Last year, North Carolina's governor, Mike Easley, finally delivered on his promise to start a lottery, making his state the most recent of the 42 states and the District of Columbia to cash in on legalized gambling.
If some voters in this Bible Belt state frowned on Easley's push to bring gambling here, others were persuaded by his argument that North Carolina's students were missing out on as much as $500 million in aid annually as residents crossed the border to buy lottery tickets elsewhere.
"Our people are playing the lottery," the governor said in an address two years ago that was a prelude to the creation of the North Carolina Education Lottery. "We just need to decide which schools we should fund, other states' or ours."
Pitches like this have become popular among lawmakers who, since states began legalizing lotteries more than 40 years ago, have sold gambling as a savior for cash-starved public schools and other government programs. Lotteries have raised billions of dollars, and of the 42 states that have them, 23 earmark all or some of the money for education.
For years, those states have heard complaints that not enough of their lottery revenue is used for education. Now, a New York Times examination of lottery documents, as well as interviews with lottery administrators and analysts, finds that lotteries accounted for less than 1 percent to 5 percent of the total revenue for K-12 education last year in the states that use this money for schools.
In reality, most of the money raised by lotteries is used simply to sustain the games themselves, including marketing, prizes and vendor commissions. And as lotteries compete for a small number of core players and try to persuade occasional customers to play more, nearly every state has increased, or is considering increasing, the size of its prizes further shrinking the percentage of each dollar going to education and other programs.
State lotteries raised more than $56 billion and returned $17 billion to the state governments last year. They spent more than $460 million last year on advertising, making them one of the nation's largest marketers. The 197,000 retailers that sell lottery products earned $3.3 billion in commissions in 2006.
Lottery advocates say the games live up to their public mandate. According to the North American Association of State and Provincial Lotteries, $234 billion has gone into state coffers since the first modern lottery was started in New Hampshire in 1964.
But among the states that earmark lottery money for education, lottery dollars accounted for 1 percent or less of the total K-12 education financing (including all state, federal and local revenue) last year in at least five states, including New Jersey. New York had the highest percentage, 5.3 percent.