Lotteries like to say they fund schools, and many do. But the split of a ticket dollar, and the programs that get the state's share, vary a lot from one state to the next. Here's how the money divides up, with real figures from states that publish them.
How is a lottery ticket dollar split?
Nationally, the North American Association of State and Provincial Lotteries reports that US lottery sales topped $113.3 billion in fiscal 2024 and that lotteries transferred almost $30.6 billion to beneficiaries. That's about 27 cents of every dollar. NASPL says retailer commissions typically run from 5 to 8 percent, depending on the product.
Two states that publish a simple breakdown give a clearer picture of the whole dollar:
| Colorado | Washington (fiscal 2025) | |
|---|---|---|
| Prizes | 63% | 63.25% |
| State beneficiaries | 20–21% | about 22.5% (education, general fund, economic development, problem gambling) |
| Retailers | 7–8% | 5% |
| Other costs (games, vendors, administration) | the remainder | about 9% |
The figures come from the Colorado Lottery and from Washington's Lottery, which bases its numbers on its 2025 annual financial report. The prize share differs by game. Powerball, for example, sets aside about 50 percent of sales for prizes, according to its published game procedures. A lottery's overall prize share depends on its mix of games.
What does each state do with its lottery money?
Each state decides where its share goes, and the choices differ more than the "it funds education" slogan suggests. A few examples:
- Georgia uses lottery proceeds for its HOPE scholarships and pre-kindergarten program.
- Washington sends most of its share to the Washington Opportunity Pathways Account, which funds education programs. That came to about $180 million in fiscal 2025.
- Pennsylvania directs its lottery money to programs for older residents. The state's Department of Aging says the PACE prescription-assistance programs are funded by the Pennsylvania Lottery, along with lottery-funded home and community services for older adults.
- Colorado puts most of its proceeds into the outdoors. Since 1992, Great Outdoors Colorado has used part of the money to fund more than 5,900 conservation and recreation projects, and the lottery says it has put more than $4.6 billion into parks, trails, open space and recreation since 1983.
- Minnesota sends part of its lottery proceeds to the Environment and Natural Resources Trust Fund, created by a constitutional amendment that voters approved in 1988.
- South Dakota puts its lottery income into the state General Fund, nearly half of which goes to schools and universities, and into a fund for local water and wastewater projects. Our South Dakota lottery guide has the details.
Does the lottery really fund education?
In many states, yes. The money is real and it does go to the programs named in state law. What the slogan doesn't tell you is how big the lottery's contribution is compared with the rest of the education budget. Washington's roughly $180 million education transfer, for example, is a small sum next to what a state spends on public schools from its general budget.
Money is also interchangeable. When a legislature knows a program will receive lottery money, it can choose to spend less general-fund money on that program than it otherwise would. So "this program is lottery-funded" doesn't by itself tell you whether total spending on schools is higher than it would have been without a lottery.
What about unclaimed prizes?
Prizes that aren't claimed before the deadline don't go back to the player. Depending on the state, the money may go into future prizes, to the lottery's beneficiaries or to the state. Claim periods for Powerball and Mega Millions range from 90 days to a year depending on where you bought the ticket. Our guide to unclaimed lottery jackpots explains how to check whether a big prize was claimed, and how long to claim a winning ticket lists deadlines by state.
Do governments also collect taxes from lottery winners?
Yes. Lottery prizes are taxable income. The lottery withholds 24 percent for federal tax on prizes over $5,000, or 30 percent for winners who aren't US citizens or residents, under the IRS Form W-2G rules. Most states with an income tax also tax lottery winnings. Our federal and state tax breakdown has the details for each state.
Where lottery money goes: common questions
Where does lottery ticket money go?
Most of it goes back to players as prizes, about 63 percent in Colorado and Washington. Roughly 20 to 25 percent goes to state programs, retailers get about 5 to 8 percent, and the rest pays for running the lottery. The exact split varies by state and game.
How much money do US lotteries raise for states?
According to NASPL, US lottery sales topped $113.3 billion in fiscal 2024, and lotteries transferred almost $30.6 billion to their beneficiaries, about 27 percent of sales.
Does the lottery really fund education?
In many states, yes. Georgia's HOPE scholarships and pre-K program and Washington's Opportunity Pathways Account are examples. But lottery transfers are small compared with overall education spending, and legislatures can offset them by spending less general-fund money on the same programs.
Which states use lottery money for something other than education?
Pennsylvania funds programs for older residents, including prescription assistance. Colorado puts most of its proceeds into parks, trails and conservation. Minnesota sends a share to an environmental trust fund, and several states, including South Dakota, send proceeds to their general funds.
What happens to unclaimed lottery prize money?
It depends on the state. Expired prizes may go into future prize pools, to the lottery's beneficiary programs or to the state.
Sources: NASPL FAQ (fiscal 2024 figures); Colorado Lottery About Us page; Washington's Lottery Who Benefits page (fiscal 2025 report); Georgia Lottery; Pennsylvania Department of Aging; Great Outdoors Colorado; Minnesota LCCMR; South Dakota Lottery; IRS Form W-2G instructions.
