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Questions Raised Over Texas Lottery’s Financial Statements

The Texas Lottery Commission’s Executive Director, Gary Grief, gave deposition testimony in the Fun 5’s lawsuit on Friday, September 25th. A detailed summary of his testimony will be provided to our Fun 5’s clients in the coming weeks.  However, a question was raised during Mr. Grief’s deposition that is troubling and needs to be immediately addressed by the Lottery Commission to comply with its duty to ensure the integrity and honesty of the lottery.  Mr. Grief was asked to identify the financial summary issued recently by the Commission for fiscal year 2015.  Mr. Grief confirmed that the numbers for 2015 are not yet audited but that the numbers for prior years were audited and should not change from year to year.  He was then asked to explain why the lottery commission’s financial summaries for 2014 and 2015 now report increased administrative expenses for fiscal years 1992, 1999, 2000, 2001, 2003, 2005, 2006, 2007, 2008, 2009, and 2011 totaling $10,271,727 more than had previously been reported in the audited financials for those years.  Mr. Grief was unable to explain why the audited numbers from prior years had been retroactively changed on the 2014 and 2015 reports and promised to check with his staff to explain the discrepancy.  If you are interested in comparing the numbers yourself, compare the audited Administrative Expenses on the  2015 Texas Lottery Commission Financials with the audited Administrative Expenses reported on the earlier 2012 Texas Lottery Commission Financials and the 2011 Texas Lottery Commission Financials.

An additional mystery surrounds the Lottery Commission’s  Press Release Re Fiscal Year 2010 Sales and Revenues.  That press release bragged that the Lottery Commission had transferred almost $87 million to the state in Unclaimed Prizes.  A glance at the 2012 Texas Lottery Commission Financials confirms that the audited numbers for 2010 show a transfer of  $86,859,465 in Unclaimed Prizes to the state. In other words, the audited numbers for 2010 support the press release issued by the Lottery Commission.  However, the 2014 and the 2015 Texas Lottery Commission Financials retroactively reduced the audited 2010 Unclaimed Prizes transferred to the state by approximately $20 million to $66,591,791.  That’s a huge change in audited financial numbers for 2010 and one wonders who made the change and why it was made.  If we get an answer to these questions, we’ll post it for those who are interested.

By Richard LaGarde

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