States hope for revenue boost with Mega Millions craze

By KIMBERLEE KRUESI, JAMES POLLARD and GABE STERN
Associated Press

A bump in college scholarships for New Mexico students. A new bike trail nestled in the western slope of Colorado. More homeless shelters in Arizona.

When lottery sales soar, players holding the golden ticket aren’t the only ones who win. Across the U.S., state lottery systems use that money to boost education, tourism, transportation and much more. Now that the giant Mega Millions lottery jackpot has ballooned to more than $1 billion, state officials are hoping increased national interest will result in more funding for their own causes.

However, critics of these lottery-funded programs note that lower-income players foot the bill for benefits they won’t proportionately reap.

In South Carolina, lottery officials said 43 cents of every dollar spent directly support the state’s education lottery account. The General Assembly then uses that money largely to fund scholarships. But the vast majority of South Carolina’s proceeds go toward merit-based scholarships rather than need-based scholarships.

In New Mexico, some legislators and advocacy groups have criticized the lottery as a regressive source of income.

“The people that play it are disproportionately low-income,” said Fred Nathan, of the nonpartisan policy group Think New Mexico. He successfully lobbied for the state’s 30% minimum contribution of lottery revenues for college scholarships, but said concerns remain about the share of lottery scholarships that go to children of affluent and middle-income families.

Mega Millions is played in 45 states as well as Washington, D.C., and the U.S. Virgin Islands. No one has matched the game’s six selected numbers since April. T he next drawing will be at 11 p.m. Friday in Atlanta.

On Friday, the historic jackpot attracted Bryan Byrd, 36, to buy a ticket at a gas station in Columbia, South Carolina. Byrd said he usually only plays when the pot gets this big.

His first move if he takes home the prize?

“Probably put my two weeks’ notice in,” said Byrd. “Hopefully I’m a winner.”

The game is coordinated by state lotteries, which pull in revenue not only from Mega Millions but also from scratch tickets, Powerball and other authorized games. The revenue is then used to help pay out prizes, retailers, state funds and overhead costs.

The Michigan Lottery is on track to make its third consecutive annual contribution of $1 billion to the state’s school aid fund, according to player relations manager Jacob Harris, who said jackpots like this one help that cause. In Michigan, Harris said 28 cents for each dollar collected goes toward the fund.

In Georgia, ever since the jackpot started growing in April, the state has collected nearly $22 million for college scholarships and pre-K programs, lottery officials say.

Oregon has recently posted some of its largest daily sales numbers for the Mega Millions draw, according to spokesperson Chuck Baumann. The $1.4 million and $1.2 million collected Tuesday and Wednesday, respectively, were good for the state’s eighth- and 10th-highest single-day sales.

“Whether it’s Powerball or Mega Millions, when the jackpots get big and people play, that’s good for the state of Oregon, and those folks that receive lottery dollars,” Baumann said. Voters over the years have approved measures sending lottery proceeds to education, parks and veterans’ services funds.

On a typical Tuesday draw in Texas, statewide sales will hover around $1 million for Mega Millions tickets. Last Tuesday, they sold $20 million, according to Gary Grief, the executive director of the Texas Lottery Commission.

He expects the record sales to continue. A typical Friday nets about $5 million in sales. He expects this Friday to crack $80 million.

“As we’re winding down to the end of our fiscal year, we were running neck and neck with last year’s record sales pace,” Grief said of the state’s lottery revenue. That accounted for $1.97 billion to the state’s Foundational School Fund and $23.4 million toward Veterans’ Assistance. “This will push us past that.”

Ticket sales are skyrocketing in New York. In the week ending July 23, Mega Millions sales totaled over $26 million, according to a New York State Gaming Commission report. That’s more than double the over $12 million collected the previous week.

In Ohio, where lottery funding goes toward education, lottery sales have mainly stayed consistent, yet jackpot sales often fluctuate more than other lotteries, said Danielle Frizzi-Babb, Ohio Lottery’s communications director. The Mega Millions jackpots are difficult to predict — and this jackpot, topping $1 billion, has resulted in a sales jump that is difficult to see far in advance.

“When we get to that kind of number, the sales really, really, really ramp up,” Frizzi-Babb said. “And that’s just not something that you can plan for. But we’re excited when it happens.”

California had amassed over $224 million in sales as of Thursday afternoon for the Mega Millions sequence. The estimated amount for education was $89.6 million, according to Carolyn Becker, a California State Lottery spokesperson.

In fiscal year 2021, California generated about $1.8 billion across all games for public education — though Becker described these funds as “supplemental” given the number of school systems in the country’s most populous state.

“Even though it pales in comparison to a school budget, we hear from school teachers, administrators, et cetera, that every dollar helps,” Becker said, adding that the funds have gone toward teacher salaries, computers and band and gym equipment.

Over in Tennessee, recent Mega Millions sales tickets have resulted in more than $263 million that will be set aside for scholarships, grants and after-school programs.

The Tennessee Education Lottery called the ever-expanding prize a “welcome development” as they’ve seen more first-time players buy tickets hoping to score the prize.

Yet that hope comes as Americans are experiencing the highest inflation in decades, leaving many with fewer dollars to throw on entertainment. Some states are already experiencing dips in sales with their lotteries.

Iowa Lottery CEO Matt Strawn told board members in late June that higher gas and grocery costs were likely to blame for the dip in scratch off sales, while also noting that inflation had also caused an 82% hike in their staff’s fuel budget. A spokesperson for the lottery said they believed an increase in Mega Millions sales will offset the decreased sales.

And even in a projected record revenue year in Texas, the returns from the lottery — which help fund education and veterans assistance — are somewhat dampened due to its weakened purchasing power.

“The money that we turn over to (the Texas Education Agency), it’s going to purchase something somewhat less than what it purchased a year ago,” said Grief.

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Kruesi reported from Nashville, Tennessee. Pollard reported from Columbia, South Carolina. Stern reported from Reno, Nevada. Associated Press writer Morgan Lee from Santa Fe, New Mexico, contributed to this report.

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James Pollard and Gabe Stern are corps members for the Associated Press/Report for America Statehouse News Initiative. Report for America is a nonprofit national service program that places journalists in local newsrooms to report on undercovered issues.