The Massachusetts Lottery Commission on Tuesday approved a $5 million outlay for the next year of its advertising contract and got a presentation from its ad firm that Treasurer Deborah Goldberg said highlighted what the Lottery has done "on an incredibly small shoestring budget."
State spending to promote the Lottery has been called both essential to maintaining the steady stream of revenue used for local aid and exploitation of vulnerable residents who might be drawn into gambling by the ads. Though it has not been much of an issue on Beacon Hill for years, Lottery advertising was once a hot-button issue at the State House
The Lottery Commission on Tuesday authorized the agency to spend up to $5 million for Boston firm Full Contact's advertising services in fiscal year 2023, subject to legislative appropriation. The Lottery and Full Contact entered into a three-year contract with two one-year options last May. For more than five years, the Legislature has level-funded the Lottery's advertising line item at $4.5 million, though the Lottery can supplement that with some monitor game funds.
Goldberg, who at one point early in her tenure as treasurer asked lawmakers to allocate $10 million a year for the Lottery to advertise its products in an increasingly competitive gaming market, said a few times during Tuesday's meeting that the Lottery's advertising budget is not proportional to the $5.8 billion in revenue it took in last budget year.
"It's unheard of, the size of the advertising budget, comparing it to any other operating company that generates that amount of volume. And so that makes it all the more impressive," she said. Goldberg later added, "As you can note, it's an extraordinarily lean advertising budget for a very large operating company."
Tuesday's meeting also featured a presentation from Full Contact on its work to produce ads connected to the Lottery's 50th anniversary this year. The commission also saw a video produced in-house to advertise a Keno promotion; like another recent Lottery video, this one cast a Lottery employee in an acting role to minimize costs.
"It would be nice to have a little bit more," Goldberg said of the Lottery's advertising budget. "Maybe it's something we can, as we continue to grow in volume, and we can show the percentage of our marketing budget getting smaller and smaller versus the amount of volume that we have. It would be a fascinating number to be looking at."
The Lottery's advertising-specific budget line item has been set at a steady $4.5 million since mid-2016 and the House and Senate have both approved that same amount again for the fiscal year 2023 budget. If the ad budget stays there through conference negotiations, it would be the seventh straight year of level funding. The Lottery's ad budget is supplemented with a small portion of funds from its monitor games.
Lottery advertising has not been much of a talker on Beacon Hill in recent years, but its history intersects with a number of significant people and events of the last few decades of Massachusetts politics.
Massachusetts spent between $11 million and $13 million on lottery advertising during the late 1980s and early 1990s but the Legislature gutted the budget starting in the mid-1990s, according to News Service reporting. After approving $11.8 million for fiscal year 1994, Lottery advertising funding was slashed to $400,000 and advertising was limited to the point of sale starting in fiscal 1995.
That dramatic cut corresponded with the time that Thomas Birmingham, who felt that Lottery advertising preyed on poor and vulnerable residents, was deeply involved with the state budget as Senate Ways and Means chairman and then as Senate president. The Chelsea Democrat was successful in holding down Lottery ad spending for several years, but he gave up the gavel in the Senate to run unsuccessfully for governor in 2002.
Instead of Birmingham moving into the corner office in 2003, it was Republican Mitt Romney. By September of that year, in a bid to boost sales and deliver more aid to cities and towns hit by local aid cuts, the Legislature and first-year governor had signed off on $5 million for Lottery advertising via radio, television and billboards in fiscal year 2004.
That $5 million turned into $10 million in fiscal 2005 and the Lottery got $10 million for advertising each year through fiscal 2009, until the recession forced cuts. The account was funded at $2 million in fiscal years 2010, 2011 and 2012.
Lottery advertising was at the center of the scandal that ensnared Treasurer Tim Cahill and led to a 2012 indictment on charges of public corruption, conspiracy, and procurement fraud stemming from Lottery ads that appeared designed to bolster his unsuccessful 2010 run for governor. Cahill's legal case ended with a mistrial and a fine.
As casino gambling, which was legalized here in 2011 as direct competition to the Lottery, was becoming a reality in Massachusetts, the Lottery was given additional advertising ammunition as its ad budget was bumped back up to $5 million for fiscal years 2013 and 2014 and then boosted even further to about $8 million for budget years 2015 and 2016.
"As a businesswoman, I firmly believe that the last thing you do when you're trying to increase revenue is cut advertising. And especially not when new competition is moving into your backyard," Goldberg said, referring to casinos and slot parlors, as the Legislature began to build the fiscal 2016 budget.
But in the fiscal year 2017 budget, Gov. Charlie Baker vetoed some Lottery advertising spending and the Legislature allowed it to stand. Lottery profits had been mostly flat in the face of competition from online entities and a new slot machine facility in Plainville. Baker left the Lottery with $4.5 million for ads, saying that is the amount that's "necessary" and neither he nor lawmakers have seen fit to adjust the budget since.
"Our prize payouts have been extremely high in the last couple of months, including the month of April, and we are at our highest prize payout than we have seen in our last five years," Bracken said. "So, once again, good for the players in that aspect."
Through 10 months of the fiscal year, Lottery sales of $4.94 billion are up $73.2 million or 1.5 percent over the same 10 months of fiscal 2021, but this year the Lottery's net profit is running $38.4 million behind the pace that led to a record $1.112 billion in profit in fiscal 2021.