Lottery Revenue and State Budgets


Lottery is a fixture in our society, with people spending upward of $100 billion on tickets every year. It’s a form of gambling, but states promote it as a way to raise revenue — that ticket you buy at the gas station isn’t just a giant waste of money; it’s actually helping “save the children.” But how meaningful is lottery revenue in broader state budgets, and are the benefits worth the trade-offs to people losing their hard-earned cash?

Many people play the lottery because they like to fantasize about winning a fortune for just a couple bucks. That’s fine for most, but for some people – particularly those with the lowest incomes – lottery games can become real budget drains. It’s no wonder critics call them a hidden tax on those least able to afford it.

In the 17th and 18th centuries, private lotteries were common in England and the colonies, where they were a mechanism to raise money for everything from building a college to paving streets and constructing wharves. Public lotteries were even used for a short time in the American Revolution to help finance projects like laying the foundation for the British Museum and supplying Benjamin Franklin with cannons to defend Philadelphia from the British.

The modern lottery is a complex system of numbers and symbols that are drawn at random for a prize, with some governments outlawing the activity while others endorse it to some extent by organizing a national or state lottery. Most lotteries follow similar patterns: The government legislates a monopoly for itself; establishes an agency to run it (as opposed to licensing a private firm in exchange for a share of profits); begins operations with a modest number of relatively simple games; and, under pressure to maintain or increase revenues, progressively introduces new games.

Historically, the revenue generated from these games was a significant part of the federal and state budgets. During the post-World War II period, this arrangement worked well: It allowed governments to expand their social safety nets without imposing especially burdensome taxes on the poor and working class. But by the 1960s, inflation began to erode this arrangement and it became increasingly difficult for governments to keep pace with rising costs.

As a result, public lotteries began to be seen as a more viable source of funding. State lotteries now provide funds for a wide range of public services, including education. To learn more about how Lottery proceeds are distributed to communities across the state, click or tap a county on the map below or select a county name from the search box below. Funding for each county is based on Average Daily Attendance (ADA) for K-12 school districts and full-time enrollment for higher education and specialized institutions. These amounts are updated on a quarterly basis. You can also download the data for a more comprehensive look at how Lottery dollars are dispersed.