In record $1.6 billion lottery, states not such big winners: experts

Thu Jan 14, 2016 3:07pm EST
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Daniel Wallis and Fiona Ortiz

DENVER/CHICAGO (Reuters) - The fervor around this week's $1.6 billion Powerball jackpot will feed annual lottery ticket sales worth tens of billions of dollars, but public policy experts estimate only about a quarter of that revenue will ultimately make it into state coffers.

Forty-four states plus Washington D.C. and two U.S. territories sold millions of tickets ahead of Wednesday's draw. It was the largest lottery prize ever offered in North America, and the biggest ever worldwide that a single ticket holder could win.

The record prize will be divided among three tickets bought in California, Tennessee and Florida, lottery officials in those states said. But the states themselves, where earnings from ticket sales usually go, have less reason to cheer.

Total U.S. lottery sales, boosted by advertisements highlighting how states spend the money on worthy causes such as education, topped $70 billion in 2014, according to the North American Association of State and Provincial Lotteries.

But research by the Rockefeller Institute of Government found that after prizes, administrative costs and other expenses are paid, the net revenue for state budgets amounted to only some $18 billion, or 26 percent of sales.

The institute's researchers, Lucy Dadayan and Donald Boyd, said states typically allocate lottery revenue to the general fund or to dedicated funds targeted at specific areas such as schools, veterans' affairs or the environment.

But, they said, legislators then normally decide how much of the lottery funds go to the dedicated programs, and often supplement funding for those programs with general revenue.

Therefore, higher ticket sales do not necessarily lead to increased state spending on those programs, nor do shortfalls in sales always result in lower spending on them.   Continued...

The winning Powerball numbers are shown after being drawn at the Florida Lottery studio in Tallahassee, Florida January 13, 2016.    REUTERS/Philip Sears