North Carolina Education Lottery is sending less and less money to education
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The North Carolina Education Lottery is giving a smaller and smaller share each year to education. The reason? Players' wins are claiming more of the revenue originally meant for schools.
Why it matters: Not without controversy, the education lottery was created in 2005 to provide schools a funding boost, especially in rural counties. But despite record sales, the lottery is transferring less to education each year, a new state audit reveals.
- "At first glance, these numbers raise a lot of questions," State Auditor Dave Boliek said.
Flashback: Originally, the law required 35% of lottery proceeds to go to education. In 2007, the legislature changed that rule to a guideline.
By the numbers: The percent of lottery revenue transferred to the North Carolina Education Lottery Fund slid from 23% in fiscal year 2023 to 20% in 2024 to 16% in 2025, according to the Office of the State Auditor.
- And while the lottery raked in $5.4 billion in 2024 and a record $6.6 billion in 2025, net revenues designated for public schools decreased from $1.07 billion to $1.05 billion, the auditor's office reports.
- It's not that the lottery is substantially raising salaries or spending much more on advertising. The prize money is eating up the share: Revenue distributed to winners ballooned, from 66% in fiscal year 2023 to 70% in 2024 to 76% in 2025.
The other side: The problem, the lottery management explained in response to the audit, is that people are buying fewer traditional tickets and winning more online.
- In its first full year, digital games attracted new players and gave a crucial boost to the lottery's sales, the reply document describes. While store sales dropped by $254 million in 2025, digital games accounted for 40% of the sales.
- However, due to the design of games like Digital Instants, which are comparable to scratch-offs, the lottery was spending more on payouts.
- The opposite problem is occurring with the major jackpots, like Powerball and Mega Millions. Not enough people are getting lucky. Only two drawings exceeded $800 million in 2025, compared to six in 2024. The lottery called this "unusual, almost unprecedented" and said it dwindled excitement around the games.
Reality check: The education lottery has created a common misconception that schools have some big, reliable cash flow at their disposal. But the lottery's impact is actually negligible, especially in urban areas like Charlotte and Raleigh.
- Mecklenburg County, for instance, received $58 million in 2024, divided up for school construction, staff, pre-K, scholarships and transportation. It's less than 3% of the system's yearly budget.