Report: NC Should End Lottery

Special Report - February 10, 2011

 A recent report from the John Locke Foundation, calls for the North Carolina “Education” Lottery to be completely disbanded because it has failed to boost education funding in the state. The report argues that though “the North Carolina Education Lottery was sold as a way to boost education spending … research shows that has been a false promise.”

Analyzing recent spending trends in the state education budget, the report found that “rather than supplement education spending,” lottery funds have instead been used only to supplant general fund appropriations for education. As evidence of that fact, the report recalls former Governor Mike Easley’s 2006 announcement that roughly $200 million dollars in expected lottery revenues would be used to take the place of budgeted education monies allotted for by the general fund. Current Governor Beverly Perdue’s authorization of a $50 million transfer from the lottery reserve fund to the general fund ($12.4 million has yet to be returned) is also cited as proof that lottery funds are routinely subject to misuse.

Further findings in the report include:

• The “education lottery” premise is baseless, as states without education lotteries actually maintained and provided education funding more than those states with education lotteries.
• States with “education lotteries” have declining rates of spending for education when compared to other budgeting priorities.
• Without accounting for supplanted education funds, the lottery requires about three dollars to produce just one dollar of education funding.
• The best predictors of a county’s lottery sales are consistently poverty, unemployment, and property tax rates.
• In the top 10 counties with the highest lottery receipts, the average amount of money spent on lottery tickets per adult is $389, about twice the statewide average.
• Out of those top 10 counties with the highest lottery sales per adult, eight of those counties are among the most economically distressed in the state, including: Edgecombe, Halifax, Hyde, Lenoir, Martin, Tyrrell, Vance, and Washington Counties.

The report concludes with a recommendation to “end the state lottery and return to a more honest direct form of funding.”

“The lottery was strongly opposed by citizens, legislators, and groups from all sides of the political spectrum who recognized that it is a a predatory way for the government to separate citizens from more of their hard-earned incomes,” said Bill Brooks, president of the North Carolina Family Policy Council. “This report is just the latest in a long history of evidence that North Carolina made a mistake by going into the gambling business, and the best option is to get out of it completely.”

Related resources:
Lottery Funds Transferred - February 1, 2011
Study Says Lottery Entices Poor - January 7, 2011
Lottery Funding Shifts From Education - September 30, 2010
Lottery Revenues Rise With Unemployment - February 2, 2010
Economy Down, Lottery Up - July 11, 2009
Governor Seizes "Education" Lottery Funds - February 27, 2009
Lottery Sales Holding Steady - February 19, 2009
Lottery Revenues Up As Economy Slows - September 18, 2008
Lottery Revenue Fails to Make Significant Impact - September 25, 2007
Easley Recommends Increasing Lottery Prize Payouts - February 23, 2007
A Lottery Education: Dispelling the Education Lottery Myth - [PDF] - Findings - April 2004

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