Audit critical of NC Education Lottery

June 20, 2012 3:19:05 PM PDT
A report issued Wednesday by the North Carolina Office of the State Auditor is critical of the state Education Lottery.

Auditors said that since the lottery's inception six years ago, officials failed to collect liquidated damages from GTECH Corporation, its primary gaming vendor. The audit said the purpose of liquidated damages is to recoup potential sales losses from GTECH due to their failure to perform under certain aspects of their contract with the Lottery.

Click here to read the report (.PDF)

According to the audit, instead of collecting full cash payment from GTECH, officials allowed the company to accumulate and carry an outstanding balance for years. Auditors also said collecting some of the money owed in the form of goods and services was a violation the state's Cash Management Policy.

The report said the lottery collected $278,432 worth of goods and services, while $182,372 remained unpaid.

In addition, investigators found lottery officials failed to verify and document the value of some items received in payment for damages.

In its written response to the audit, lottery officials challenged the characterization that they "failed to collect" from GTECH and said the goods and services received were necessary and important. They said accepting goods and services from vendors is a common practice in the gaming industry.

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