California State Lottery - Lottery Act

Lottery Act

The California State Lottery Act of 1984 was intended to provide more money to schools without imposing extra taxes. Accordingly, the Lottery was required to provide at least 34% of its revenues to public education, supplementing (not replacing) other funds provided by California. Another 50% of its revenues must be paid to the public in the form of prizes, making a mandated minimum of 84% of all funds that must be given back to the public in the form of prizes or funds for public education. The remainder, a maximum of 16%, was to be spent on administration, such as salaries and running the games.

On April 8, 2010, Governor Schwarzenegger signed into law Assembly Bill 142 (Hayashi, D-Hayward). Amending the Lottery Act, this bill reallocates Lottery revenues "so as to maximize the amount of funding allocated to public education." As an urgency statute, this bill took effect immediately. The new allocation increased to at least 87% the portion of Lottery revenue returned to the public, and correspondingly decreased to a maximum of 13% the amount spent on administration. It then specified that "not less than 50% of the total annual Lottery revenues, in an amount to be determined by the commission, be returned to the public in the form of prizes." This leaves "the commission to establish the percentage to be allocated to the benefit of public education at a level that maximizes the total net revenues allocated to the benefit of public education." It also imposed requirements "to ensure continued growth in Lottery net revenues allocated to public education", with annual procedures that would, "in any one of the first 5 full fiscal years after the enactment of this measure, ... provide for the repeal of the changes made by this measure on the following January 1, and the prior law to be restored", if those requirements were not then met. This bill follows the practice of "other large state lottery systems, including Texas, North Carolina, and Florida, which have shown an increase in revenue through similar changes."

The Lottery Act mandates a five-member commission, appointed by the governor, to "oversee the Lottery and the Director" and make quarterly reports "to the Governor, the Attorney General, the Controller, the Treasurer, and the Legislature." Annually the commission selects a chairperson. Regular meetings of the commission are held at least quarterly and are open to the public.

The Lottery uses a pari-mutuel system to determine the size of each prize, such that prize values are not fixed, but depend on sales and the number of winning tickets. The Lottery does set fixed prize levels for its Hot Spot game (see below.) The minimum age for a person to purchase or redeem California Lottery tickets is 18.