The Illinois Lottery reported that ticket sales for May 2026 were virtually unchanged from a year earlier, but the bottom line took a significant hit as prize expenses climbed sharply. Operating income fell 26.2% to $52.0 million, down from $70.4 million in May 2025, according to state filings released Tuesday.
Sales totaled $320.1 million, a marginal decline of 0.3% from $321.1 million in the same month last year. However, prize expenses jumped 7.4% to $235.3 million, driving the payout ratio to 73.5% from 68.2% a year ago. This means winners received an additional $5.28 for every $100 wagered, compressing the lottery's operating margin to 16.2% from 21.9%.
The sharp increase in prize costs was largely attributed to a single event: the May 3 Pick 4 drawing, where the combination 7-7-7-7 produced over $7.1 million in payouts to more than 3,300 winners. Pick 4 prize expenses rose $12.6 million year-over-year, accounting for roughly 77% of the total increase in May prize payouts. The game's payout ratio soared to 82.2% from 35.3%.
Sales mix also shifted during the month. Instant-ticket sales fell 4.1% to $183.9 million, while all other lottery games combined grew 5.2% to $136.2 million. Mega Millions saw a 16.4% sales increase, Pick 4 added 8.7%, and Fast Play rose 7.5%. The shift toward draw games, which typically have higher prize costs, contributed to the margin compression.
With May results in hand, the lottery now faces a daunting June target. To meet its fiscal 2026 operating-income goal of $851 million, the state needs approximately $123.8 million in operating income for June—more than double May's figure and 138% above the average monthly result over the past 11 months. The private-management report from Allwyn Illinois had previously warned that the full-year target would be missed for a second consecutive year.
Digital sales, while growing, have not translated proportionally into profits. Through March, iLottery sales rose 6.6% to $571.1 million, beating plan by 1.5%. However, about 65% of those sales came from Fast Play, which contributed only 42% of gross gaming revenue (sales minus prizes), according to the management report. This suggests that conversion efficiency remains a challenge for the online channel.
Unclaimed prizes represent a small but notable factor. As of July 13, there were 10 unclaimed prizes of at least $100,000, totaling $2.575 million—equivalent to 1.1% of May's prize expenses and roughly 5% of operating income. Under Illinois rules, expired unclaimed prize money is redirected to special prize pools, with the remainder going to the Common School Fund rather than operator profits.
Looking ahead, June's results could vary significantly depending on jackpot cycles and payout timing. The May figures are unaudited and reported on an accrual basis. A month with lower prize payouts or stronger sales could narrow the gap, while another heavy payout month could widen it. The full-year numbers will ultimately determine whether May was an anomaly or indicative of a deeper structural issue.
