Record Lottery Sales Raise Questions About School Funding

North Carolina lottery sales hit a record $6.6 billion last year, but a new state audit shows public schools didn’t see the same growth in funding.

Even as ticket sales surged, the share of lottery money going to education kept shrinking—a trend auditors say has been happening for years. State Auditor Dave Boliek said many residents naturally expect school funding to rise when lottery sales jump, but the numbers tell a different story. Over the past three years, lottery revenue climbed by more than $3 billion, while education contributions stayed mostly flat.

That gap triggered a deep financial and operational review of the Education Lottery. According to the auditor’s office, the goal is to better understand what kind of return schools are really getting from the lottery system.

What the audit found

• FY 2024:

  • Ticket sales: $5.38 billion

  • Net proceeds for education: $1.061 billion

• FY 2025:

  • Ticket sales jumped to $6.59 billion

  • Net proceeds rose slightly to $1.095 billion

• Despite the higher dollar amount, the percentage going to schools dropped

  • 23% in FY 2023

  • 20% in FY 2024

  • 16% in FY 2025

Administrative costs also crept up, taking a slightly bigger bite of total revenue compared to the year before.

Lottery officials respond

Lottery leaders say the shift comes down to how people are playing. Fewer players bought high-margin jackpot games like Powerball and Mega Millions, while more turned to digital instant games, which now make up nearly 40% of all sales.

Those digital games pay out more in prizes, which means lower profit margins, even with higher overall sales. Officials also pointed out that jackpots didn’t climb as high in FY 2025, which usually drives stronger ticket buying.

Still, lottery representatives said the program has delivered over $1 billion for education for three straight years and expects funding to grow again. Early sales in FY 2026 are reportedly on pace to meet that goal.

The bigger picture

State law requires all net lottery proceeds—money left after expenses—to support education. Historically, that’s been around 30% of revenue, though recent years have fallen well below that mark. Schools also rely on other funding sources like sales taxes, fines, and the state’s general fund.

The audit, completed by an outside accounting firm, marks the first full state audit of the Education Lottery since 2008, raising fresh questions about efficiency, spending, and long-term benefits for North Carolina’s public schools.