Digital Scratch-Offs Boost NC Public Education Funding. Will Sports Betting Do The Same?

So far, so good for digital scratch-offs in North Carolina.

Early numbers show that the lottery’s latest release is quite the hit, with more dollars going toward the state’s public education fund.

“Over the years, we’ve been able to build the amount of money we’ve provided to the state for education,” North Carolina Education Lottery Communications Manager Adam Owens told WCNC. “People in North Carolina should be proud that their lottery continues to innovate and not sit still.”

As we get a better idea of how much digital scratch-offs will help the state’s educational funding, it’s worth looking at how North Carolina sports betting could also lend a hand.

Early numbers on North Carolina’s scratch-offs

It appears as though North Carolina residents love the digital scratch-off aspect so far. Owens said these scratch-offs were “(their) number one games.”

“It’s more interactive, and there’s more interesting things going on.”

According to Owens, the convenience factor plays a major role. With so much of the population spending time on their phones, the lottery’s goal is to meet customers where they want to be met.

North Carolina’s digital scratch-offs were a hit. Two weeks after their launch, the lottery received $32 million, of which $2 million was allocated for educational funding.

Educational funding goes toward things such as school construction, college scholarships and grants, non-instructional support, needs-based school construction, and transportation.

How will digital scratchers impact North Carolina public school funding?

The new digital scratchers will certainly boost North Carolina public schools.

“The sole reason that this lottery exists is to raise money as best we can to fund education in North Carolina,” Owens told WCNC.

Projections indicate that the lottery could make close to $40 million off its new digital scratch-off games within the first year. By the fifth year, lottery officials estimate the digital scratch-offs could account for $416 million.

But will the digital scratch-offs be a major difference maker for the schools?

Maybe. There’s still room for improvement.

The North Carolina lottery has contributed $9.7 billion to education to date, including $929 million last year.

According to the North Carolina Department of Public Instruction, “about 30% of lottery revenue goes to education.”

In a 2021 faculty needs survey, North Carolina public schools said it would need close to $13 billion over the next five years for construction.

“Even if the NC Education Lottery gave 100% of its revenue to schools, that would only cover about 19% of the state’s total budget for K-12 public schools,” the North Carolina Department of Public Instruction website reads.

“It’s very difficult to generate this amount of money with the current tax structures,” the North Carolina Justice Center’s Matthew Ellinwood said in a panel last month.

How will sports betting impact school funding?

Public education will certainly receive some of the dollars when North Carolina launches its legal online sports betting market.

North Carolina is taxing its sports betting operators at 18%, which stands 4% higher than what was proposed originally. Operators are taxed on gross gaming revenue, and they aren’t able to deduct promotional spending from that total.

The state’s general assembly fiscal research division projects $64.6 million in taxes in the first year of legal sports betting. Taxes could also reach as high as $100.6 million by the fourth year.

Unlike the lottery’s overall structure, sports betting revenue won’t go directly to public school funding. Dollars will go toward responsible gaming, youth sports, college athletic departments (including five Historically Black Colleges and Universities), and North Carolina’s Youth Outdoor Engagement Commission grants. Of the remaining proceeds, 50% will go toward the state’s general fund, and 30% will go toward the North Carolina Major Events, Games, and Attractions Fun. The final 20% will be divided equally among the 13 universities’ athletic departments.

About the Author

Adam Hensley

Adam Hensley's byline has appeared in the Associated Press, Sports Illustrated and sites within the USA Today Network. Hensley graduated from the University of Iowa in 2019 and spent his college career working as an editor and reporter for the Daily Iowan’s sports department.