If you ask most state lawmakers they’ll tell you not to feel bad about playing the lottery because the money goes to “education.” A win for everyone, right? If you’ve been reading Paycheckology long enough, you know I’m about to say “wrong.”
Here’s Five Fast Facts About Lotteries and Education:
- 🤑 Break It Down - Around 50-60% of lottery winnings actually goes to the winners. Retailers get a 5% commission while 10% goes to administrative costs. The rest goes to taxes and the state hosting the lottery. For Powerball, it goes to participating states.
- 💰 Big Bucks - There’s big money in it! In 2015, state lotteries brought in $21M and sent it on its way to the schools. Kind of…
- 🏫 Subtraction - States take the money they’d already allocated for education in their budget and move it elsewhere. The missing education funds are replaced with lottery money. The education budget is the same, if not a little bit higher, than before. See? It went to the schools. Worse, in Virginia, lottery money is being used for regular education expenses rather than additional education funding.
- 💵 Is This Legal? - It’s very legal. The money is definitely going where the lottery says it’s going: education.
- 😠 Show Me The Money - This entire scenario is incredibly frustrating when you consider school funding continues to be cut, putting the financial burden on the teachers and a tax burden on the public.
🔥Bottom line: This is one of those instances where you probably didn’t want to see how the sausage is made. But this isn’t a soapbox to tell you to stop playing the lottery. It’s a reminder that state legislatures aren’t always transparent when it comes to money and your best interests.
Do you think the lottery is a good way to fund public schools?
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