The North Carolina Education Lottery has been giving a steadily smaller share of its money to education, a new audit shows, even as it sets new records for sales.
Monday’s report from a private auditing company, contracted by State Auditor Dave Boliek’s office to analyze lottery spending, found that just 16 cents from every $1 spent on lottery tickets or other games went toward public school funding in the 2025 fiscal year.
Money from the lottery has traditionally gone toward funding school salaries, construction, transportation and college scholarships.
When North Carolina first created the lottery in 2005, state law required 35% of proceeds to go toward supporting public education in the state. But the state legislature later turned that from a requirement to a suggestion. And in recent years, the share of lottery sales going toward education has grown steadily smaller.
In 2023, schools got 23% of lottery sales, the audit found. In 2024 that had dropped to 20%, followed by a drop in 2025 to 16%.
The audit showed the following:
- In 2024, the lottery did $5.376 billion in sales and gave $1.07 billion back to the state.
- In 2025, the lottery did $6.586 billion in sales and gave $1.05 billion back to the state.
- So from 2024 to 2025, North Carolinians increased their spending on the lottery by 22.5%. But the amount of lottery money going to education dropped by 1.9%.
“North Carolinians have a reasonable expectation that if the Education Lottery’s ticket sales go up, money going toward our public schools would increase as well,” Boliek said in a news release. “At first glance, these numbers raise a lot of questions.”
The amount of money the lottery has spent on its own expenses, such as salaries and advertising, has remained relatively flat, the audit found.
So the main reason education is getting a smaller share of sales is because of one main factor: Lottery players are winning more.
The lottery responds
The audit, as is standard procedure, included a response from the lottery to the findings.
In it, the lottery pointed to the increase in winnings it has had to pay out. It also blamed a relative lack of large Powerball and Mega Millions jackpots for the drop in profits. It said that whenever a jackpot exceeds $1 billion, many more people buy tickets for those games. And because the chance of winning is so low, the games make bigger profits even despite paying out those higher jackpots.
In the 2024 fiscal year, the lottery said, those two games had six different billion-dollar jackpots. In 2025, they had just two.
“Due to the lack of high jackpots, combined sales from these multistate jackpot games decreased by $174 million, resulting in $70 million less in net profit,” the lottery response stated. “This decline contributed to two-thirds of the deficit in retail sales of lottery games. Consequently, a substantial percentage of fiscal year 2025 performance resulted mostly from the luck of the draw.”
The lottery also blamed another factor for why its profits have dropped even as total sales have increased: A massive chunk of the business it does now is from “digital instant” games, which the lottery created in the 2024 fiscal year.
Those games have a much higher payout rate than traditional scratch-offs or lottery drawings, the lottery’s audit response said. That means that even though the lottery is taking in more money in sales, it’s also having to pay out more in winnings.
While the share of lottery money spent on education has been dropping, from 24% in 2023 to 16% in 2025, the lottery response noted that the share of money paid out to players has increased, from 66% in 2023 to 76% in 2025.
