The system includes a central computer system (10), a plurality of lottery agent terminals (44) in direct dial-up communication with the computer system over the telephone line, and a plurality of lottery game terminals (45a-45h) associated with each lottery agent terminal (44) and coupled in parallel for serial communication with said lottery agent terminals. The central computer system consists of three minicomputers (16, 20, 24) intercoupled on a common network. Each minicomputer includes a data memory storage disc and display keyboard. A first of said minicomputers (16) provides a primary central processor for maintaining a lottery system data base.; The lottery agent terminal (44) is connected for encrypted communication with the central computer (10) and provides statistical data from lottery game terminals, communicates high-tier lottery wins and malfunctions (including security breaches), provides a hard copy audit trail of significant events, provides a means of ticket validation and payment record, and provides daily and weekly accounting information on demand as necessary to the central computer and the lottery agent.