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CA Lottery Isn’t Paying Its Fair Share For Education, Audit Claims

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A man shows his just purchased lottery tickets from the Blue Bird Liquor store in Hawthorne in 2018. (Frederic J. Brown/AFP via Getty Images)
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The California lottery has not been living up to its promise to support public education, according to the state auditor.

The Lottery was established by voters in 1984 to benefit schools by allocating a certain amount of its proceeds to public education. It's required by law to increase school funding in proportion to its revenues.

Here are some of the key takeaways from the audit:

  • Its failure to follow the proportionality requirement means it shorted education by $36 million in the 2017-18 fiscal year (the Lottery reports it contributed a total of $1.7 billion that year, or 1% of the state’s public education budget)
  • It's not doing enough to follow a competitive bidding process
  • The State Controller's Office has not provided sufficient oversight and even removed a significant finding from a recent audit after the Lottery disputed it

The audit echoes the findings of our 2018 investigation. We reported that while California Lottery revenues were skyrocketing, money for schools barely inched up.

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A 2010 change in the law had led to a dwindling share of revenues flowing towards education — an issue that concerned auditors, who determined the Lottery “has not prioritized funding to education." We also reported that several Southern California cities, including Westminster, Garden Grove and Inglewood, had some of the highest rates of per capita lottery sales in the state.

"It's very clear that this is a system that targets the poor," Zahava Stadler, with a nonprofit that studies education funding, told us in 2018.

Both the Lottery and the State Controller's Office disagreed with many of the report’s conclusions, though the Lottery agreed to implement some of its recommendations, according to the audit.

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