Where The Lottery Ticket Sales Profits Go

Jan 9, 2016

DeShannon Korrea and Dwayne Taylor head home, lottery tickets in-hand, from the BP on Lakewood in Durham.
Credit Jess Clark

At Saturday night's Powerball drawing, one very lucky ticketholder could win more than $900 million—the largest lottery jackpot in the nation's history. Ticket sales from Powerball and other lottery games offered in North Carolina are billed as a benefit for the state’s schools. Sales in 2015 were almost $2 billion, and about a quarter of that went to fund public education in the state. But what does that really mean for school funding?

At the BP gas station on Lakewood Avenue in Durham, DeShannon Korrea is hoping for a big return on investment.

"What I got was $3.00: Two dollars for the Powerball, and then a Pick-4," Korrea said, holding out her tickets.
 
If Korrea has the winning Powerball ticket, her $2.00 could become hundreds of millions. She says if she wins, she will probably quit her job, help her family pay off their debts, and then, who knows?

"From there I have no idea. Travel, maybe?" Korrea said, laughing.

Korrea’s odds of winning are, like everyone else’s, 1 in 292 million. You’re more likely to be killed in an asteroid strike than win the Powerball.

If Korrea doesn’t win tonight, she could take comfort in the fact that part of her ticket price went to fund public education. Last year the lottery raised about a half-billion dollars for public schools in North Carolina—around 5 percent of the total education budget.

But Chris Fitzsimon of the left-leaning group NC Policy Watch says schools are not seeing an increase.

Since the first lottery ticket was sold in North Carolina in 2006, per pupil spending has gone down, adjusting for inflation. Fitzsimon says that means the lottery has not been used to supplement education funding; it’ has been used to replace it.

“The lottery funds go to education, so the money we would have spent on education isn’t spent on education," Fitzsimon said.

“How many teachers we have in the classroom, how many pre-K slots we have, how many schools we build, how many scholarships we fund is partially determined on how many people the state can convince to throw their money or to risk their money, most of whom don’t have it to throw away," Fitzsimon said.

A report from NC Policy Watch showed people in the state’s poorest counties spend the most per capita on lottery tickets.

North Carolina Education Lottery spokesman Van Denton says the lottery is not trying to target the poor and has more responsible advertising than other states. The goal, Denton says, is to run fun games to help a good cause.

“The money that has been raised is making a difference in every county in the state," Denton said. "There are schools that are being built and that are being repaired with the help of money raised through the lottery. And the only other way to raise that money to build and repair schools would be to raise property taxes.”

Lawmakers used about $100 million of the money raised last year to build and repair schools which districts usually have to pay for on their own through property taxes. But the majority of the funds—around $300 million—went to pay salaries for school custodians, office workers and substitute teachers. The remaining went to pre-K programs and scholarships.

“If the lottery wasn’t there providing those funds, where would those monies come from?" Denton asked.

Fitzsimons’s answer to that question is taxes which he says are a more equitable way to raise funding and more reliable than lottery revenues.

Still, one would be hard pressed to find anyone who says paying taxes is as fun as playing the lottery.

Back at the BP, Korrea’s boyfriend Dwayne Taylor buys a ticket too. The chance, however small, of winning a huge jackpot was just too enticing to pass up.

“If I win the Powerball," he said, "it will be great!"