Report: Cape Towns Get Inadequate Share Of State Lottery Aid

HARWICH – The Barnstable County Board of Regional Commissioners has released a Massachusetts Lottery funding analysis that shows the 15 towns on the Cape received only 5.2 percent of lottery money generated throughout the county in 2025. 

For comparison, the Cambridge gets 77 percent of the funds generated in that city, Somerville gets 72 percent and Boston gets a 43 percent return per dollar on sales, according to the “5 Cents On The Dollar: Cape Cod’s Lottery Revenue Gap” report approved for release by the commission at a meeting held here on July 30. 

The document was put together by Barnstable County Administrator Michael Dutton and county finance and treasurer Carol Coppola. The analysis focuses exclusively on aid received by Barnstable County’s 15 municipalities. Barnstable County government does not receive any state aid from lottery ticket sales.

The Massachusetts State Lottery generated $5.904 billion in 2025 with a net profit of $1.045 billion.

According to the report, Barnstable County communities generate substantial lottery revenue “but receive a disproportionate small share of unrestricted general government aid (UGGA) under the commonwealth’s current distribution formula.”

Unrestricted general government aid is flexible, no-strings-attached state funding derived primarily from the state lottery and gaming fund to support municipal budgets.

In fiscal year 2025, Cape communities generated approximately $231 million in net lottery sales, yet only received $12.04 million in UGGA, representing a return of approximately 5.2 cents for every dollar in ticket sales, according to the report. Cambridge, in FY2025, generated $34.3 million in lottery sales and received $26.4 million in UGGA, a 77.06 percent return rate. 

The current formula does not distribute aid based on where lottery tickets are sold. Instead, distribution is heavily influenced by equalized property valuation and population-based factors, according to the report.

The aid Cape communities receive has steadily lost purchasing power. According to the report, between 2017 and 2026, countywide UGGA increased by 29.5 percent, while cumulative inflation increased approximately 35.68 percent. 

To maintain the same purchasing power as 2017, Barnstable County municipalities would need approximately $12.76 million in UGGA in 2026, the report states. The actual aid total was $12.18 million, resulting in an annual purchasing power shortfall of approximately $583,424, a 4.6 percent decline, according to the report.

The percentages vary in different towns. Truro receives the highest return ratio at 61.09 percent. The town generated $60,645 in lottery sales in 2025 and received $37,045 in UGGA. Brewster generated $3,214,441 and received $486,179 in UGGA, a 15.12 percent return. Chatham generated $2,794,882 and received $185,311 in UGGA, a 6.63 percent return. 

Harwich and Orleans received some of the lowest percentages of returns. Orleans generated $6,251,579 and received $211,505, in UGGA, a 3.38 percent return. Harwich had the lowest return rate in the county. The town generated $16,843,854 and received $530,386, a 3.15 percent UGGA return. 

The Massachusetts State Lottery was established by Chapter 813 of the Acts of 1971 in response to growing municipal fiscal challenges. The legislature’s objective was to create a dedicated, non-property tax revenue resource that could provide unrestricted local aid to cities and towns throughout the commonwealth. Lottery sales began in 1972 and expanded significantly with the introduction of the scratch ticket in 1974. 

The report cites some structural issues in the current formula, including what is called the “wealth illusion.”

 “High property values create an appearance of municipal wealth despite many year-round residents having incomes below statewide averages,” the report reads. “In Barnstable County the median household income is $95,241, compared with the Massachusetts median of $104,828. As a result, property values can overstate the fiscal capacity of local communities and the ability of residents to absorb rising municipal costs.” 

The formula does not adequately account for millions of seasonal visitors to the Cape who increase demand on public services and infrastructure, according to the report. Elements of the current formula trace back more than 50 years, resulting in historical allocation patterns that have become embedded over time and which no longer fully reflect the fiscal realities facing communities today, the report asserts.

The report recommends that the legislature begin the process of reforming the formulas associated with the lottery and the UGGA, including establishing a minimum municipal return tied to lottery revenue generation; modernizing the UGGA formula using additional indicators beyond property valuation; accounting for seasonal population impacts on the delivery of municipal services; and creating an inflation protection mechanism to preserve the purchasing power of local aid.

Dutton said the initial draft of the report has been shared with the Cape legislative delegation as will the final draft. He said Senator Dylan Fernandes, D-Plymouth/Barnstable District, has tried to get the legislature to adopt a proposed amendment to the state budget to create a study commission to review the lottery and state aid, though it was not adopted in the final budget.

The plan is to have the Cape legislative delegation ask the legislature to study the issues in the future. That request will come with the transmittal of the final report early next week, according to Dutton.

Dutton said he and Coppola plan to update the report on an annual basis to see if there are any significant changes over the next few years.