North Carolina Lottery players get a bigger slice of every dollar

North Carolina Lottery players are getting a much bigger piece of every dollar spent on lottery games than they were just two years ago. However, as more money goes back to players in prizes, a smaller percentage is making its way to public education. A new audit completed by North Carolina State Auditor Dave Boliek shows just how dramatically the lottery’s finances have shifted as sales have surged and digital games have taken off.

During the 2022-23 fiscal year, about 65.8% of lottery revenue went toward prizes. That number jumped to 75.8% by 2024-25. To think of it another way, about $76 of every $100 in lottery revenue is now going towards prizes. Meanwhile, the percentage going to education has gone sharply in the opposite direction.

Lottery sales soar, but contributions to education fall

In fiscal year 2022-23, North Carolina Lottery sales totaled about $4.3 billion. In fiscal year 2024-25, just two years later, sales had reached $6.6 billion. That is an increase of about 53.5%.

However, education funding didn’t experience anything close to that kind of growth. In fact, lottery proceeds sent to education funds increased from about $1.02 billion to $1.08 billion during that same period. This is about a 5.9% increase.

That means the percentage of lottery proceeds going toward education dropped from 23.4% to 16.3%. This decline in funding puts the lottery even further from its long-standing goal of directing at least 38% of lottery proceeds toward education.

According to Boliek’s audit, state lawmakers and policymakers now need to decide what they actually expect from the North Carolina Education Lottery.

Boliek states they need to step back and reexamine their goals. Should the goal be maximizing the total number of dollars generated for education, maintaining a specific percentage for education, or finding a balance between the two?

Digital games are changing where the money goes

One of the big factors for this change in revenue is how North Carolinians are playing.

During the 2022-23 fiscal year, digital instant games didn’t exist. In fiscal year 2024-25, digital instant games accounted for 40% of lottery revenue.

Digital instant games generally offer higher prize payout rates than traditional retail games. As we see digital play growing, that means more of the money spent on the lottery is being returned to players.

According to North Carolina Education Lottery CEO Mark Michalko, the old 38% benchmark doesn’t fit the realities of a modern lottery. He said the lottery must meet consumer demand and remain competitive while also trying to maximize the actual dollars being returned to education.

While the percentage has declined, lottery officials want to point out another important number: It has generated over $1 billion for education in each of the past four years.

The North Carolina Education Lottery debuted in 2006. Since then, it has raised over $13 billion for the state, including funding that has benefited more than 100 school construction projects.

That’s where things get tricky for lawmakers. Players are spending a lot more and getting a bigger percentage back in prizes. Education is still receiving more than $1 billion annually, but its slice of the overall lottery pie has been shrinking.

Now, North Carolina must decide which of those numbers matters more.

Enjoy playing the North Carolina Lottery, and please remember to play responsibly.