State Lotteries

In March 2013, Wyoming became the 44th state to legalize the operation of a state lottery. Lottery sales across all states totaled nearly $69 billion in 2012, with profits of more than $19 billion. Most states use at least some of that revenue to fund education and 17 states mandate that revenue be used exclusively for this purpose.

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Forty-four states operate a state lottery, but how state lottery revenues are used varies across states.

  • Wyoming’s legalization of a state lottery in March made it the 44th state with such a lottery.
  • Hawaii and Utah continue to ban all forms of gambling, while the other four states without lotteries—Alabama, Alaska, Mississippi and Nevada—profit from casinos and other forms of gambling.
  • Most states use some of their lottery revenue to fund education, and 17 states mandate that revenue be used exclusively for this purpose.
  • Six states and the District of Columbia put lottery revenue in their general fund to be used for any purpose without restrictions.
  • At least six states designate some portion of lottery revenues to programs that help people with gambling problems.
  • Since implementing their lotteries, the states’ distribution of revenue has remained fairly constant. A few states, such as Missouri and Washington, originally allocated revenues to their general funds but have since dedicated all or most of this money to educational funds.
Lottery sales across all states totaled nearly $69 billion in 2012, with profits of more than $19 billion.1
  • From the 2011 fiscal year to the 2012 fiscal year, every state operating a state lottery saw an increase in total lottery sales except two; Delaware saw a 3 percent year-over-year decrease and New Mexico saw a 1 percent decrease.
  • The average year-over-year change in sales across all states was 8 percent, with California (27 percent) and Idaho (20 percent) seeing the biggest gains.
  • Profits from those sales—the revenue states receive from lottery sales—also increased from 2011 to 2012, on average 5.5 percent across all states. All but six states—Indiana, Washington, South Dakota, Delaware, New York and New Mexico—saw profits increase over this period, with profits increasing the most in North Dakota (28.7 percent) and Montana (21.3 percent).
  • The percent of profits from lottery sales states receive also varies significantly, ranging from a low of 10.7 percent in Rhode Island to a high of 50.1 percent in Oregon in 2012. 
For those states that do not currently have a state lottery, the issue is still debated regularly.
  • Those opposed to a state lottery typically argue that the revenue raised is not enough to offset social costs, such as problem gambling and exploitation of the poor, who disproportionately buy lottery tickets.
  • Democrats in Alabama have pushed several times for a state lottery to help fund education and keep Alabama money from flowing into other states, such as Georgia, which operates a state lottery. The idea was defeated by popular vote in 1999, and a proposal raised in the 2013 session failed to make it out of committee.
  • Alaska, while not in need of extra revenue from the lottery because of oil and other natural resources, also considered a state lottery in the early 2000s, but it was rejected largely on moral grounds.
  • Mississippi introduced a bill during the 2013 session to create a state lottery to fund education, but this also failed to make it out of committee. Mississippi faces the same moral opposition as Alabama and Alaska.
  • Nevada, although known for gambling, does not have a state lottery, primarily because it would compete with existing gambling industries in the state.

RESOURCES

1 National Association of State and Provincial Lotteries, http://www.naspl.org/index.cfm?fuseaction=content &menuid=17&pageid=1025
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