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The Virginia Lottery netted about $16 million in profit from the Mega Millions multistate sweepstakes in the past week, more than making up for a three-month run of good luck by players of the daily games offered by the state-owned gaming enterprise.

Lottery Executive Director Kevin Hall estimated $40 million in sales for the last two Mega Millions drawings — held last Friday and Tuesday — for a jackpot that reached $1.537 billion before the game drew a winning number for an unidentified ticket-holder in South Carolina.

The net profit for the lottery — and for public education in Virginia, Hall reminded legislators — offset a $6.3 million decline in the first quarter of the fiscal year, despite a $16 million increase in sales from the previous year.

The reason? The Virginia Lottery paid out $22.3 million more in prize money from July 1 to Sept. 30 than it did the same quarter a year ago.

“The players did very well,” Hall said.

However, he told the Senate Finance Committee on Thursday, “We have more than made up that ground with the recent jackpot run.”

And the multistate Powerball jackpot was $750 million, with a drawing scheduled on Saturday night.

The Virginia Lottery is leaving as little of its fortune to chance as possible after generating more than $9 billion in profit in its first 30 years. It reported record sales of $2.1 billion and record profits of $606 million in the fiscal year that ended June 30.

The lottery is expanding convenient options for people who want to play its games, while keeping a wary eye on a looming array of potential gambling competitors — from a new form of horse race betting to efforts to establish casinos in Bristol and on tribal land in New Kent County.

But, in response to a question from state Sen. Frank Wagner, R-Virginia Beach, Hall said the lottery sees a potential opportunity from a U.S. Supreme Court ruling in May that allows states to legalize sports wagering.

“It feels like a natural home for sports wagering,” he said, citing the dominant role that lotteries play in sports betting in Europe.

However, Senate Majority Leader Tommy Norment, R-James City, mused about the “inherent contradiction” between “the abhorrence some legislators have in Virginia about the expansion of gaming” and the state’s financial benefit from games of chance offered by the lottery.

Norment asked Hall how the lottery regards potential competition from casinos, currently prohibited in Virginia but being pushed in cash-starved Bristol and by the Pamunkey tribe in New Kent, as well as the advent of betting on historical horse racing at Colonial Downs in New Kent and gaming parlors across the state.

“We are closely watching the conversation as it unfolds,” Hall said. He is in his first year as lottery leader after serving as communications director for U.S. Sen. Mark Warner, D-Va. He previously served as spokesman for Warner when he was governor, as well as for then-Gov. Tim Kaine, a Democrat who now also serves in the U.S. Senate.

“I have a fiduciary responsibility with the Virginia Lottery to be about protecting the brand we have created over 30 years,” he said. “I am cognizant of potential competition for the same discretionary entertainment dollars.”

Hall quantified the threat with a Maryland study that he said estimates its state lottery experiences the loss of “a detectable amount of revenue” — about $50 million — when a casino opens in the state, which now hosts six. Ultimately, he said the loss is made up over time, but could affect the flow of lottery dollars to public education, with one-third of the profits allocated to local school systems in Virginia.

He also said he defers to the General Assembly on the future of sports wagering, but added, “The Virginia Lottery wants to be part of the conversation.”

The conversation will not always be easy.

“If we are looking perhaps at entering the world of sports betting through the lottery, maybe we ought to look at putting slot machines in ABC stores while we’re at it,” Sen. Mark Obenshain, R-Harrisonburg, said sardonically.

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