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What Do State Governments Do With Lottery Profits?

There is little doubt that the lottery offers an exciting way to win money. But how much money does it really bring in? And what do state governments do with that money? The answers to these questions may surprise you.

While the casting of lots to make decisions and determine fates has a long history, lotteries for material gain are considerably newer. The first recorded public lotteries to award prizes in the form of money were held in the Low Countries in the 15th century for town repairs and to help the poor.

These days 44 states and the District of Columbia run lotteries. The six states that don’t—Alabama, Alaska, Hawaii, Mississippi, Utah, and Nevada—don’t do so for a variety of reasons.

Many people have fantasized about what they would do with a big jackpot—instant spending sprees, new cars, luxury vacations, the works. But the reality is that winning a jackpot means nothing unless you spend it. And the chances of winning are not as great as you might think.

Moreover, the majority of lottery profits—the money that isn’t paid out to winners—goes back to the states. This money often ends up in the general fund, where it can be used to address budget shortfalls, roadwork, bridgework, police force, or other social services. In fact, most states have gotten creative with this money: for example, Minnesota puts about 25% of its lottery revenue into the Environment and Natural Resources Trust Fund to ensure water quality and wildlife regulations; while Pennsylvania invests over a billion dollars in programs for seniors, like free transportation and rent rebates.