Lottery officials respond

Last week, NC Policy Watch published the first report in our new series Policy Watch Investigates. Since that time, lottery spokesperson Van Denton has requested an opportunity to offer an official response.

We’re happy to accommodate this request.

Policy Watch stands by the report, and we look forward to the continued discussion on the lottery, as well as how to best fund education in our state.

Read below for Denton’s statement:

A recent report by the N.C. Policy Watch, “Scratch and Shift: Lottery giving education smaller share,”  is based on a flawed assumption that the amount of money paid out in prizes to players of the N.C. Education Lottery does not have a direct correlation to the amount of overall revenues that is raised. Both the experience here in North Carolina and in other states with successful lotteries demonstrate that higher payout in prizes results in higher sales. In fiscal year 2008, when the instant ticket prize payout changed in North Carolina, instant ticket sales increased by 79 percent from the first to the last half of year. The N.C. Lottery Act directs the N.C. Lottery Commission to allocate its revenues “to increase and maximize the available revenues for educational purposes.” The Policy Watch report assumes that sales do not change with a drop in prize payouts and then applies a 35 percent guideline to revenues resulting from the higher prize payout. The report ignores the correlation between prize payout and sales. The extra $80 million that the report claims for education would not have existed if sales had not grown due to the larger payout in prizes.

In the end you can’t spend percentages on behalf of education. You can spend dollars. The math is actually pretty simple. Which does better for education? Deliver a 35 percent return from $866 million in sales, as we did in fiscal year 2007? Or deliver a 30 percent from $1.424 billion in sales as we did in fiscal year 2010? Here’s another way to look at it. Think of a pie. If you have made a bigger pie, which the Education Lottery has, then the slice is not smaller, it’s larger. We’ve increased the amount of money going to education. That’s what’s important.