Lottery tries to juggle tickets, prizes, schools
Published October 1, 2014
By Patrick Gannon, published in The Rocky Mount Telegram, September 30, 2014.
For every dollar spent on the N.C. Education Lottery in the latest fiscal year, slightly more than a quarter – 27.3 cents – came back to the state for education.
In this fiscal year, which ends June 30, lottery officials anticipate that number will creep down to about 26 cents. At the lottery’s launch nearly a decade ago, 36 cents per dollar spent on lottery tickets went to the state to pay for school construction, scholarships and other education needs.
Why has that percentage declined over time?
When the lottery started selling tickets in 2006, the N.C. General Assembly mandated that 35 percent of its revenues go toward education. (It is the Education Lottery after all). But after disappointing sales numbers for the first year or so, lawmakers repealed the mandate, giving the lottery more flexibility to dole out more prize money in hopes of selling more tickets.
Since then, the percentage of lottery revenue paid to players in prizes has increased every year, according to a chart provided by the lottery. In the fiscal year that ended June 30, 61.5 percent of revenues went toward prizes, up from 51.7 percent in 2007. Meanwhile, the percentage of lottery revenue going back to the state for education has declined each year.
But because more tickets are being sold, lottery dollars for education have increased every year.
In other words, even though education gets a smaller percentage, it gets more lottery money because the pie is bigger.
Last fiscal year, the lottery gave the N.C. General Assembly more than $503 million. This year’s lottery budget forecasts more than $520 million coming to state coffers.
During this year’s state budget debate, a top lawmaker suggested that the N.C. General Assembly should take a look at the percentage of sales the lottery is returning to the state for education. It’s unclear whether that will happen.
But through the state budget, lawmakers created a special lottery oversight committee with 14 legislators expected to delve into lottery administration, budgeting and policies.
The committee also will examine the lottery’s efficiency and review other states’ games to identify ways to maximize contributions to education in North Carolina.
In other words, the lottery may get more scrutiny from the legislature over the next couple of years.
To increase sales, lottery officials recommend more advertising.
Today, the lottery is allowed to spend 1 percent of its revenue on ads. But lottery officials would advise against any attempts by lawmakers to once again mandate a percentage of revenues that must go to education because that likely would require a corresponding decrease in prizes.
They pointed to other states, like Texas, that lowered prize payouts in order to give higher percentages back to the state and suffered significant decreases in sales.
In the lottery business, states sell prizes.
“I don’t know of many business people who would say the way to grow sales and profits would be to make … your product less valuable to the consumer,” said lottery spokesman Van Denton.
Creating the proper balance between lottery sales, prize amounts and returns to education is a delicate act that many state lotteries must try to master.
And in North Carolina, it’s a balancing act that lawmakers might soon jump into.
And if there’s a way to return more money for schools, most North Carolinians would say it’s worth it.
October 1, 2014 at 7:11 pm
Norm Kelly says:
Let's look at the facts & figures for an easy explanation. I know, every lib out there, including most that write for the N&D and the entire N&D editorial staff, just stopped reading. It's not their fault; don't blame them. It's in their DNA - being libs they are pre-disposed to ignoring and despising facts. I'll go on anyway.
When the lottery was started in 2006, 8 years ago, the state-sponsored gambling scheme was returning 35 cents on every dollar of ticket sales. The most recent information reveals that 27.3 cents of every dollar of ticket sales went to the government monopoly education system. Projections are that only 26 cents of every dollar of ticket sales will go to government monopoly schools in the future (or coming) year.
So, when Gov Mike told us that implementing state-sponsored gambling would be a panacea he was TELLING ANOTHER LIE!?!!! At the same time that state-sponsored gambling was being foisted upon us, private gambling was being eliminated because it preyed on the poor, and the outcomes were uncertain, meaning that private businesses COULD be taking advantage of gamblers. Like state-sponsored gambling doesn't take advantage of those who participate?! What a ludicrous idea! But that's for another post. Let me get back to the facts.
So, the most that was ever 'given' to the school monopoly was 35%. The newest projections have it down almost 10% to only 26%. What an absolutely inefficient way to raise money for ANY government endeavor; and horrible for education as it teaches kids that so long as the money goes to schools then gambling is fine. All government is inefficient by default. But to make a government scheme this inefficient is scary, and should be illegal.
So, how can we make the money going to education better, more, less likely to teach kids that SOME gambling is good. Let's stop gambling in the state altogether. Or, I should say, let's eliminate ALL state-sponsored gambling, and put it BACK in the private sector. First, we eliminate the state-sponsored gambling scheme that is so inefficient. Second, the state raises money, with no effort, by taxing legal private-sector gambling. It does NOT take a new bureaucracy to run a private-sector gambling establishment as it does to create a state-sponsored gambling scheme. So the state save first by eliminating a whole bunch of state workers, many who make way too much money anyway.
Ask yourself one simple question, keeping in mind the 35% or 26% state numbers. How much money goes to education when the state budgets money for education? When the state budget for education is $1BILLION, how much of that $1BILLION goes to education? Trick question. ALL OF IT! Exactly $1BILLION would go to education when the budget is set at $1BILLION. Cuz that's what the budget means!
So, instead of 26% of the money going to education, the state saves again (or makes more) by eliminating state-sponsored gambling. Cuz if the state were to raise the education budget from $1BILLION to $1.25BILLION, then exactly $1.25BILLION goes to education. Not 26% of any amount; but ALL of that amount. What is the most inefficient way to raise money for education? The Lottery. Even when you call it 'the Education Lottery' to make people feel good, it's still the absolute MOST INEFFICIENT way of raising money.
Any other way to raise money for education has the net effect of raising 100% of the money for education. Not 35%. Not 26%. But 100%. If you raise the sales tax in the entire state by 1/4 cent, and all of that money is put in the education budget, how much of that 1/4 cent actually goes into the education budget? 100% of it! This is simple math, even for libs. Though most libs have missed it and are completely confused.
Was state-sponsored gambling, the lottery, the panacea that Gov Mike told us it would be? Hardly. Has school construction become easier because the lottery is paying for schools? Has teacher pay grown dramatically because the lottery is paying for so many other things that the education budget can afford to raise teacher pay? Hardly. So far from a panacea that it's laughable. Except it's so serious that not even libs should be laughing. Go back & listen to all the things Gov Mike said the lottery would solve, or at least help. Virtually the only thing that Gov Mike didn't tell us would be better because of state-sponsored gambling was snow on the roads. Other than that, everything else would improve because the state got into the gambling business. How's that working out for you?
Eliminate state-sponsored gambling. Allow private business gambling establishments, where it should be. Raise the necessary taxes & fees to support education. Promote private schools through scholarships. Promote charter schools, cuz they are less expensive for the government(s) to operate. There are so many options BESIDES state-sponsored gambling that it's time we stop whining about state-sponsored gambling's failures, and FIX IT. Not like the demons in Washington want to do with the failed Obamacancer and play around the edges. But actually FIX the problem. First, repeal state-sponsored gambling. Second, repeal socialized medicine phase 1.
Now that is what's called a panacea for EVERYONE!!
