When reviewing exemptions, what are methods being used to verify that income from lottery tickets sales do not exceed 50% of seller's revenues? We're a small shop and have only a few C-stores that sell them. We do require that separate lottery accounts are maintained.

When auditing this, I have typically seen evidence of a percentage provided by an employee of the business. A few banks will get the percentage in writing from the business with a signature from the business employee providing the information, but most will just have their employee document the conversation they had with the business customer, recording the percentage provided and the person they talked to.

As long as there weren't other facts or circumstances that made me question the credibility of the listed percentage, I have never had a problem with either of these approaches, especially for smaller financial institutions like yours.

Since they get maybe a nickel of income for a ticket, they would have to be selling a lot of them compared to other activity at a typical store. Many banks just have the customer self-certify or if they were co-operative, you could always ask for a copy of their financial statements.

Excellent advise! Thanks Adam and Randy!

We look at total ACH in, cash in and other deposits in as revenue, then look at the total the lottery commission withdraws, divide the two for a percentage. Obviously what the lottery takes is the sales total and not the revenue the store makes from selling it so we're way overestimating revenue but it's always such a small percentage, never exceeds the allowable dollar amount.

We always used financials if we could get them. If not, we has a handy spreadsheet that we would use to figure percentages. We'd do rough estimates and determine if it was anywhere near 50%. They are more around 0.50%.

We have the customer sign an annual certification that indicates the revenues of the company from lottery.