Where Does Lottery Revenue Go?

ByABC News
August 24, 2001, 6:27 PM

Aug. 25 -- No matter who matches all six lucky numbers in today's $280 million Powerball game, the real winners are supposed to be education, environmental protection, and other projects earmarked to receive lottery proceeds.

The 21 states that participate in Powerball along with the District of Columbia will garner at least $114 million from the $380 million in tickets bought for this jackpot so far.

Some states, like Iowa, put lottery money in the state's general fund, but most target it toward a particular purpose environmental protection in Colorado, or school aid and crime control in Montana, for example.

Many experts say, however, that even when lottery money is targeted toward a particular purpose, such as education or environmental protection, it has little or no effect.

The lottery money does go to the intended cause. However, instead of adding to the funds for those programs, legislators factor in the lottery revenue and allocate less government money to the program budgets, says one lottery critic, Patrick Pierce, a political scientist at St. Mary's College in Indiana, who has analyzed the impact of lotteries.

"In the first year of a lottery there is a dramatic increase [in spending on education]," he says.

In subsequent years, however, the increase in education spending is much smaller than in states without lotteries, Pierce says, even when adjusting for inflation, number of children in a state, and other factors.

"Given a few years, a state would have spent more on education without a lottery," he concludes.

Anger Among Former Lottery Supporters

Pierce's findings are echoed by Dave Clark, a spokesman for the Florida Education Association, a 120,000-member union of education employees.

"We hoped the Florida lottery would be something that would help our schools," Clark says. Instead, "The politicians began to use it for other things."

He believes legislators simply allocated less money to education, so that even with billions in lottery money, the net increase in education funding has been minimal.