From textbooks to firefighters: how lottery dollars make a difference

By Kate Northrop

Today, the California Lottery celebrates its official 40th anniversary, and aside from launching a colorful scratch-off ticket to mark the occasion, it's raised over $48 billion for educational programs across its entire lifespan and influenced more than 1,000 school districts.

Over the past four decades, the California Lottery has contributed $48 billion toward educational programs, career preparation, and equipment — resources that would not have otherwise been funded were it not for lottery dollars.

The California Lottery got its start forty years ago on this day, October 3, 1985. The very first ticket ever sold was a "California Jackpot" scratch-off game, of which 400 million tickets were available. Today also marks the day that the Lottery announced that it hit the $48 billion milestone in funding for state education.

One of the most common questions among players is, "where does all that money go?" Answering that question begins with understanding how that money is divided up. According to the Lottery, about 95% of the money it brings in is given back to the community in the form of prize payments, public education funds, and retailer commissions and bonuses. Prize payments make up a majority of the pie, with 66% of revenue going back to players in the form of prize pools and payouts. The next biggest is education, which claims 22% of Lottery revenue.

At the end of the fiscal year, that money reserved for state education goes from the Lottery to the State Controller's Office, which then distributes those funds across California's school districts, of which there are around 1,000. The money is allocated based on the attendance of students in the district.

In the 2024-2025 fiscal year, the Lottery contributed over $1.9 billion to public education, representing just 1% of the entire $206.2 billion state budget for California's education system in that same year. While it may seem like a drop in the bucket, there is a marked difference between what the general state fund provides and what Lottery dollars can be used for.

State law requires that Lottery revenue must "supplement the total amount of money allocated for public education in California," not "substitute" it. In other words, Lottery dollars are not part of the overall state budget. Instead, they provide extra money for public schools and fund programs that otherwise would not have received funding at all, so it can and does make a difference.

For example, the money can be a means to afford things like textbooks, art supplies, athletic equipment, tablets, learning software — things that were not included in California's $206.2 billion state education budget. It's not just physical resources either. Lottery money can support anything from vocational education to prepare students with workplace training to providing funds to pay school staff for additional hours in afterschool care.

"They [school staff] provide a lot of different types of instruction for students," El Sol Academy teacher Wanda Ramirez said in an interview with the Lottery. "We have the rock band, basketball, and even Baile folklórico. They [students] want to come to the afterschool program. They want to stay in school."

When schools like these receive Lottery money, the decisions on what to do with those funds are made at the local level. As another example, Pasadena City College and Glendale Community College both have firefighting academies, and the extra resources allow them to purchase materials and tools they need to keep the program alive without going through the trouble of fundraising on their own.

Some education centers simply wouldn't exist if it weren't for the Lottery. San Diego DREAM Academy is a charter school that teaches students about gardening and sustainability, giving children the time and space to get outside, interact with nature, and simultaneously work on their communication and teambuilding skills.

"We're a very small school," DREAM Academy Principal Brooke Dexheimer told the Lottery. "Last year, our entire [garden program] budget was the Lottery. If we didn't have the money from the California Lottery, we would not have been able to do anything, so we are very grateful."

The Sacramento City College Theater Program, which has "scraped by on a shoestring" for over 100 years, is another example of an educational outlet that would not exist today without help from Lottery revenue.

"If we didn't have Lottery funding, we would be decimated," Sacramento City College Professor of Design and Technical Production Shawn Weinshceink said in an interview. "We couldn't exist without it, 'cause there [are] no other dollars there for us. It's our responsibility as educators to promote an environment that gives the student the best opportunity to succeed. The funding is almost as important as what we give them in the classroom. If we can't provide that to them here, where else do they learn it? The California Lottery funding that we receive is holding together our production program at this time."

In terms of increasing contributions in the future, the California Lottery has set its sights even higher than before. With a $9.1 billion sales goal for 2025-2026, the Lottery is aiming to hit $2.08 billion raised for public schools. Part of achieving that goal is ensuring that the Lottery is offering big enough prizes to entice players and drive sales.

Well over a decade ago, the Lottery figured out that increasing its prize payouts, including offering more or bigger prizes to players, would produce higher sales and in turn increase the amount of revenue available for education. In 2010, a bill passed that reduced the Lottery's administrative costs from 16% to 13% to bump up its total revenue returned to the public from 84% to 87%. This figure includes prize payouts, education, and retailer commissions.

Under that umbrella, prize payouts were previously capped at 50% of the Lottery's revenue. The bill removed the flat 50% requirement so that the Lottery Commission could increase payouts to players and drive sales. Raising the amount the Lottery paid out to players meant a smaller chunk of revenue returned to education percentagewise, but it still paid out to education far better than before. It's how the Lottery was able to grow its education funding from $1.04 billion from 2008-2009 to $1.8 billion a decade later in 2018-2019.

Think of it like taking a quarter of a large party-sized pizza as opposed to grabbing half of a smaller, personal pizza, California Lottery Deputy Director of Public Affairs and Communications Carolyn Becker suggested. You may be eating a smaller part of the pie, but you're still getting more pizza.

The California Lottery really is a super transparent organization," California Lottery Strategic Communications Supervisor Daniel Kelly explained to Lottery Post. "Anyone can come to the [California Lottery] website and see where all the money goes — and I encourage them to do so! Not only that, over and over, we're awarded for our budgeting presentation, excellence, and public stewardship of this money. As far as Lottery operations go, third parties do certify that we are one of the most transparent and well-stewarded government institutions."

In 2015, the California Lottery was the first lottery in the U.S. to be certified by the World Lottery Association at the highest level for commitment to responsible gaming, according to a press release. It also holds a high level of certification for security control standards from the association and holds multiple recognitions and titles for financial reporting.

"We're a very transparent, professionally budgeted organization with the sole purpose being to give as much money as we can to California education," Kelly said.

(Click to display full-size in gallery)One of the first California Lottery scratch-off games.

(Click to display full-size in gallery)This chart shows how the California Lottery distributes money from ticket sales.