State Lotteries

• Author: Richard Leiter
• Pages: 723-736

Page 723

State lotteries have become nearly ubiquitous as state government activity. Forty states permit lotteries. In virtually all states with lotteries, the stated purpose is to raise revenue. However, there is wide diversity in how the money raised is distributed. Most states (about 16) designate lottery profits for schools and education, about thirteen states distribute profit to the general fund, or a fund for economic development, such as highway construction, in support of stadium authorities. A few states designate lottery revenues to fund various general environmental activities.

Many states apply the revenues to more than one purpose. A few states are quite unique. For example, Pennsylvania uses its revenue for programs designed to help the elderly with rent rebates and property tax assistance. Massachusetts uses its revenue in support of the arts. Maryland and Washington use substantial portions of their lottery revenue to raise money for sports stadium construction and operation.

A number of states have enacted provisions designed to help problem gamblers. Louisiana, for example, requires all lottery tickets to be printed with a toll-free gambler’s assistance hotline phone number. At least four other states also have various provisions designed to assist problem gamblers.

One interesting provision in many state lottery laws provides for the garnishment of prizes to collect various debts, ranging from unpaid taxes to outstanding child support obligations. Usually, only prizes over a certain amount may be garnished. One state specifies that only prizes over $100 may be garnished, another sets the limit at $2,500. Texas permits garnishment of prizes won by persons who have defaulted on guaranteed student loans.

Interestingly, there are some unusual circumstances in various states. Maine, New Hampshire and Vermont each authorize two lotteries: their own and a Tri-State Lotto that is authorized under a tri-state compact. The proceeds are distributed equally among the three states. Finally, it is interesting to note that Nevada does not permit a state lottery. Perhaps this would be seen as competing with one of the state’s major industries.

Overall, the matter of state lotteries is only one category, albeit a big one, of the laws relating to gambling. The law of gambling is a very complex and varied area of state regulation. Of late, gambling itself has been subject to many political pressures, both for and against legalization. Although gambling is not treated in this chapter, one interested in the subject may use statute citations provided to locate the general gambling laws for each state.

Page 724

Table 44: State Lotteries
State	Code Section	Distribution of Revenue	Additional Purpose	Prize Subject to Garnishment	Time Limit to Claim Prize/Disposition	Prohibited Related Activities
ALABAMA	Prohibited: Art. IV §65 AL Constitution
ALASKA	05.15.100, et seq.		Department of Revenue may license municipalities and organizations to conduct lotteries
ARIZONA	5-501, et seq.	18.5% state lottery fund (for administrative and advertising expenses); 29% commerce and economic development commission fund, clean air fund, and local transportation assistance fund; 50% payment of prizes		On prizes over $600, a set-off is allowed for any debts over $100 owed to the state, including overdue support	180 days/70% to state lottery prize fund and 30% to special advocate fund	Sale to minor; alteration of ticket; sale by unauthorized person; sale at unauthorized price
ARKANSAS	Prohibited: Art. 19 §14. AR Constitution
CALIFORNIA	Gov. §8880, et seq.	50% prizes; 34% benefit public education; 16% expenses	For the preservation of the rights, liberties, and welfare of the people to benefit education without additional or increased taxes, money should supplement, not be substituted for, public education funds		180 days; to benefit public purpose of education	Sales to minors; counterfeit/altered tickets

Page 725

State	Code Section	Distribution of Revenue	Additional Purpose	Prize Subject to Garnishment	Time Limit to Claim Prize/Disposition	Prohibited Related Activities
COLORADO	24-35-201 et seq.	Of net proceeds: 40% conservation trust fund with 10% going to Division of Parks and Outdoor Recreation for acquisition and development; 50% of total revenue for disbursements of prizes	Acquisition of state correctional facilities	Offset for those who owe child support debt or arrearages up to full amount of prize	180 days	Sell ticket at greater price; unauthorized sale; sale to minor
CONNECTICUT	12-568a; 12-800, et seq.	Of net proceeds, $1.05 million goes to gamblers’ rehabilitation programs				Forgery/counterfeiting tickets; sale to minors; sale of out-of-state lottery tickets; unlicensed sale; at greater price §12-568 repealed 7/1/96
DELAWARE	29-4801, et seq.	At least 30% to the General Fund of the state from the “State Lottery Fund”; 45% payment of prizes; 20% administration and expenses	To produce the greatest income for the state; for “video lottery”— to provide nonstate supported assistance to the harness and thoroughbred racing industries		1 year/State Lottery Fund	Sales to minors; at greater price; alteration/forgery
DISTRICT OF COLUMBIA	3-1301, et seq.	1st pay operation, administration and capital expenses (including payment of prizes); remainder to General Fund of District of Columbia as general purpose revenue funds Lottery and charitable games fund pays for operation			1 year/General Fund of District of Columbia	Unauthorized sales; forged/counterfeited/altered tickets; sale to minor

Page 726

State	Code Section	Distribution of Revenue	Additional Purpose	Prize Subject to Garnishment	Time Limit to Claim Prize/Disposition	Prohibited Related Activities
FLORIDA	24.101, et seq.	Deposited in administrative Trust Fund; remaining revenue to pay administrative expenses of lottery department	To support improvements in public education and not as a substitute for educational funds	On prizes over $600; offset by outstanding obligation to any state agency or owing child support through a court	180 days/added to “pool from which future prizes are awarded or for special prize promotions”	Unlawful assignment/transfer; unauthorized sale as retailer; sale to minor; counterfeited/altered ticket; at greater price; extension offered to purchase ticket
GEORGIA	50-27-1, et seq.	45% prize money; 35% of net proceeds to go to Lottery for Education Account (with 10% as a scholarship shortfall reserve account)	To support improvements and enhancements for educational purposes and programs; funds used as supplement, not substitute	On prizes over $5,000, set-off for all debts over $100 owed to any state agency including taxes, child support, and judgments or liens	180 days/up to $200,000 to Department of Human Resources to treat compulsive gambling disorders with the rest added to a pool for future prizes or special prize promotions	Sale only at set price by authorized retailer; sale to minors; stolen, forged, or counterfeited tickets
HAWAII	Offense of gambling is prohibited. 712-1220. et seq.
IDAHO	67-7401, et seq.	45% prize expense; 15% administrative costs; 3½% advertising and promotional costs. Of rest of net income: 1/2 to permanent building account; 1/2 to school district building account with a one-time allotment to permanent building fund advisory council for Vietnam Veterans Memorial	To benefit public purposes consonant with the public good	Subject to garnishment for unpaid taxes, child or spousal support; or public assistance benefits	180 days/added to future prize pools	Sales to minors; counterfeited, altered, or forged tickets

Page 727

State	Code Section	Distribution of Revenue	Additional Purpose	Prize Subject to Garnishment	Time Limit to Claim Prize/Disposition	Prohibited Related Activities
ILLINOIS	20 ILCS 1605/1 et seq.	Set by department; all revenue to go to “State Lottery Fund”	To support the state’s Common School Fund	Withheld for past due support	Set by department/added to prize pool for special drawings	At greater price; to charge a fee to redeem a prize;

...