NC State Auditor investigates North Carolina Education Lottery

Jun 20, 2012

A report from the state auditor's office says the North Carolina Education Lottery violated state law by failing to collect damages from its primary vendor.

Lottery officials allowed the company to accumulate and carry a balance for several years.

The report from the State Auditor shows that from 2006 through 2011, the lottery accumulated liquidated damages totaling more than 450 thousand dollars.  The damages were incurred by GTECH -- the lottery’s main goods and services provider.  Those damages came from delayed or untimely performance or from lottery system and ticket machine down-time. 

According to the report, the lottery collected just 60 percent of that money in the form of more goods and services from GTECH, and that violates the state's Cash Management Policy regarding the collection and deposit of funds owed to the state. 

Lottery Commission Chair Robert Farris says all the damages were tracked to ensure that appropriate value was received.  But officials from the State Controller’s office say Lottery employees knowingly and willfully violated the state statute.