wral.com · Emily Walkenhorst, WRAL education reporter · September 8, 2026
Amid drops, NC lawmakers should revisit Education Lottery payouts to schools, state auditor says :: WRAL.com
# Amid drops, NC lawmakers should revisit Education Lottery payouts to schools, state auditor says
The North Carolina Education Lottery has for years not met its goal of giving out at least 38% of proceeds to public education, which mostly includes K-12 schools and some college scholarships. The state statute outlining the program indicates at least 50% should go toward paying out winnings.
Posted
9/8/2026, 4:00:27 PM
© WRAL
By Emily Walkenhorst, WRAL education reporter
North Carolina lawmakers and policymakers should make a decision about the future of the North Carolina Education Lottery, including potentially reducing the percentage of proceeds that go to public education, North Carolina State Auditor Dave Boliek said.
The state's education lottery has for years not met its goal of giving out at least 38% of proceeds to public education. The state statute outlining the program says at least 50% should go toward paying out winnings. About half of the education funds typically go toward K-12 school construction and much of the remainder goes toward support personnel for K-12 schools, with relatively small amounts going toward North Carolina's Pre-K program for lower-income families and college scholarships.
Boliek said Tuesday, in announcing the findings of a performance audit of the North Carolina Education Lottery, that the nature of the lottery has changed, resulting in both a need to increase digital winners' payouts to encourage further gambling and in an ongoing decline in the percentage of sales that results in public school funding.
That's also resulted in a disconnect between what the lottery is and what the public thinks the lottery is, he said.
"The public should expect a certain level of performance with the education lottery," Boliek said.
Boliek didn't suggest a new goal for what the law should say but said there should be a consistent percentage or dollar amount each year given to education.
The audit recommends the state should decide whether the lottery's goal is to maximize funds for education or maintain a target percentage of funding toward education -- or find a balance.
In a response to the audit, North Carolina Education Lottery CEO Mark Michalko said setting those goals aren't compatible in a modern lottery environment. He wrote that lawmakers should reconsider the 38% figure but that the lottery will "work to meet consumer demand, remain competitive and maximize return to education."
Tuesday's performance audit reiterated findings Boliek announced in December and findings that education advocacy groups have made over the years.
In December, a fiscal audit of the lottery found that increased proceeds aren't translating into proportional increases in public education funding.
From the 2022-23 fiscal year through the 2024-25 fiscal year, gross lottery sales increased from $4.3 billion to $6.6 billion, a 53.5% increase. Over that same time, school funding from those proceeds increased from $1.02 billion to $1.08 billion, a 5.9% increase. The share of proceeds from the lottery going to public education dropped from 23.4% to 16.3%. Had the percentage stayed at 23%, public education would have received roughly $600 million additional dollars over those two years.
The percentage of revenues going toward prize payouts rose over that time from 65.8% to 75.8%.
Digital instant games, which have higher payout rates to winners, didn't exist during the 2022-23 fiscal year but by the 2024-25 fiscal year comprised 40% of revenues. Retail games, which have lower relative payout rates, are declining slightly in revenues.
The change in how much the state is paying out in prize money has resulted in just less than $100,000 in new money leftover for education, administrative costs and retail commissions as before digital instants, the data shows.
The lottery was initially established about two decades ago with a requirement that a certain amount of money go toward education, and that requirement turned into a guideline within a few years.