Audit says Montana Lottery miscalculated finances by $18.5 million

A state audit says the Montana Lottery’s books were off by $18.5 million over several years, a breakdown that did not involve missing money but did expose serious accounting failures at one of Helena’s most visible state agencies. For Lewis and Clark County residents, the issue matters because lottery revenue is supposed to move on a set schedule into the state scholarship fund and the General Fund.

The Montana Legislative Audit Division’s June 2026 financial audit covered the fiscal year ended June 30, 2024, and said the lottery overstated and understated its accounts by that amount. Auditors pointed to delayed financial transfers, inaccurate ledger entries and weak oversight of routine reporting, all signs that basic controls were not working as they should. The audit division says its mission is to increase public trust in state government by reporting timely and accurate information about agency operations, technology and finances.

The report also found that in fiscal year 2023, the lottery made three transfers instead of the four required by statute. Montana law has long required quarterly transfers of lottery net revenue, a safeguard meant to keep public money moving into state accounts on time. The audit said the problems did not end there, and that additional inaccuracies showed up in 2024 after the earlier reporting troubles had already begun.

One key factor was the death of Armond Sergeant, the lottery’s financial services director. Sergeant, who had held the role since 2017, died unexpectedly of natural causes on March 9, 2025, in Townsend at age 55. After his death, the agency struggled to complete financial statements, support records and transfers on time, underscoring how dependent the operation had become on one employee.

To sort through the mess, the lottery asked Chet McLean, an accountant in the governor’s budget office, to review its finances in March 2026. McLean later told the Lottery Commission that the issue was one of the more complicated accounting questions he had faced in his career. The five-member Montana Lottery Commission, appointed by the governor, oversees the agency’s games, ticket prices, prize structures and interstate gaming agreements, but the commission declined to answer questions about the failures or how it planned to fix them.

Even without any allegation of fraud, the audit leaves a sharp warning for Montana taxpayers. Lottery proceeds are public money, and errors that large can ripple through the state budget, scholarship funding and confidence in the way Helena agencies handle money that belongs to everyone.