Why It Matters
Montana taxpayers and lawmakers rely on accurate lottery financial reporting to make sound budget decisions. A newly released audit has found that the Montana Lottery miscalculated its finances by $18.5 million over multiple years — a figure large enough to trigger a rare and serious accounting opinion from state auditors and raise questions about whether the agency can be trusted to manage public funds responsibly.
The findings come at a time when Montana is navigating significant economic developments, from a major industrial investment in Great Falls to broader fiscal pressures across state government. Sound financial oversight of state-run enterprises matters more than ever.
What Happened
The Legislative Audit Division released its findings in June 2026, concluding that the Montana Lottery had both overstated and understated various accounts, resulting in a combined miscalculation of $18.5 million. Auditors were clear that no fraud was alleged — the errors stemmed from accounting mistakes and internal control failures that went unaddressed for years.
The problems compounded quietly over time. A 2024 review uncovered additional accounting errors in which ledger entries had been stacking and multiplying across fiscal years. Auditors determined they could not fully verify the completeness or accuracy of the lottery’s financial reporting, leading them to issue a disclaimer of opinion — one of the most serious conclusions an auditor can render, effectively signaling that the books could not be relied upon.
The lottery also failed to meet a basic statutory requirement in fiscal year 2023: state law mandates four transfers of net revenues per year, but the agency made only three. The missing transfer was tied directly to a staffing disruption. The third-quarter transfer was delayed because the director of financial services was unavailable to calculate the required net revenues.
A Key Personnel Loss
That staffing gap had a human cause. Armond Sergeant, who had served as the lottery’s director of financial services since 2017, died unexpectedly in March of the year preceding the audit report. His absence left a void that the agency struggled to fill, and internal controls that may have depended heavily on one person’s institutional knowledge began to break down.
The audit also flagged a structural weakness in how accounting staff were organized. Three of the lottery’s five accounting employees had the ability to both log and approve their own accounting entries — a textbook separation-of-duties failure that creates conditions for errors to go undetected, whether intentional or not.
By the Numbers
- $18.5 million — total miscalculation identified across overstated and understated accounts
- 3 of 4 — required annual transfers completed in fiscal year 2023
- 3 of 5 — lottery accounting staff with the ability to both log and approve entries
- 2017 — year Armond Sergeant began leading lottery financial services
- June 2026 — date of audit report release
Official Responses
The governor’s office said it is reviewing the report and supports corrective actions. An accountant from the governor’s budget office, Chet McLean, had already reviewed lottery finances in March before the audit’s public release. McLean described the complexity of the review, saying, “I really had to dig, because I would get into one layer and then realize that there was another layer below it.”
State Sen. Emma Kerr-Carpenter acknowledged the audit’s findings fit a troubling pattern, noting that “every year there’s a financial audit where there are big things that need to be addressed.” The Montana Lottery Commission did not respond to requests for comment.
What’s Next
The Legislative Audit Committee is expected to convene to formally discuss the audit’s findings and weigh what corrective steps the lottery must take. Lawmakers will likely press for stronger separation-of-duties policies, additional staffing safeguards, and a clear timeline for reconciling the misreported figures.
For a state whose legislature has wrestled with a range of oversight challenges — from record ballot volumes in June primaries to infrastructure planning — the lottery audit adds to a growing list of institutions requiring closer legislative scrutiny heading into the next session.
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