North Carolina Education Lottery - Proceeds and Payouts

Proceeds and Payouts

• Seven percent is paid to retailers as commission.
• Fifty percent is paid as winnings to players.
• Eight percent is cost-of-sales.
• The remaining 35% goes to education proceeds, broken down as follows:
  • Before any proceeds are paid, 5% of the proceeds (1.75% of the total) goes to the Education Lottery Reserve Fund to be used when lottery proceeds fall short. This fund may not exceed $100 million.
  • Fifty percent of the remainder (16.625% of the total) goes towards the reduction of class sizes.
  • Forty percent of the remainder (13.3% of the total) is used for school construction.
    • Sixty-five percent of the above (8.645% of the total) is distributed based on school enrollment.
    • The remaining 35% (4.655% of the total) is distributed to counties with effective property tax rates above North Carolina's average based on school enrollment.
  • Ten percent of the remainder (3.325% of the total) are distributed for college scholarships, to be used with the federal Pell Grant.

Originally, North Carolina's scratch tickets had an overall payout of 52%, the lowest among scratch tickets then available through US lotteries. While its $1 instant tickets continue to pay out at roughly this level, its newer $2-and-up games now have higher-percentage payouts.

The Lottery has continued to generate controversy among North Carolina constituents upset with teacher layoffs who believed the Lottery should have made up the difference.