Controls Over Lottery Machines & Tickets
With no tax payable on pull tab lottery machines and lottery fruit machines these machines are becoming more popular (Machine Gaming Duty is payable on traditional fruit machines only). However, the controls operated over these machines have developed from practices developed for the traditional fruit machine where cash is paid out by the machine not the steward. In many instances these procedures are inappropriate and should be changed to take advantage of the new features offered by the latest machines. For example, lottery fruit machines are self-auditing and detailed reports can be produced of money in and paid out.
Pull tab machines offer a good source of income but we have encountered a number of problems, instead of the expected guaranteed profit, losses have been incurred; this cannot happen if the correct controls are followed. Different ticket suppliers may have different security controls which should be followed but a checklist of the common controls to look out for are:
- Boxes not being used in order with new boxes being opened once the highest prizes have been won. This results in the club not achieving the desired profit from the tickets with the club share being left unused in the box, sometimes these unused tickets turn up years later.
- Opened boxes are not kept in a secure location but are left open in an unsecure room, physical security over tickets is crucial as any ticket could be a major prize. This can result in one or more tickets being stolen, prizes being claimed but with no income for the club.
- Winning tickets from one club with similar machines being reused at another club. Whilst the name of the club is printed on the ticket it has to be removed with the detachable pull tag. Ask your supplier to ensure that club name is not printed on any detachable portion of a ticket
- Lack of controls over the reimbursement of winnings with payment by the officer or employee of the club being made without support and a check on the winning tickets. All major wins should be compared to the winning serial numbers supplied with the box of tickets
- Members are holding on to winning tickets for a considerable length of time and cashing them in bundles, for instance at Christmas. This can create a loss in a given period.
Checklist of control procedures:
- Do not over-order boxes; once ordered they should be locked in a safe location; the boxes should be used in order and not opened until all the tickets in the previous box have been used; this also prevents any physical degradation of the tickets
- A sheet should be maintained of the serial numbers of the boxes bought by the club. This should be posted in a convenient location and sequence number of the larger winning ticket checked to the list to ensure it is current, not a couple of years old and comes from a box bought by the club.
- The Steward or Officer responsible for paying winning tickets should use a black marker to draw a line across a winning ticket or pierce the symbol with a pen on the win line so it cannot be reused
- The winning tickets should be retained and in due course passed to the Secretary in support of the claim for reimbursement of winnings paid out. These should be reconciled to the amount of cash paid out.
- As with all machines located in the club there should be segregation of duties; the keys to open the machine not being held by one person; the machine should be emptied by at least two people; the counters should record the take in a small ledger book at the time of counting the money; the book should be signed by the counters. Many machines have an audit reading recording the money taken, where available these reading should also be recorded.
- The Secretary should monitor income earned from the machine and compare it to winnings paid out. Over time income should exceed monies paid-out and the club should achieve the desired profit share.
- Members should be encouraged to cash in their prizes as soon as possible.
If the above procedures are followed pull tab lottery machines provides a good source of income for most clubs.