Vernon Downs Casino & Hotel is located in the village of Vernon. Owned and operated
by Southern Tier Aquisition II, LLC, Vernon Downs Casino opened on October 26, 2006,
and operates 512 video lottery terminals.
Batavia Downs Gaming is located in the city of Batavia. Owned and operated by
Western Regional Off-Track Betting Corporation, Batavia Downs Gaming opened on
May 18, 2005, and operates 869 video lottery terminals.
Jake’s 58 Hotel & Casino is located in the village of Islandia. Owned by Suffolk
Regional Off-Track Betting Corporation. and operated by Delaware North Companies,
Incorporated, Jake’s 58 Hotel & Casino opened on February 27, 2017, and operates
1,000 video lottery terminals.
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Monticello Casino & Raceway is located in the village of Monticello. Owned and
operated by Empire Resorts, Inc., Monticello Casino and Raceway opened on June 30,
2004, and operated 1,090 video lottery terminals. Monticello Casino & Raceway ceased
its video lottery operations as of April 23, 2019.
COMPREHENSIVE ANNUAL FINANCIAL REPORT 2020
Economic Outlook
The following is a summary from the FY 2021 First Quarterly State Budget Financial Plan Update prepared by the
New York State Division of Budget (DOB) released on August 13, 2020:
Worldwide lockdowns to prevent the spread of COVID-19 sent most major economies into an economic downturn in the first half of 2020. With global infections continuing to rise, uncertainty remains over how fast international travel, global trade shows, supply chain disruptions, business and household demand will recover from
their pandemic triggered recession.
The Bureau of Economic Analysis (BEA) reported that GDP plunged at a 32.9 percent annual rate during the
second quarter of 2020, after slipping 5.0 percent in the first quarter. The second quarter decline marked the
strongest quarterly contraction in the 70 years since the government began reporting quarterly GDP figures.
With social distancing programs put in place, an unprecedented scale of business closures, and skyrocketing
employee furloughs and layoffs, it was clear the U.S. economy had fallen into recession territory. The National
Bureau of Economic Research (NBER) Business Cycle Dating Committee recently designated February 2020
as a business cycle peak. DOB expects that the Committee will ultimately declare that a business cycle trough
occurred during the second quarter of 2020. Monthly data shows that the economy bounced starting in May,
especially in terms of employment, equity prices, and consumer spending. DOB expects that U.S. real GDP will
rebound 14.8 percent in the third quarter and grow 7.4 percent in the fourth quarter of 2020.
The labor market is recovering robustly, at least through mid-June. The employment report released on July 2,
2020 indicated 7.5 million nonfarm job gains during May and June, after 22.2 million jobs were lost in March and
April of 2020. The unemployment rate fell to 11.1 percent in June 2020, 3.6 percentage points below its peak
of 14.7 percent in April. The May and June employment reports beat consensus forecasts by wide margins and
indicated a widespread recovery among industries.
New York State and especially New York City have been hit particularly hard by the COVID-19 pandemic. Recent
Current Employment Statistics (CES) employment data and initial unemployment insurance claims suggest that
job losses were worse than expected compared to the Enacted Budget forecast, Private sector employment is
expected to decline 8.5 percent in 2020, 1.0 percentage point lower than the Enacted Budget forecast. Although
private sector employment growth is projected to enter positive territory in 2021, with 4.6 percent job growth,
a full recovery to pre-COVID employment levels is expected to take several years. The complete FY 2021 First
Quarterly State Budget Financial Plan Update can be found at:
https://www.budget.ny.gov/pubs/archive/fy21/enac/fy21-fp-q1.pdf
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The U.S. and Global Economy
U.S. Economic Forecast
The New York State Economy
COMPREHENSIVE ANNUAL FINANCIAL REPORT 2020
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Budgetary Controls
New York State law limits administrative expenditures on Lottery operations to no more than 15 percent of traditional lottery game sales and 10 percent of video lottery gaming net win. In addition, the legislature sets appropriation limits in the annual State budget which establish maximum amounts that can be spent on administrative
costs other than sales-based agent commissions and vendor fees. Payment of expenditures is made through
the Office of the State Comptroller which verifies compliance with budgetary appropriations. Historically, the
Commission has efficiently controlled spending well below its statutory limit, allowing for unused administration
funds to be transferred to the education account as surplus. For the year ended March 31, 2020, administrative
surplus amounted to $272.2 million.
Debt Administration
The Lottery’s long-term liabilities consist primarily of installment payments due to winners of lottery jackpots.
This debt is funded by United States government-backed securities and New York City municipal bonds whose
interest payments and maturities are timed to correspond with payments due to prize winners. As of March 31,
2020, the accrued value of the Lottery’s installment prizes payable was $1.185 billion, with $136.2 million payable
within one year and $1.049 billion classified as long-term.
Financial Policy Changes
In May 2020, the GASB issued Statement No. 95, Postponement of the Effective Dates of Certain Authoritative Guidance. The primary objective of this Statement is to provide temporary relief to governments and other
stakeholders in light of the Severe Acute Respiratory Syndrome coronavirus 2 (“COVID-19”) pandemic. That
objective is accomplished by postponing the effective dates of certain provisions in Statements and Implementation Guides that first became effective or are scheduled to become effective for periods beginning after June 15,
2018, and later. There was no material impact to the financial statements as a result of adopting and implementing GASB 95, except for the Lottery postponing the adoption of certain standards, particularly GASB Statement
No. 87, Leases.
Financial Information
Internal Controls
The Commission is required to maintain a system of internal controls to safeguard assets, prevent fraud and
abuse, and ensure accurate financial information. To this end, the Commission has established an Internal
Controls Unit that reports directly to the Internal Control Officer. Standards for internal controls, as issued by
the New York State Office of the State Comptroller, are posted to the Commission intranet for all employees
to access. Also posted are the agency’s Internal Control Guidelines, which provide executive support for the
program and clear direction on staff responsibilities in carrying out the program. All managers conduct annual
internal control reviews within their units. During these reviews, risk is assessed and controls are documented,
evaluated, and tested. The Commission annually certifies the effectiveness of its Internal Controls program to
the New York State Division of Budget.
The Commission’s Internal Audit Unit regularly reviews and evaluates all activities of the Lottery from an internal
control perspective and issues reports to management recommending improvements to the system of internal
controls as necessary.
Beyond these internal reviews, the Lottery’s financial statements are audited on an annual basis by a certified
public accounting firm. As a state agency, the Commission is also subject to periodic audits by the Office of the
State Comptroller.
COMPREHENSIVE ANNUAL FINANCIAL REPORT 2020
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Independent Audit
The New York Lottery’s annual financial statements are audited by a certified public accounting firm. The statements include pertinent footnotes, required supplementary information and Management’s Discussion and Analysis. The statements for the year ended March 31, 2020 were audited by Mitchell & Titus, LLP. The independent
auditor’s report and the financial statements are included in the Financial Section of this report.
Social Responsibility
As a member of the World Lottery Association (WLA) since 2009, the New York Lottery has been a strong supporter of the WLA’s Responsible Gaming Framework which outlines the actions a gaming operator must undertake to demonstrate its commitment to globally accepted Responsible Gaming best practices. The New York
Lottery demonstrates its commitment to Responsible Gaming by making it an integral part of our daily operations
in the best interest of our players, our beneficiary, and all New Yorkers. The New York Lottery’s evolving Responsible Gaming Program is rooted in the following WLA principles:
Take reasonable and balanced measures to meet our objectives while protecting vulnerable groups.
Ensure our practices and procedures reflect a combination of government regulations, operator selfregulation, and individual responsibility.
Develop our practices concerning Responsible Gaming-related issues on the fullest possible understanding of relevant information and analysis of documented research.
Work with stakeholders to share information, develop research, and promote Responsible Gaming as
broadly as possible, and encourage a better understanding of the social impact of gaming.
Promote only legal and responsible gaming in all aspects of our activities, including the development,
sale, and marketing of our products and activities, and make reasonable effort to ensure our agents do
the same.
Provide the public with information in an accurate and balanced manner to enable individuals to make
informed choices.
Certificate of Achievement
The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of
Achievement for Excellence in Financial Reporting to the New York Lottery for its comprehensive annual financial
report for the fiscal year ended March 31, 2019. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This
report must satisfy both generally accepted accounting principles and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive
annual financial report continues to meet the Certificate of Achievement Program’s requirements and we are
submitting it to the GFOA to determine its eligibility for another certificate.
COMPREHENSIVE ANNUAL FINANCIAL REPORT 2020
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Acknowledgements
This Comprehensive Annual Financial Report reflects our continued commitment to maintain the highest standards of public accountability and to maintain the public trust through accounting transparency. Preparation of
this report could not have been accomplished without the efforts and dedication of the entire Commission staf