By Jheri Hardaway
Staff Writer
Since its inception in 2005, the North Carolina Education Lottery has been marketed as a winning ticket for our state’s schools. But as the lottery grows into a multi-billion dollar enterprise, many North Carolinians are left wondering: is the money actually making its way to the classroom, or is it just a shell game? According to recent data from Public Schools First NC, the answer is more complex than a simple "yes" or "no." While the lottery is generating record-breaking sales, the slice of the pie dedicated to education is getting thinner.
In the 2024-25 fiscal year, the NC Lottery generated a staggering $6.59 billion in sales, a 22% jump from the previous year. Despite this massive growth, actual funding for education programs dropped from $1.09 billion to $1.08 billion. The root of this disconnect lies in legislative changes. Originally, 35% of lottery proceeds were required to go to education. In 2007, the legislature downgraded this requirement to a "guideline." Consequently, the percentage of revenue allocated to schools has steadily declined from 2024 (down 20.2%) to 2025 (down 16.4%). Currently, the vast majority of lottery revenue, 75.8% or $5 billion, is returned to players as prize money. Administrative costs and retail commissions account for the remaining 7.9%.
When that 16.4% finally reaches the education sector, it is distributed among five key areas. It is important to note that local school systems do not decide where this money goes; those decisions are made by state legislators in Raleigh. Allocations follow:
- School Construction, 51%, $549.3 Million (Building new schools and repairing older facilities)
- Non-Instructional Support, 36%, $385.9 Million (Salaries for custodians, office assistants, and bus drivers)
- NC Pre-K, 7%, $78.2 Million (Funding seats for at-risk four-year-olds)
- College Scholarships, 4%, $41.2 Million (Financial aid for public colleges and universities)
- LEA Transportation, 2%, $21.4 Million (Supporting school bus operations across the state)
The biggest point of contention for critics is whether lottery money is supplementing the state’s education budget or simply substituting for funds that should have come from the general fund. When the lottery was first proposed, it was presented as an "extra" boost for schools. However, a provision that required lottery funds to be a supplement, not a replacement, was removed in 2005 before the bill became law. This allows legislators to use lottery dollars to cover costs that might otherwise have been paid for through standard state taxes. Based on insights from Public Schools First NC, “Even if the lottery returned to its original 35% allocation, it would only cover about 14% of North Carolina’s total K-12 public school expenditures.”
While the "Education Lottery" provides critical funds for school roofs and support staff, it is far from a total solution for our state’s educational needs. As sales continue to climb, the conversation in Raleigh may need to shift from how much money is being made to how much of it actually serves the students of North Carolina.
