Did heavy rains add to Kerala lottery's revenue challenges? Key CAG findings explained

The Kerala State Lottery Department remains the undisputed engine of the state's non-tax revenue, yet a recent audit by the Comptroller and Auditor General (CAG) reveals that the "business of luck" is facing a tightening squeeze on its actual profits. While ticket sales have reached historic highs, the cost of keeping the wheels turning is rising even faster.

The backbone of non-tax revenue

The department continues to be a financial titan for the Kerala exchequer, accounting for a staggering 76.66 per cent of the state's total non-tax revenue during the 2023-24 financial year.

By the end of 2024-25, total receipts from lottery sales had climbed to ₹12,711.18 crore.

It is a massive operation that does more than just fill the state's coffers; it is also a significant generator of Central and State Goods and Services Tax (GST).

In the last financial year alone, lottery sales generated total GST collections of ₹3,559.34 crore.

This highlights the department's role as a dual-purpose revenue stream, providing both direct income and substantial tax contributions to the state and the Union governments.

Big wins, smaller yields

However, the audit points to a worrying trend: the actual money left over for the government after all expenses — known as the net yield — is shrinking.

During 2024-25, the net yield from lotteries decreased by ₹140.51 crore.

This happened despite more tickets being sold than in the previous year.

The reason for this dip is simple but expensive. The department is spending more than ever on the prizes that attract players and the commissions that sustain its vast network of agents.

Expenditure on prize money and commissions reached ₹11,721.98 crore in the last financial year.

Essentially, the state is running a higher-volume business but walking away with a smaller slice of the pie.

Furthermore, the growth rate of lottery revenue slowed to 1.44 per cent, a sharp drop from the 5.36 per cent growth recorded a year earlier.

Officials attributed this slowdown to heavy rainfall and a shortage of drawing machines needed to expand lottery series.

Audit hurdles and missing funds

Beyond the balance sheet, the CAG flagged several administrative and transparency issues, suggesting a need for tighter internal controls.

As of June 2024, the department had 77 outstanding audit paragraphs involving ₹7.30 crore.

Despite these pending irregularities, not a single departmental audit committee meeting was held during 2023-24 to address them.

More concerning are the findings related to financial integrity.

The audit identified two cases of misappropriation or loss within the department, involving a total of ₹59.95 lakh.

Of this, around ₹49.03 lakh has remained unresolved for more than 15 years.

These gaps in oversight, combined with rising operational costs, present a complex challenge for a department on which millions of Keralites depend for their livelihoods.