North Carolina could get more money for education if the state expands where people can play the lottery and makes the games more enticing to younger players, a new report says.
The NC Education Lottery generated $634 million for education in 2016. A legislative staff report outlining multiple options to increase lottery proceeds presents a challenge to state lawmakers: How do you balance the need to provide money for public education with concerns about the impact of gambling?
Three other reports were released Monday about the $79 million annual cost of adding school nurses statewide, ending the ability of school districts to sue county commissioners for more money and changing the fares and schedules for state ferries.
“Ladies and gentlemen, you’ve just heard four presentations on highly controversial issues,” Rep. Craig Horn, a Union County Republican and co-chairman of the Joint Legislative Program Evaluation Oversight Committee, told fellow legislators. “As I said before, ‘Buckle your seat belt.’ ”
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In the next few months, the committee will spend more time on each report and consider whether to propose new legislation to carry out the recommendations from those who evaluated the individual state programs.
North Carolina is among 44 states that operate a lottery. The lottery was approved by state lawmakers in 2005 and over 10 years returned over $4.6 billion to the state for education purposes.
In fiscal year 2016, the lottery generated almost $2.4 billion in revenue with 62.4 percent going toward prizes. A total of $634 million, or 26.5 percent, was transferred to the Education Lottery Fund to hire teachers to reduce class sizes, offer pre-kindergarten programs, pay for school construction and provide scholarships to needy students.
Education supporters caution that the lottery doesn’t provide as much money as some people think. For instance, even if the lottery gave all its money to the education fund, it would only cover about 19 percent of the state’s total budget for K-12 public schools.
The money generated statewide for education in 2016 is also less than what Wake County, the state’s largest school district, received in regular state education funding that year.
The Program Evaluation Division of the General Assembly was charged with determining if the lottery is providing the maximum economic benefit to the state. Jim Horne, the lead evaluator, cautioned lawmakers that the report didn’t look at the social impact of the lottery.
Some critics say it’s immoral for the state to sponsor lotteries. Other critics call lotteries a regressive tax because it’s hard to win and the poor can least afford to lose their money.
The report recommended setting growth targets for expanding the network of lottery retailers. North Carolina has fewer lottery retailers per resident than the 10 top-selling states.
The report noted how lottery officials have expanded options such as the ability to play at the pump at gas stations and at Alcohol Beverage Control (ABC) stores. The report said the lottery may want to consider expanding to locations such as airports, which has been done in some other states.
“Increasing the number of retailers that sell lottery tickets has the potential to increase revenue by making lottery products more readily available for purchase,” according to the report.
Another recommendation is to consider reducing the 7 percent commission per ticket that retailers receive. Lottery officials say this could make it harder to expand the number of retailers.
The report also found that offering video lottery terminals, which are similar to slot machines, and iLottery online-based instant lottery games “could potentially boost sales among younger generations of players.” People must be at least 18 to play the lottery.
Horn, the lawmaker, said there would be a lot of pushback if the state allowed the use of video lottery terminals or iLottery games.
“The lottery is always a delicate issue for two reasons,” Horn said in an interview. “You’ve got the people that think it’s morally wrong and then you have the people that say that it’s inherently corrupt based on how the funds are allocated.”