Minnesota State Lottery
The Minnesota State Lottery, or Minnesota Lottery, is a government agency that operates lotteries in the U.S. state of Minnesota. The state’s lottery system was established in 1988 through a successful voter referendum that amended the state’s constitution. Lottery revenue is paid out towards prizes, administrative expenses, and retailers, and the remaining proceeds are split between environmental conservation funds and the state's general fund. The Minnesota Lottery participates in the Multi-State Lottery Association and several other multi-jurisdiction games. In-house draws include Pick 3, Gopher 5, and North 5, among many other games and offerings.
Over the three decades since its first game debuted on April 17, 1990, expansion and management of the lottery has resulted in controversy. In the early 1990s, the Minnesota State Lottery partnered with a technology company to develop a lottery cartridge for a modem-equipped Nintendo Entertainment System but had to cancel a test run of an in-home lottery system after political pushback. A corruption probe in the early 2000s effectively ended with the suicides of a long-time director and a public relations contractor, and mismanagement of the lottery agency led to the ouster of several top executives in the 2010s. The lottery posted its record level of sales in the fiscal year 2020 period at $668.6 million. The lottery has been criticized for relying disproportionately on sales to people with below-average incomes and operating with a lack of oversight.
History
1960s to 1980s: modern lottery movement
Modern state lotteries began with the creation of a sweepstakes in New Hampshire in 1964, a New York state lottery in 1967, and a New Jersey lottery in 1970. In Minnesota, bills first emerged in 1972 to amend the state's constitution to permit a lottery, and by 1986 a bill was narrowly defeated in the legislature. By the late 1980s, public opinion polls revealed popular support for a lottery idea, with betting at the Canterbury Downs racetrack in Shakopee, charitable gambling, and Indian tribal casinos proving both popular and profitable in the state.After several years of debate about the creation of a state lottery system, the Minnesota Legislature put the decision before voters. In 1988, Minnesotans approved with 59% of the vote a referendum to amend the state's constitution to authorize a state lottery, but it did not codify how lottery revenue would be used, leaving it up to the legislature to decide. Legislation establishing the lottery passed in 1989.
1990s: debut and expansion
The first ticket sales, for an instant scratch-off game, began on April 17, 1990. Political disputes about how to direct revenue and state budget pressures led to a second lottery-related constitution amendment in 1990, which established and dedicated 40% of lottery proceeds to an environment and natural resources trust fund.Soon after its creation, the lottery quickly expanded to other games and concepts. The Minnesota lottery joined the multistate Lotto America game in 1990.. In 1991, the lottery added the Minnesota-only Daily 3 and Gopher 5 lotto games, which were considered "on-line" as they used a central computer system.
In partnership with Nintendo and the Bloomington-based Control Data Corporation, the state agency had plans to launch a test lottery with 10,000 Minnesota households in 1992 via an experimental modem for the NES. At the time, Japanese consumers were able to use the Nintendo Famicom console for banking and stock purchases with the Network System peripheral. The American console had a relatively unknown expansion port that made the device capable of connecting to phone lines. Lottery officials hoped that in-home lottery ticket sales would spur growth that had flattened. Technology companies hoped the idea would spur greater American interest in the burgeoning industry of electronic commerce. Nintendo hoped the effort would extend the useful life of the NES console that was being supplanted by the SNES. The lottery would have been conducted via connection to a central computer and with pre-paid credits and an encrypted password to ensure users were 18 years of age or older. The concept was ultimately not pursued after receiving substantial opposition by advocates worried that use of an in-home video game console would encourage youth gambling. Several editorial pages and state legislators condemned the plan.
Prior to 1995, the lottery maintained accounts outside the state treasury, until a change in statute moved lottery proceeds to state funds, with the exception of day-to-day operating accounts. The state's constitution was amended again in 1998 to extend authorization of the lottery to 2025.
2000s: corruption and investigations
In 2003, the lottery received criticism by an environmental advocacy organization for operating at a higher cost than comparable lotteries in other states. State lawmakers placed stricter spending limits on lottery operations, which resulted in 34 staff layoffs. The agency added the Minnesota-only game Northstar Cash, an all-cash lotto, the same year.In 2004, George R. Andersen, the longtime director of the lottery who had served in the role since its inception in 1990, died the day after meeting with the Legislative Auditor about a pending report. His death was the result of an overdose of pain medication and ruled a suicide. Governor Tim Pawlenty appointed Michael Vekich to succeed Anderson and head the embattled lottery agency, a role Vekich served in for eight months. Vekich was credited with increasing productivity and reducing the lottery's operating costs.
In 2005, Michael Priesnitz, a public relations executive who was both a friend of Anderson and contractor of the lottery, died of a self-inflicted gunshot wound to the head. Priesnitz's death came a month after the lottery cancelled a $1.3 million promotional contract with his company and as he was under a probe by the Minnesota Department of Public Safety. Ramsey County prosecutors concluded in 2006 that Anderson had engaged in "a string of self-dealing, favor granting, and contract-rigging actions of the type expected from the ‘Chicago-style’ politics of the past." Prosecutors did not file criminal charges as the two main suspects, Anderson and Priesnitz, were both dead.
2010s: managerial strife
Lottery ticket sales were suspended during the 2011 Minnesota state government shutdown. An estimate of the 20-day government closure put the revenue losses of the lottery to state funds at $9,988,000.The lottery introduced ticket sales at gas pumps and ATMs and offered online games in 2012. By 2015, the state legislature shutdown the newer types of game offerings.
In 2015, lottery director Ed Van Petten resigned under pressure from Governor Mark Dayton. Van Petten had already drawn criticism from state lawmakers for expanding the lottery without sufficient authorization. When he was confronted by the Minneapolis-based Star Tribune newspaper about lavish expenses that he charged to state accounts, Van Petten resigned the following day. Controversially, Van Petten was reimbursed $7,000 for staying with his staff at timeshares he owned while attending out-of-state conferences. Minnesota Management and Budget determined the reimbursements were not allowable, and Van Petten later repaid the agency.
Johnene Canfield, the lottery's interim director after Van Petten's departure, was fired in 2015 after being intoxicated at out-of-state conferences and meetings. Canfield sued to be reinstated on the grounds that alcoholism was a disorder and that she was held to a different workplace standard due to her gender. The Minnesota State Lottery had a policy disallowing alcohol consumption in the office, but allowed it in moderation at conferences. Canfield alleged that Van Petten, the former lottery director, encouraged her to drink at conferences. Canfield later pled guilty to an unrelated drunken-driving charge that resulted in a serious crash in 2015. In 2017, a Ramsey County District Court narrowed the scope of the suit to potentially allow Canfield to return to the lottery as a lower-level employee but not as its director.
Among the managerial turmoil at the lottery, Vekich was re-appointed director in 2016 by Governor Mark Dayton of the Democrat-Farmer-Labor party, though Vekich he had served under the GOP administration of Tim Pawlenty and he had run briefly as Republican candidate for governor. Vekich was an in acting role for more than a year until Robert Doty was appointed by Dayton in 2017 as the lottery's chief.
By 2018, unaffiliated, out-of-state companies were essentially operating as courier services to facilitate online sales of Minnesota Lottery games for state residents.
Newly elected governor Tim Walz in 2019 tapped Adam Prock, the director of communications for the lottery, to take over the executive director role. The lottery posted three years of consecutive, record earnings for the fiscal year 2018, 2019, and 2020 periods.