Bad Math: North Carolina Education Lottery

November, 27, 2007

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“Put your pants on. We’re going to Raleigh.” -Patti Kennedy

The person quoted above won $200,000 on a lottery scratch card last week, but spends $500 every month on the North Carolina lottery.  That’s $6,000 every year—which when added annually to

your average mutual fund can easily appreciate to almost $100,000

any bank account would be over $50,000

in about ten years

in just eight years.  Gambling addiction is a huge problem, particularly among the poor and uneducated, and is fueled heavily by the North Carolina Education Lottery.

How much does the lottery actually contribute to our education system?

The graph on the left comes from the NC Education Lottery Website, behind a link titled: Where The Money Goes.  It describes the “breakdown of the net proceeds to education.”  The graph on the right is definitely NOT found on the Lottery’s website.  The pie represents the total 2007 North Carolina Education budget, showing the lottery’s contribution: 1.2% for the fiscal year.  (The cut of the net revenue that goes to the private corporation that runs the lottery: more than $60 Million last year alone.)

The North Carolina State Lottery Act and the 2005 Appropriations Act were passed thanks to a big push from Governor Mike Easley, under the guise of badly needed education funds.  In lobbying for this bill, Governor Easley failed to describe the thousands of Patti Kennedys every month that don’t win and struggle to put food on the table and pay their mortgage. It’s nobody’s fault but the person who throws their entire paycheck away on lottery tickets, but that does not justify state sponsored gambling with shamefully thieving odds.  (Cue the joke about the lottery being a tax on people who can’t do math.)

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  • Vince
    11/28 07:23 PM

    I remember the first time I bought a ticket.  It was after Powerball was introduced and it had reached a 100+ million jackpot.  I was standing in line waiting to buy beer.  The two people in front of me were buying tickets like mad.  I decided to buy for shits n’ giggles.  I heard someone behind me say to their friend, “Hey, its for education.”  After that, everyone at the counter and in line chuckled a bit. 

    That story is basically sums up a common point that people know (especially friends of mine who work in the NC Educational system) that the lottery as a means to funds education is a joke.  All the lottery does is glorify the 21st Century American Dream:  Get something for nothing.

    But you better believe I’m gonna play some numbers tonight.  $1 for 155 Million?! (well, $116,250,000 annuity or $57,750,000 cash payout?)  Hey, it could happen.  American Dream or not!

  • Adam
    11/29 12:26 AM

    1. People want to play.
    2. People not forced to play.
    3. Some money goes to good cause.


  • JZ
    11/29 01:14 PM

    The proposed national budget allocates 59% of tax revenue to military spending. 6% is proposed to be allocated to Education. Find this information here:

    (Its killing me now, because I can’t find the link, but I had read that 40% of federal taxes from NC citizens go toward that Military budget while only 2-3% goes toward Education)

    My point is this: a 1 or 2 percent shift from Military to Education would result in a minor (+/- 4%) decrease in the overall Military spending and a major (+/- 33%) increase in Education spending.  I’m not sure if 1-2% is the right amount, but I put it out there to illustrate what could be achieved with a meaningful and conscious shift in priorities in this nation.  The same principle applies to state spending as well.  The money is there without the need to seek further subsidizing through the lottery.

    Its a great irony that lottery funds are dedicated to education, which, if improved, will inherently produce a more intelligent citizen, less likely to be the fool who parts with their money…...The fat lady is hanging out with the pig in a very warm Hell…..

  • 150
    11/29 01:46 PM

    I’ve always taken the stance that I don’t have a problem with the lottery.  After all, “A fool and his money are soon parted”, right?  If that money goes to something that I see as beneficial, like education, then that’s fine with me. 

    Here’s the problem, if I understand things correctly, that makes me wonder if my attitude is ignorant of the larger picture, and maybe completely wrong:  When the fools who lose all of their money find themselves unable to afford basic things like decent shelter, food for their children, things like that, and turn to goverment assistance, then ultimately all of us are paying for their choices, right?  If these people really develop gambling addictions that require help, and it’s because of the lottery, then I don’t want to support that.  I’d rather just give my money directly to education. 

    It’s another one of those issues that I just don’t know the answer to.

  • erin
    11/29 02:48 PM

    “which when added annually to your average mutual fund can easily appreciate to almost $100,000 in about ten years.”

    i’m a well-educated, fairly smart adult that has some disposable income but even i don’t know how to start a mutual fund.  i’m intimidated by the thought of all of that, and i’m weary of some stock broker dude stealing my money. 

    i’m guessing the woman who spends that money in the lottery thinks similarly to me.  although, i know well enough not to spend it on the lottery.  (i pretend buying dumb stuff at target is a better investment of that disposable income!)

  • Adam
    11/29 04:45 PM

    Hey Mark,

    I think you are taking my argument to a logical extreme. Do you think that the ill affects on society are the same for buying a lottery ticket as shooting up heroine?

    Which is a better use of $2 per day: Coffee or lottery tickets? I am not at all convinced that the ignorant answer is the lottery ticket.

    Interesting discussion everyone. After reading this article yesterday, I blogged about it on my site if anyone is interested.

  • 150
    11/29 05:40 PM

    Mark, you’re probably right, but as I said in my previous post, there is a societal effect from the lottery, which everyone ultimately pays for.  The coffee drinker, while not any smarter, is only affecting themselves.

  • 150
    11/29 05:48 PM

    Whoops, I meant Adam, not Mark.

  • Adam
    11/29 06:13 PM

    I would argue that is another logical extreme. Someone who buys so many lottery tickets that they are not able to afford food (and then presumably go on food stamps, etc?) I don’t have the statistics on that, but i would bet the money generated for education outweighs those costs by a great deal.

  • Adam
    11/29 11:48 PM

    First off - No substance? Ouch. If there’s no substance it’s because you created a straw man and then burned it.

    But let me see if I can play the role of yin to your yang. If I’m not mistaken, you bolded the amount per month the person spent on lottery tickets and you provided a fact(?) about the returns if that money was invested. That doesn’t imply that you know best about how other people should spend their money? You provided the opportunity cost of that person’s decision!

    I use brute political labels in some of my other blog entries to have fun with the two (now three) people who read my blog. But I’ll gladly summarize my position on this topic (whether it applies to you or not):

    1. People want to play the lottery.
    2. People are not forced to play the lottery.
    3. Some people feel that others should not have the ability to play the lottery.
    4. The rationale for the above is often that the lottery is played by those who are not acting in their own best interest.
    5. I submit that those who feel that lottery tickets are not the best use of money are correct.
    6. I also submit that those who pity the ignorant for their lotto-playing ways are ignorant of their own equally ignorant spending habits.
    7. Trying to control the spending habits of other people is not only antithetical to capitalism, but also an affront to freedom.
    8. Any money to go towards education is a plus.   
    9. If it is preferred that the lottery make up a larger share of the education budget, we will need to make some tweaks to how it is managed and drastically increase the number of people gambling (was that your point?)
    10.  Saying politicians rationalize gambling addiction by having a lottery is akin to saying they sponsor alcoholism by running the ABC stores. I do not agree with that.
    And as far as talent, I have a long way to go. I would never think of using the phrase:
    “My entire post is FACT until the moment that I speak my mind” :) I really like that line.

  • JZ
    11/30 03:05 PM

    Correct me if I’m wrong, or don’t see all the angles:  Its fine for folks to do what the want when its their money, their time, in the private sector.  It gets dicey when the government starts controlling leisure- and commerce-based activities.  I’ve always had a big problem with the ABC stores…what the hell are they regulating?  Morality?  Government Income (I’m sure the markup is pretty good)?

    Why does the government have to get into the gambling business at all to raise funds for education?  What else isn’t working properly that they cannot finance education using the existing tax base?

    Its like income tax: rather than overhauling the system, legislators continue to add more stopgap solutions to handle loopholes. Or the concept of writing a patch for a computer application rather than rewrite the base code in the file. 

    I think the lottery is a band-aid on a larger issue about bureaucratic inefficiency.

  • JS
    05/13 12:27 PM

    I happen to work in the education system.  I don’t have a problem with there being a lottery.  I can’t keep a person from spending their money (or my tax money) on lottery tickets anymore than I can keep them from spending it on booze, cigarettes or strip clubs, etc.  I just don’t think it should be called an “education” lottery.  It was simply a term used to get it passed.  Yea, so small, itsy-bitsy portion may go to education, blah, blah, blah.  Yes, being in education any gifted money, supplies, etc. is appreciated.  I am not in any way saying that it isn’t.  However, do not tell me it is an Education lottery when I do not know a single person in education that has reaped any benefits this year or any years prior.  I live in one of the poorest counties in the state.  Principals in this county were basically told to choose between supplies for teaching next year, or people to do the teaching.  Luckily, at my school, the principal chose people and nobody had to lose a job.  We aren’t worried about supplies.  The lottery will pull us through. Right?

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  • kovka
    03/15 08:37 AM

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  • David Taylor
    04/04 05:02 PM

    If a lottery is such a good idea, why can’t private citizens start one.  Oh, I remember govt. is so much more efficient and productive than the private sector.

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