By Colleen Quinn

State House News Service

BOSTON -- The Massachusetts Lottery, whose profits help fund municipal government operations, posted its second-highest profit level last fiscal year, hauling in $952 million on record sales of $4.8 billion.

Profits were $25 million higher than expected, despite "sizeable losses" during the year when storm-induced power outages kept players home, and sales dipped in the days following the Boston Marathon bombings when areas of the state were put on lockdown while authorities sought the alleged bomber.

From July 1, 2012, to June 30 sales topped the previous record of $4.723 billion set in fiscal 2012, when the Lottery generated $983.4 million in profits. Lottery officials had anticipated $927 million in profits for fiscal 2013.

At a press conference, Lottery overseer and state Treasurer Steven Grossman said strong sales help boost local aid to cities and towns. He called the money generated by the Lottery a "critical lifeline" for cities and towns.

The number of people playing the Lottery is up, with approximately 85 percent of residents in the state playing, according to executive director Paul Sternburg.

The prize payout last fiscal year was the highest in the history of the Lottery, which was created in 1972, with 72.7 percent of every dollar wagered going to winners. Massachusetts pays out more money in prizes than any other state, according to Lottery officials. Arkansas and Missouri rank second with 64 percent payouts.

It was also the best year for sales agents who rung up over $276 million in commissions and bonuses, officials said.

Instant ticket sales topped $3.33 billion, accounting for 69 percent of all sales, while KENO pulled in $799 million and the Numbers Game brought in $324 million.

Sternburg attributed the strong sales to the high payouts and efforts to pull outdated games and develop new ones that appeal to players, he said.

In June, the Lottery ditched a seven year-old horse racing game, replacing it with a poker-themed monitor game. Jackpot Poker launched June 17 at more than 1,200 Lottery retailers, and generated $254,265 on its first day of sales, more than double the single day sales record of the Daily Race Game.

In early 2012, the Lottery launched the first-ever New England-wide drawing - "Lucky for Life" - enticing players with a grand prize of $1,000 per day for the rest of their lives.

During the press conference Tuesday, Grossman acknowledged the eventual advent of casinos in Massachusetts will cut into Lottery sales. "We know it is going to have an impact," Grossman said.

He said the Lottery will have to make adjustments, including potentially moving the Lottery into online games. Lawmakers are considering a bill that would allow the Lottery to test some online gaming models.

Grossman said Tuesday he would not support online gaming unless he was confident it could be done in a way to protect the 7,400 Lottery agents from losing sales. He said he also would want to see built-in protections to reduce risks of addictive behavior for those playing online.

"I will not support gaming online until we can protect those agents," he said.

In December, a state task force recommended the Lottery enter online gaming before federal legislation potentially forecloses that avenue, concluding that there is an "inevitable" shift online.

The task force recommended quick passage of enabling legislation, and then a more cautious approach toward the actual implementation through pilot programs.

Grossman said one idea is to have players buy gift cards from Lottery agents for online games, with a set amount of money on the card. Along with giving retailers the sales, it would also prevent people from racking up charges on their credit cards, which could potentially lead to financial problems for some gamblers, Grossman said.

Lottery officials have not worked out an online gambling model, and cannot move forward with any testing until the Legislature acts, Grossman said. 

One of the Lottery's key constituencies, the convenience store owners who sell the tickets, has urged state officials to shelve the online gaming plan, worried that it would hamper their business in part by costing them customers who buy Lottery tickets and other products when visiting stores.

"The consensus was that this type of expansion would hurt thousands of lottery agents in Massachusetts struggling in a tough economy to provide jobs and stay in business," New England Convenience Store Association Executive Director Stephen Ryan in a Dec. 5 letter to Grossman and the Lottery director.