For decades state lotteries have been sold to voters as tax-free ways to funnel funds into cash-starved schools. Of the 42 states with lotteries, 23 of them earmark money for education. But an investigation by the New York Times found that very little of the billions raised finds its way into school budgets. The bulk of the revenue goes to marketing costs, vendor commissions, and inflating payouts.
Though they're marketed with campaigns like “Raising billions to educate millions,” the Times analysis shows that lottery money makes up only 1 to 5% of K-12 school funding. And in some states, rather than increasing funding, lottery money has replaced earlier, equally meager tax dollars. Contributions are not rising with the higher costs of education, and in some cases are falling—either to fund ballooning payoffs, or simply because profits are lower than projected.