Lottery Revenue Fails to Make Significant Impact

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Lottery Revenue Fails to Make Significant Impact

Special Report - September 25, 2007
In contrast to claims by gambling advocates that government-sponsored lotteries provide vital revenue for public education, an investigation by CBS News has found that funds generated from state lotteries cover just a “fraction” of overall education spending. The report challenged the notion that lotteries make a significant contribution to education budgets, pointing to states like California where lottery dollars account for a mere 1.4 percent of overall education spending. The report also found that the percentage of state spending on education is down or flat in 21 of the 24 states that dedicate lottery proceeds to education. Specifically, education spending has dropped by six percent in Washington, five percent in New York, and four percent in Missouri since state lotteries were enacted. Dawn Netsch, a former state representative in Illinois who voted to approve the lottery in the 1970s, told CBS News that lottery money simply supplants (or replaces) funds already devoted to education that legislators then spend on other projects.

In North Carolina, the total amount generated from the state lottery during its first fiscal year of operation represented less than two percent of the state’s 2006-07 general fund budget and only three percent of the overall education budget. Lottery revenues came in nearly 25 percent below expected amounts, resulting in just $313 million earmarked for education, compared to the $425 million initially budgeted by state lawmakers. As a result, state legislators budgeted only $350 million in net revenue from the lottery in the 2007-08 fiscal year.