DENVER – Auditors blasted the Colorado Lottery for its bonuses to sales staff members Monday, saying officials have awarded hundreds of thousands of dollars without tying the payouts the actual sale performances.
Bonuses from the Colorado Lottery rapidly increased from $68,000 in 2009 to $394,000 last year for about 30 sales staff, according to an audit released to state lawmakers. Lottery officials note that bonuses awarded before the recession, in 2008, were $406,000, and say they’ve already begun implementing reforms.
The audit said that bonuses not supported by data “call into question the integrity of the incentives, which have amounted to hundreds of thousands of dollars each year that would otherwise have been distributed as proceeds to beneficiary agencies.”
Last year’s figures mean that, on average, sales employees got between $12,000 and $13,000 in bonuses.
“Ouch, this is hurting me,” said Republican Sen. Steve King, warning officials that he would pursue greater accountability of the state lottery’s business practices.
“I have a problem with $12,000 in bonuses in one year. I have a problem with us spending $400,000 to motivate people,” he said.
Department of Revenue Executive Director Barbara Brohl, who oversees the Colorado Lottery department, said officials are already making changes to the bonus program. Bonus payouts have been reduced by half, and officials are making sure they’re tied to sales goals.
Lottery Director Abel Tapia told King he understood his frustration.
“We’re working with this right now. We see it as a problem that we need to resolve,” Tapia said.
Since 1983, the Colorado Lottery has distributed $2.6 billion to state parks and wildlife, capital construction projects, and Great Outdoors Colorado. A small percentage of the proceeds also go to public schools and the state’s general fund.
Bonuses have existed since the state lottery began as a way to motivate staff members and increase sales to retailers. But auditors said that, in calculating bonuses, lottery officials were not comparing actual sales to previous years and were instead using sale projections. Auditors also said that thresholds set for jackpot ticket sales and retailer recruitment do not reward individual achievement, noting that in some quarters during the year either none or all of staff members met the goals.
Lottery officials said in their response to auditors that they will no longer use forecasts to compute awards. They also said “it is not possible to link sales or proceeds increases to any one variable,” noting that variables like big jackpots, and new productions and productions can affects sales, in addition to the individual efforts of staff members.
The audit also raised other concerns, including prize payouts that have been set higher than other states. Auditors said the national average for prize payouts was 61 percent of sales in 2011, while Colorado’s was 63 percent that year. The percentage difference means an additional $10.2 million went to price payouts instead of beneficiary agencies.
