Pennsylvania Lottery Says State Must End Profit Mandate to Appease Changing Consumer Demand

Posted on: March 18, 2025, 09:05h. 

Last updated on: March 18, 2025, 09:26h.

Devin O'Connor @CasinoorgDevinO Read More
Expertise: Asia Pacific Gaming, Commercial Gaming, Legislation, Politics.
  • The Pennsylvania Lottery must make a 20% profit
  • The profit mandate applies only to traditional game sales — not iLottery
  • Problem gambling experts say the lottery has become predatory and is a “regressive tax” on those who can’t afford it

The Pennsylvania Lottery is required by law to make a minimum profit of 20% on its traditional game sales, or all games aside from its iLottery. The profit mandate runs through June 30, 2029, but lottery officials and Gov. Josh Shapiro (D) are pleading with state lawmakers in Harrisburg to terminate the yield statute.

Pennsylvania Lottery profit scratch-off scratchers
The Pennsylvania Lottery is required to make a 20% profit on its traditional games like draws and scratchers. Lottery reps are asking state lawmakers to fold on the profit stipulation so it can offer more higher-priced scratchers that require better payout rates for customers. (Image: Shutterstock)

Pennsylvania is home to one of the country’s richest lotteries, with almost $4.8 billion in traditional sales during the state’s 2023-24 fiscal year. The calendar year marked the 13th consecutive year in which the Pennsylvania Lottery recorded profits exceeding $1 billion, with 2023-24’s tally coming in at more than $1.22 billion. The Pennsylvania Lottery primarily benefits older Pennsylvanians.

Lottery officials say they could deliver the state even more money should it end the 20% profit rule on scratchers. Over the past decade, the lottery has seen a sales shift from nightly draws to instant games and higher-priced scratch-offs.

The $30 and $50 scratch-offs, however, typically demand a much higher payout percentage and, therefore, come with a potentially lower profit margin for the lottery. Changing consumer behaviors, including lottery players favoring longer odds on the dream of hitting a $5 million jackpot on a $50 scratcher, has rendered the 20% profit protocol obsolete, lottery reps argue.

Shapiro Turns to Gaming for Budget Funding

During his 2025-26 Budget Address to the General Assembly last month, Shapiro doubled down on his belief that skill games, controversial slot-like gaming terminals, should be regulated and taxed. The Pennsylvania Lottery and the state’s vast, legal gaming industry heavily oppose skill games on the belief that the gray games poach play from their operations.

Shapiro wants more legal gaming by way of skill games to help fund his plan to direct an additional $500 million to the poorest schools in the commonwealth and allocate $290 million more to public transit initiatives. He agrees that the lottery could generate more revenue should the 20% profit mandate be lifted.

To assist in these initiatives, the budget proposes … eliminating the minimum profit margin requirement to allow the Lottery more flexibility to offer higher-priced games that lottery players want,” Shapiro said.

The lottery thinks ending the profit rule could grow profits, but the mandate hampers it from running more $30 and $50 scratchers because of the inherent risk involved. For example, if the five top prizes of $5 million available in the $5,000,000 Lion’s Share scratcher are won quickly, the net win for the state could be small after paying out the $25 million.

The Pennsylvania Lottery currently has 29 scratch-off games costing between $1, $2, $3, or $5. There are only eight games costing $20 or $50. 

Problem Gaming Opposition   

There is, of course, opposition to allowing the Pennsylvania Lottery to offer additional higher-cost scratch-off tickets. Andrew Shaffer, a Pennsylvania resident who sits on the National Board of the Stop Predatory Gambling Foundation, a Washington, DC-based nonprofit that seeks to restrict the harmful impact of commercialized gambling on individuals and communities, says higher costs of play will lead to higher losses for people already “harmed by excessive lottery gambling.”

“The highest concentrations of lottery sales are in poor and disadvantaged communities, where disproportionately large numbers of people who lack access to good financial resources and education often spend what few investable resources they have buying a Lottery ticket instead of using those resources to improve their situation. Lotteries derive most of their revenue from a relatively small fraction of their players who are problem gamblers and gambling addicts, and ‘who are Black, lower-income, or high school dropouts,'” Shaffer said in remarks to Casino.org.

Shaffer added that the lottery is a “regressive tax levied principally on those who are least able to afford it.” He claims many seniors in the state — the very ones who benefit from the lottery’s revenue with property tax and rent rebates, prescription assistance, aging services, and free transportation to medical appointments — oppose the lottery pushing “addictive gambling products on their children and grandchildren.”