Audit: State lottery not meeting $$$ targets for schools (despite sales increases)
The state lottery got sold to us – at its creation – as The Education Lottery. Advertising still hits us with that spin. Play the lottery and help the rugrats learn to read and write.
But the gang at state auditor Dave Boliek’s office has issued a report showing that – despite an increase in lottery ticket sales – money transfers to the schools is falling sharply:
[…] The North Carolina Office of the State Auditor (OSA) is statutorily required to conduct financial statement audits of the North Carolina Education Lottery (NCEL). Examination of recent financial statements found that while lottery sales have been increasing significantly, the percentage of lottery proceeds transferred to North Carolina’s Education Lottery Fund has fallen sharply.
From FY 2023 to FY 2025, the NCEL reported gross sales increased from $4.3 billion to $6.6 billion. However, the percentage of sales transferred to the Education Fund fell from 23% in FY 2023 to 16% in FY 2025. The total dollars transferred to the Education Fund increased from $1.02 billion in FY 2023 to $1.09 billion in FY 2024, but then declined to $1.08 billion in FY 2025. […]
This sounds a lot like the same game that gets played with The Highway Trust Fund in Raleigh and the so-called social security ‘lockbox’ in DC. In both instances, specific allegedly-untouchable set-aside funds are regularly raided for various politician pet projects. We – and the economy – typically get screwed over the long-run when this happens.
Where has the lottery commission BEEN on all this? Isn’t that group supposed to be providing some kind of oversight?
MORE:
[…] OSA conducted a performance audit to examine the factors that led to the above figures.The primary drivers are substantive growth in digital instant games, declining sales of traditional lottery games, and expansion of higher-payout lottery products. Total prize payouts increased from approximately 66% of sales in FY 2023 to approximately 76% of sales in FY 2025, resulting in a reduced percentage of sales available for transfer to the Education Fund. […]
*Surely, all that gambling industry money that got poured into the March primaries will inspire our leaders in Raleigh to make policy changes to ensure the school kiddies will not continue to be screwed as gambling grows.*
MORE:
[…] The introduction of digital instant games is new to North Carolina, and as shown in the audit, it has already had tremendous impact on the operations and finances of the Education Lottery. Digital instant games are designed to have a payout rate of approximately 87%. They have gone from generating zero dollars in sales in FY 2023, to $2.60 billion in sales in FY 2025, which represented approximately 40% of total lottery sales that fiscal year. Over the same time period, draw games and scratch-off tickets – which have lower prize payout percentages – both saw a decrease in sales.
State laws guiding and regulating the Education Lottery were not initially designed with digital instant games in mind. As a result of the findings, auditors recommend that the NCEL work with the General Assembly to clarify North Carolina’s primary strategic objective for the Education Lottery. Specifically, a strategic decision is required to determine whether the NCEL’s primary objective is to maximize total dollars transferred to the Education Fund, maintain a specified minimum percentage to transfer to the Education Fund, or balance both objectives through clearly defined policy framework. […]
It would be nice to see the state act to fix problems before they get called out by the auditor or an independent watchdog like our website. It would engender a lot more confidence among the general public.
The auditor is doing his job. But we’ve seen this show before. There’s a splashy report that makes waves for a few days among the Raleigh drive-by media. Then, everything goes quiet and nothing more is said or done.
The only way to achieve good, ethical, honest government is to watch it – and its operatives – like a hawk.
