The scores of losing players in this week's $425 million Powerball jackpot did more than take an extremely long shot at getting rich. Their ticket purchases also helped fund a small but increasingly important part of their states' budgets.
Changes in the nationwide Powerball and Mega Millions games have led to some of the world's largest jackpots in the last two years, boosting player interest and sales. Fueled by the growth of those games and the steady expansion of other offerings, many state lotteries last year reported record revenues and transfers to the state budgets and programs they helped fund.
For every $2 ticket, 50 cents or more might end up paying for police officers in Massachusetts, services for the elderly in Pennsylvania, or education in rural school districts in Idaho, lottery directors say.
In all, about $20 billion out of the roughly $70 billion in overall annual lottery revenues is used by states after prize money, retailer commissions, advertising and administrative expenses are taken out. Most states target their lottery revenue to specific causes, with education being the most popular.
Texas Lottery Commission executive director Gary Grief said Powerball sales in his state multiply several times as the jackpots rise, from a normal range of about $3 million per week all the way up to 10 or 15 times that amount. That means millions more dollars for public education in Texas, the lottery's beneficiary, he said.
"That's a very small piece of a big pie, but every dollar counts," he said. "It helps alleviate the drain on other revenue sources for state government."
Overall, state budget experts say lottery revenue typically represents a single-digit percentage of overall state budgets. That means a momentary sales frenzy for Powerball has little impact in the big picture, other than helping the lottery become a dependable and incrementally growing funding source.
"In the big scheme of things, we have a $16 billion budget in Oregon," said that state's chief financial officer, George Naughton. "The individual sales, the individual jackpots, do have an upward tick but it's probably not going to change from a revenue perspective the decisions that elected officials are going to make down the road."
Naughton said the lottery generates roughly $1 billion over two years to help fund education and other programs.
Increases in lottery revenues have helped maintain services in recent years during a tough time for state budgets, said David Gale, executive director of the North American Association of State and Provincial Lotteries. He said overall lottery revenues likely increased one or two percent in the budget year that ended last July, above the $68.7 billion of the previous year.
In Massachusetts, cities and towns benefit when sales spike because lottery revenues are among the state's "single largest source of unrestricted local aid," said Beth Bresnahan, executive director of the state's lottery. The money is divvied up based on a formula set by state lawmakers and used for everything from police officers to transportation, she said.
She said that during a December frenzy over the last large Mega Millions jackpot, retailers were selling $11,000 in tickets per minute — "and this was in a statewide snow emergency."
"When we see a surge in sales, it does impact the bottom line," she said, "regardless of the smaller amount of overall play it represents in our portfolio."
Only when it is used for what it was intended for. It does not always work out that way.
Arizona example:
http://www.azcentral.com/news/politics/articles/20131130arizona-lottery-revenue-funds.html
I am glad the lottery can provide some of the extras the state needs, but when a powerball or mm creates such a frenzy as it has over the last couple of years. Why are states constantly going into greater debt ?? I better hurry up and win one of these jackpots soon, just incase they get other ideas about taking more than they do.
very interesting and enlightening article. It is sad what they are doing.
Well needed fund in some states. The trick is to make sure it goes to where it's needed the most and not get wasted by incompetent officials.
Great a Win Win Situation
Oklahoma Lottery Commission says its going to the schools but I just read yesterday that our 3rd graders can't read at their levels. So where is the money going in Oklahoma
They just keep throwing money at education, if the parents are not involved, all the money in the world cannot make kids smarter.
I'm glad to have helped. Can they help mend the holes that lottery has burnt through my pockets?
Little
I read it yesterday in the newspaper ( not sure , but may still be able to read on line )
Lexington Kentucky Herald-Leader newspaper yesterday ( front page )
" College aid sapped by diversion of lottery funds "
Need-Based Support Especially Shorted
Some Key points in article
Diverted more than 100 million in lottery proceeds away from financial aid programs for college students since 2009 , and might take an additional 76 million over the next two years
Despite the fact that the General Assembly in 1998 decided that 100 % of lottery proceeds would go to education , with most of the money aimed at helping students pay for college
Its part of why the state denied need-based aid to 86,000 qualified students in 2013
Source : Parts above is from a well respected newspaper in Kentucky ( name mentioned above )
Unfortunately the money is going towards the teachers salaries, pensions and unions. These corrupt officials couldn't care less about our children but they put on a convincing face when claiming the money is to benefit the schools. Many states allocate lottery money towards these "Educational funds" and less than 10% even make it into the school system, the rest of the money gets thrown at various pet projects and departments throughout the state.
Overall the Federal/state Government throws more funding toward public education than any other developed nation yet these kids rank near the bottom in terms of math and science skills.
They forecast that two years from now, UK Chancellor George Osborne will be taking £1billion a year in tax from lottery tickets – almost double the State’s share of the takings before the onset of the economic downturn.
Duty paid on National Lottery tickets runs at 12 per cent, and from the game’s beginnings in 1994 until 2007 the amount paid to the Treasury each year ran at between £500million and £600million.
But the Government’s take has been rising steeply in line with tickets since the onset of the downturn, the figures show. It topped £800million last year and will hit £1billion in two years’ time, they indicated.
Sorry, it is not going toward teacher salaries, pensions or their union. I know that for a FACT!
Lottery money is indeed going towards states budget and not the school system as most have claimed and advertised.