Where Does Lottery Scratch-Off Money Go? A State-by-State Breakdown
Americans spend over $100 billion on lottery tickets annually — with scratch-offs making up roughly half of that. But where does all that money actually go? The answer varies by state, but the general breakdown is surprisingly consistent.
Understanding the revenue split helps explain why scratch-off games are designed the way they are — and why the house edge exists in the first place.
Last updated: May 2026 · Sources: Official state lottery annual reports and NASPL data
The Typical Revenue Split
For every dollar spent on a scratch-off ticket, here’s approximately where it goes:
| Category | Percentage | What It Means |
|---|---|---|
| Prizes | 60–70% | Paid back to players as winnings |
| State Programs | 20–30% | Education, infrastructure, general fund |
| Retailer Commissions | 5–7% | Paid to stores that sell tickets |
| Operations | 3–5% | Lottery administration, printing, marketing |
This means that for every $10 scratch-off ticket you buy, roughly $6–$7 goes back to players as prizes, $2–$3 goes to state programs, and $0.50–$1.20 covers retailer commissions and operations.
How This Relates to ROI
The 60–70% prize payout is the theoretical maximum return to players as a group. Our ROI calculations measure the current expected return based on remaining prizes — which can be higher or lower than the designed payout depending on which prizes have been claimed.
A game designed with 65% payout starts at approximately -35% ROI. As prizes are claimed, this shifts — sometimes improving (if small prizes deplete faster) and sometimes worsening (if top prizes are claimed).
Where the “State Programs” Money Goes
The 20–30% that goes to state programs is the reason lotteries exist. Every state directs this revenue differently:
Education (Most Common)
The majority of states earmark lottery revenue for education. This is often the primary selling point when states vote to establish a lottery.
- New York: $3.6 billion to education in FY 2024–2025 — the largest lottery contribution to education in the country
- California: 95 cents of every dollar goes back to the community through prizes, schools, and retail compensation. Education receives approximately 27% of total revenue
- Michigan: 25 cents of every dollar goes directly to the School Aid Fund
- Georgia: Funds the HOPE Scholarship program, providing free college tuition to qualifying students
- Florida: Revenue supports the Bright Futures Scholarship Program and public school construction
General Fund
Some states direct lottery revenue to the general fund, where it can be used for any government purpose:
- Ohio: Revenue goes to the Lottery Profits Education Fund
- Pennsylvania: Funds programs for older residents (property tax relief, transportation, prescription assistance)
- Massachusetts: Revenue is distributed to cities and towns as unrestricted local aid
Specific Programs
Some states get creative with lottery revenue allocation:
- Colorado: Conservation Trust Fund (parks, trails, open space)
- Arizona: Heritage Fund (wildlife conservation, historic preservation)
- Oregon: Economic development, natural resource programs, and education
- Indiana: Build Indiana Fund (infrastructure projects)
Real Numbers: What States Earned from Scratch-Offs
Based on our prize tracking data, here’s what players spent (and states earned) from scratch-off games in April 2026 alone:
| State | Prizes Claimed (April) | Est. Ticket Sales* | Est. State Revenue* |
|---|---|---|---|
| Florida | $491.6M | ~$750M | ~$190M |
| California | $410.5M | ~$630M | ~$160M |
| Texas | $395.1M | ~$600M | ~$150M |
| Massachusetts | $232.2M | ~$330M | ~$80M |
| Georgia | $185.7M | ~$280M | ~$70M |
| North Carolina | $167.3M | ~$255M | ~$65M |
| New York | $148.3M | ~$225M | ~$55M |
| Ohio | $137.5M | ~$210M | ~$50M |
| Illinois | $132.9M | ~$200M | ~$50M |
| Michigan | $118.0M | ~$180M | ~$45M |
*Estimated based on typical 65% prize payout ratio and 25% state revenue share. Actual percentages vary by state.
These are monthly figures. Annually, the top states generate billions in lottery revenue for state programs — Florida alone generates over $2 billion per year for education from all lottery products.
The Retailer Cut: Why Stores Push Scratch-Offs
Retailers typically earn 5–7% commission on every scratch-off ticket sold. For a busy convenience store selling $10,000 in lottery tickets per week, that’s $500–$700 in commission — significant revenue for a small business.
Additionally, most states pay retailers a bonus (typically 1–2% of the prize value) when they sell a winning ticket above a certain threshold. This incentivizes stores to promote lottery sales and creates the “lucky store” perception (stores that sell more tickets naturally produce more winners).
This commission structure explains why scratch-off displays are prominently placed at checkout counters — retailers have a direct financial incentive to make them visible and accessible.
Operations: Printing, Security, and Marketing
The 3–5% allocated to operations covers:
- Ticket printing: Scratch-off tickets are manufactured by specialized companies (Scientific Games, IGT, Pollard Banknote) using security features to prevent counterfeiting
- Security and auditing: Independent audits, fraud prevention, prize verification systems
- Marketing and advertising: New game launches, point-of-sale materials, digital advertising
- Technology: Retailer terminals, prize validation systems, website maintenance
- Administration: Staff, offices, claim centers, customer service
The relatively low operations percentage (3–5%) is one reason state lotteries are considered efficient revenue generators compared to other forms of taxation.
The Controversy: Does Lottery Revenue Actually Help?
Lottery revenue for education is not without criticism. Common concerns include:
Fungibility
When lottery money goes to education, legislatures sometimes reduce general fund allocations to education by a corresponding amount. The net effect: education funding stays flat while lottery revenue effectively goes to the general fund. Studies in multiple states have documented this pattern.
Regressive Taxation
Research consistently shows that lower-income households spend a higher percentage of their income on lottery tickets. This makes lottery revenue function as a regressive tax — collecting proportionally more from those who can least afford it.
The Transparency Question
Most players don’t know where their money goes. A survey by the North American Association of State and Provincial Lotteries found that the majority of lottery players cannot name what their state’s lottery revenue funds.
Our perspective: We don’t take a position on whether lotteries are good policy. Our job is to help players who choose to play make more informed decisions with their money. If you’re going to spend $20 on scratch-offs regardless, you should at least know which $20 game gives you the best return.
Scratch-Off Spending Per Capita
Some states have dramatically higher per-capita scratch-off spending than others. Based on our prize tracking data (which correlates with sales volume):
| Category | States | Characteristics |
|---|---|---|
| Highest per-capita | Massachusetts, West Virginia, Rhode Island | Small populations, high engagement, mature lottery programs |
| High volume (large states) | Florida, Texas, California, New York | Large populations drive massive total revenue |
| Moderate | Ohio, Michigan, Georgia, Illinois | Established programs with steady participation |
| Lower per-capita | Montana, Vermont, South Dakota | Smaller programs, fewer game options |
West Virginia is particularly notable — despite having one of the smallest populations of any lottery state, it consistently ranks in the top 5 for prize activity in our data, suggesting extremely high per-capita scratch-off spending.
Key Takeaways
- 60–70% of every scratch-off dollar goes back to players as prizes
- 20–30% goes to state programs (usually education)
- 5–7% goes to retailers as commission
- 3–5% covers lottery operations
- The top 10 states generate an estimated $1+ billion per month in scratch-off sales combined
- Most states earmark lottery revenue for education, though the actual impact is debated
- Understanding the revenue split explains why games are designed with a 25–40% house edge
Related Resources
- The Math of Scratchers: Odds vs. EV vs. ROI Explained
- The Lifecycle of a Scratch-Off Game
- National Scratchers Report — April 2026 (includes prize payouts by state)
- Our Methodology
- NASPL: Where the Money Goes (industry association data)
Disclaimer: This information is provided for educational purposes only. All data is sourced from official state lottery websites and is updated regularly, but we cannot guarantee 100% accuracy. Lottery games are games of chance, and past performance does not guarantee future results. Please play responsibly and never spend more than you can afford to lose. If you or someone you know has a gambling problem, call 1-800-GAMBLER.