What US States Really Do With Lottery Money

Lotteries have been a part of American life since 1612, starting with the Jamestown Lottery to help fund important projects for the colonies. Today, they similarly help states earn money for important programs. According to the North American Association of State and Provincial Lotteries, Americans spent $113 billion on lottery tickets during fiscal year 2024 alone. This highlights the popularity of lotteries, which are often touted as a way to help improve and fund social welfare. However, how lottery money is ultimately used is different in each state. 

In 2022, lotteries like Powerball, Mega Millions and state-run scratch-offs brought in over $97.8 billion. Out of this, $65.2 billion was given back out as prizes, with the remaining $28.3 billion worth of  proceeds going to different state programs. Most states use some of their lottery money to help with educational projects like funding public schools and/or scholarships. Some of this lottery money also goes to social services, including help for veterans, environmental projects, tourism, economic development, and even programs to treat gambling addiction (there can be a lot to know about how to help someone with a gambling addiction).

The modern concept of state-run lotteries and the appropriation of that lottery money to pay for educational and social projects actually started in 1964, when New Hampshire established the first state lottery. Other states then started their own lotteries as a way to make money without having to raise taxes. Let's dive into some of the most profitable state lotteries in the country to see how they spend those revenues.

For starters, among the states that have sold the most winning lottery tickets are the three largest lotteries in the country: New York, California, and Florida. New York is actually America's largest and most profitable lottery, (as well as being one of the states where you can win the lottery more than once) with the state using its lottery revenues to support various public K-12 education programs throughout the state. California similarly directs much of its lottery money to K-12 schools, community colleges, and universities while Florida has a dedicated Education Enhancement Trust Fund, that sends nearly all its lottery proceeds to public schools, universities, colleges, and financial aid programs like the Bright Futures Scholarship.

Among the states with the highest lottery revenues, the Massachusetts Lottery achieved record breaking revenues of $6.165 billion in 2024, a 0.3% increase from the 2023 record of $6.148 billion. Much of this revenue is channeled to local municipal aid and public services such as infrastructure projects and education services.

However other, smaller, states also similarly use their lottery revenues to primarily focus on education. For example, Kentucky's lottery has made over $2 billion, and a hefty slice of that money goes directly into education. This includes the Kentucky Educational Excellence Scholarship (KEES), which awards college tuition funds to graduating Kentucky high school students.

While education is a primary repository for lottery funds across the country, not all states stick to this trend. The Illinois Lottery, with lottery revenues of $2.088 billion, started using specialty lottery tickets to fund specific causes. For instance, the state's "Ticket for the Cure" scratch-off game supports breast cancer research, while other specialty tickets fund veterans' programs, HIV/AIDS awareness, homelessness prevention, and even multiple sclerosis research. This targeted approach allows players to contribute directly to causes they care about.

In fiscal year 2024, Colorado made over $900 million from its lottery. However, unlike many other states that use their lottery money for schools, the Centennial State spends its lottery winnings on nature conservation and environmental projects. A big chunk of the money, 50% in fact, goes to Great Outdoors Colorado (GOCO), which focuses on nature conservation and stewardship of Colorado's many outdoor projects. State lottery revenues also help fund the Conservation Trust Fund, which helps local governments buy and take care of public lands, as well as the Colorado Parks and Wildlife Department.

Indiana's lottery sales exceeded $1.7 billion in fiscal year 2023, and helped support a myriad of causes. For starters, Indiana directs a portion of its lottery revenue toward its Lottery Surplus Fund, which helps to lower the excise taxes paid by vehicle owners in the state. Funds also go towards retirement and pension funds for teachers and public safety workers, which helps to support a strong workforce and boost the state economy and community.