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Where does all the lottery money go?

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By Bob Confer

Being that I often write about public policy, I routinely get hit with this question: “Where does all the lottery money go?”

A narrative that many people believe is that when the state lottery was instituted — 55 years ago this month — it was intended to cover the cost of public schools throughout New York. While it’s true that lottery income was intended to help education, it was never supposed to cover it in full. Despite the number of tickets New Yorkers buy, it simply can’t. 

The New York lottery brought in $8.59 billion in revenues in fiscal year 2020-2021. After taking away prize money and sales, the system was left with $3.59 billion in profits (a whopping 42%), which was invested in school aid. For that same year, public schools had cost New Yorkers – at the federal, state, and local levels of taxation — $69.4 billion.

So, as you can see, gambling proceeds just put a dent in spending, accounting for slightly more than 5% of expenses. Even if New York’s educational spending was at the national average ($13,500 versus $30,800), we’d still be looking at the lottery covering less than 12% of the total cost.

That doesn’t mean that it’s not helping.

In 2020-2021, the Lottery issued $49.3 million to schools in Niagara County, $11.1 million in Orleans County, $14 million to districts in Genesee County, and $13.1 million to Allegany County schools.

Had those funds not been in play, my school district Royalton-Hartland, for example, would have had to lean on homeowners for another $2.1 million in 2020-2021, all things being equal. Other examples of district-specific lottery revenues are Lockport at $8.3 million, Batavia at $3.8 million, and Wellsville at $2.5 million.

Since the inception of the lottery in 1967, it has paid out $75.1 billion to schools. The cumulative impact at the local level is staggering: Since 1977, the aforementioned individual districts have received $59.7 million, $200 million, $93 million, and $58.2 million, respectively (individual school district payments prior 1977 are unavailable because State aid to education was distributed through county or city governments).

I don’t care if you live in a rural school district or a big city system — that’s not chump change. It’s the difference between keeping and losing teachers, the arts, and sports or it’s money invested in labs, learning spaces, and sports fields.   

More will be coming. Despite the massive revenues, 2020-2021, like the year before it, was a down year for the lottery, what with the impacts of the pandemic and its associated lockdowns and limitations that stymied ticket purchases because of fewer people in stores and bars. Expect a significant rebound this year now that New Yorkers are beck to, mostly, living life normally. Prior to the pandemic, this form of state-run gaming was a growth industry — the New York lottery’s 2018-2019 revenues were 34% higher than they were in 2009-2009 while its payments to schools were up 39%.

When the lottery began in 1967 its first slogan was “Your Chance of a Lifetime to Help Education”. 55 years into the program, it has been almost a lifetime, and the lottery has been doing what was intended, helping education.

It’s not the end-all-be-all for funding our schools, but it’s a start.  

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