North Carolina’s Education Lottery was never a consensus idea.
The Senate vote deadlocked at 24–24, requiring then–Lt. Gov. Beverly Perdue to cast the tie-breaking vote. Lawmakers were divided not just over the expansion of state-sanctioned gambling, but over whether a lottery would actually deliver on its central promise: more money for education without raising taxes. Many supporters voted yes only after assurances that lottery revenue would supplement, not replace, existing education funding. That promise held together a fragile majority.
Nearly two decades later, that skepticism looks well-founded.
Supporters of the lottery are quick to point out that education funding from lottery proceeds remains historically high — and in raw dollar terms, that is true. The lottery now transfers more than $1 billion a year to public education. But that fact does not answer the question taxpayers were promised in 2005: whether the lottery delivers a transparent, reliable source of new funding that grows in proportion to sales and strengthens classrooms. On that measure, the lottery has fallen short.
Lottery sales are now at record levels, exceeding $6.5 billion annually. Yet education is receiving a shrinking share of each lottery dollar, even as sales soar. A growing portion of lottery revenue is absorbed by prize payouts, marketing, and administrative costs, leaving education to take what remains. Sending a large check to Raleigh is not the same thing as strengthening public education. What matters is not the size of the transfer alone, but whether lottery revenue expands classroom resources rather than simply reshuffling state dollars.
Concerns that critics raised for years were formally confirmed in the State Auditor’s most recent audit, released in late December. As the report explains, “as lottery sales increase, the amount paid to the State’s Education Lottery Fund also increases.” Still, those gains are matched by rising “prize expense, retailer commission expense, and gaming system vendor charges.” Even in years of booming sales, education funding can stagnate or decline in relative terms — not because of any single year’s outcome, but because maximizing ticket sales becomes the system’s primary objective.
This outcome reflects a structural flaw critics warned about from the start.
State lotteries are designed to drive participation, not educational outcomes. Higher payouts and aggressive marketing fuel sales growth, but they also reduce the net proceeds available for public purposes. As digital games expand and prize structures grow more generous, education funding becomes a residual beneficiary rather than the central goal.
Compounding the problem is how lottery revenue is treated in the state budget. Instead of serving as true new money for schools, lottery funds have often been used to supplant traditional appropriations. When lottery dollars are counted toward education spending targets, lawmakers can redirect general revenues elsewhere while claiming schools are being helped. The result is less transparency and less accountability for how education is funded.
To be clear, this is not an argument that the lottery sends no money to education. It is an argument that the structure of the lottery makes it a poor tool for delivering honest, accountable education funding, regardless of how impressive the headline numbers appear.
There is also an uncomfortable truth about who pays for this system. Lottery participation is disproportionately concentrated among lower-income and economically distressed communities. In effect, North Carolina relies on gambling losses from its most vulnerable residents to fund public services, while education receives a declining share of the proceeds. That raises serious ethical questions about whether this is a fair or responsible way to fund schools.
Public education is a core responsibility of government. It should be funded openly, debated honestly, and prioritized transparently — not propped up by a gambling enterprise whose success depends on encouraging people to lose money.
The strongest and most honest solution is to end the state lottery and return to direct appropriations for education, just as we do for public safety, transportation, and health care. Doing so would restore clarity to the budget process and ensure education funding decisions are made in full view of the public.
If lawmakers are unwilling to take that step, reform is the minimum obligation. At the very least, the General Assembly should require that a clear majority of lottery proceeds go directly to public schools, strengthen transparency requirements, and demonstrate — plainly and publicly — that lottery dollars are truly adding to education funding rather than replacing it.
If the lottery is truly an education success story, its defenders should be able to show — clearly and consistently — that rising sales lead to rising classroom investment, not just rising prize payouts and marketing budgets. Until they can, North Carolinians are right to question whether this system serves students or merely sustains itself.
The Education Lottery passed by a single vote because lawmakers understood the risks and trade-offs involved. Twenty years later, those concerns have not faded — they have materialized.
Whether by ending the lottery or reforming it for transparency and accountability, it is time to revisit a promise that was controversial at birth and increasingly difficult to defend in practice.
