ASHEBORO N.C. (ACME NEWS) — Despite more than $1 billion in additional sales last year, payments from the North Carolina Education Lottery (NCEL) to public schools declined, prompting questions and leading to the agency’s first financial audit in a decade.
In 2025, the lottery generated about $1.2 billion in additional revenue. However, contributions to public schools fell by roughly $20 million during the same period. The gap between rising sales and declining education funding drew scrutiny from State Auditor Dave Boliek.
“North Carolinians have a reasonable expectation that if the Education Lottery’s ticket sales go up, money going toward our public schools would increase as well. At first glance, these numbers raise a lot of questions. Over the last three years, total revenues have increased by a total of over $3 billion, while contributions to public education have been flat,” said State Auditor Boliek in a statement.
Boliek said the discrepancies led to a performance audit examining the lottery’s finances and operations.
“North Carolinians deserve answers to some tough questions so that we all have a better understanding of the return public schools are getting from the Education Lottery.”
Lottery officials cited declining jackpot-driven ticket sales and a shift toward newer digital games that generate lower profit margins.
In a letter, the North Carolina Education Lottery pointed to fewer billion-dollar jackpots, slower in-store sales and rapid growth in digital instant games, which offer higher payouts to players but produce less revenue for schools. Digital instant games are online versions of scratch-off tickets played through the lottery’s website or mobile app. They feature animated graphics and fast-paced gameplay but are legally classified as lottery products that provide immediate results.
In 2025, the lottery reported $4 billion in retail sales, a decline of $254 million from the previous year. Officials attributed the drop to weaker performance by national draw games such as Powerball and Mega Millions, along with the shift toward digital products.
“When jackpots reach certain levels, such as $1 billion dollars, the level of interest from consumers soars, ticket sales increase, and profits from those sales rise accordingly,” said NCEL in the letter. In 2025, the largest Powerball jackpot reached $514 million. The previous year, jackpots surpassed $1 billion three times.
Because of lower jackpot levels, combined sales of multistate games fell by $174 million, resulting in $70 million less in net profit, according to the lottery. Officials said this decline accounted for about two-thirds of the drop in retail revenue.
“Consequently, a substantial percentage of fiscal year 2025 performance resulted mostly from the luck of the draw,” the agency said.
The decline in draw game sales had an outsized impact because those games are among the lottery’s most profitable products. About 50 cents of every dollar spent on draw games goes to the state. By comparison, digital instant games return between 70% and 90% of sales to players, leaving far less for public education.
In its letter, the lottery said changing consumer behavior and evolving revenue models contributed to the lower margins.
 “The popularity of new digital games helped offset a decline in traditional lottery games seen both in North Carolina and at most lotteries across the U.S. The NCEL experienced success with digital instant games as it dealt with an unexpected downturn in traditional higher margin games. This led to a lower profit margin in fiscal year 2025.”
Lottery officials also noted that the agency has contributed more than $1 billion to education in each of the past three years.
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