State Lotteries laws

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.

Table 39: 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

Table 39: State Lotteries—Continued

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.					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

Table 39: State Lotteries—Continued

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.	50% payment of prizes; 39% Educational Enhancement 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

Table 39: State Lotteries—Continued

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; from unlicensed sales agent; altering ticket; sale to minors
INDIANA	4-30-1-1, et seq.	Administrative trust fund for prizes and expenses; any surplus revenue (where roughly $15 million goes to state teachers' retirement fund and $7.5 million to pension relief fund with remaining surplus to the "Build Indiana Fund" for highway construction, job creation, economic development and state and local capital projects)	To enable the people of Indiana to benefit from significant money for capital improvements	For prizes over $599, if owes (1)outstanding debt to state agency, (2) delinquent state taxes, or (3) child support paid through a court [if multiple obligations, 1st to child support, 2nd to judgments owed, 3rd to tax liens, and 4th to unsecured debts owed by prize winner]	180 days/added to pool for future prizes or used for special prize promotions	Sale to minors; stolen/counterfeited/altered tickets; at different price; by unauthorized retailer or agent; sale on credit
IOWA	99G.1, et seq.		To support a variety of programs and services and provide continuing entertainment to the public	Prizes over $600 subject to garnishment for claimant agencies	Period deemed appropriate by commissioner/added to future prize pools and given to holders of winning tickets or shares in addition to amounts already allocated	Sale at greater price; sale to minor (under 21); unauthorized sale; forged/altered ticket

Table 39: State Lotteries—Continued

State	Code Section	Distribution of Revenue	Additional Purpose	Prize Subject to Garnishment	Time Limit to Claim Prize/Disposition	Prohibited Related Activities
KANSAS	74-8701, et seq.; 79-4801, et seq.	30% lottery operating fund for expenses; 45% prizes; rest to state gaming revenues fund and state general fund for state economic development, correctional institution buildings, county reappraisal fund			Within period established by rules and regulations/added to prize pools of subsequent lottery games	Forgery; unauthorized sale. Sale at greater price sale to minor (under 18)
KENTUCKY	154A.010. et seq.	35% general fund; rest for expenses and prizes		Yes	180 days/added to pool for future prizes or special prize promotions	Sale to minor; alter or forge tickets; attempt to win through fraud or deception or tampering with lottery equipment
LOUISIANA	47:9000, et seq.	Corporate operating fund for expenses and prizes; with at least 35% to Lottery Proceeds Fund with $250,000 allocated to Compulsive and Problem Gaming Fund	"Enable the people of the state to benefit from the profits"; tickets must include toll-free phone number for mental health services for compulsive arrearages or problem gambling	Yes	180 days/added to pool for future prizes or special prize promotions	Sale to minor; false or altered tickets; influence winning or tampering with lottery equipment; illegal lottery devices; skimming lottery proceeds; bulk sale
MAINE	Tit. 8 §371, et seq.; and "Tri-State Lotto" with New Hampshire and Vermont Tit. 8 §401, et seq.	45% distributed as prizes; rest divided between expenses, General Fund, and Maine Outdoor Heritage Fund		Child support purposes	1 year/transferred to General Fund as undedicated revenue	Sale at greater price; sale to minor; alter or forge tickets

Table 39: State Lotteries—Continued

State	Code Section	Distribution of Revenue	Additional Purpose	Prize Subject to Garnishment	Time Limit to Claim Prize/Disposition	Prohibited Related Activities
MARYLAND	State Gov't. §9-101, et seq.	Pro rata basis for prizes and administrative expenses; for sports lotteries, proceeds go to Maryland Stadium Authority; for other lotteries, into General Fund of the state		Under appropriate court order, prize may be paid to person other than winner; any child support arrearage over $150; or any unpaid state or municipal tax	182 days/added to unclaimed prize fund or nondaily/weekly lottery drawing	Sale to minor; forged/altered tickets; unauthorized sale
MASSACHUSETTS	Ch. 10 §22, et seq.	45% payment of prizes; 15% administration and operating expenses; balance State Lottery Fund	Authorized to conduct lottery for the benefit of the arts; provide property tax relief and continue services at the local level	For past due child support on any prizes over $600	1 year/allocated in same manner as other lottery revenue	Forged/altered tickets; sale to minor; sale at greater price
MICHIGAN	MCL 432.1, et seq.	After payment of prizes (approximately 45%) and expenses, net revenue to state school aid fund	10% of yearly state lottery advertising budget not to exceed $1 mil. goes to compulsive gaming prevention fund	For prizes over $1,000, for liabilities to state or support arrearages	1 year/deposited in state school aid fund and distributed pursuant to law	Sales to minors; sale at greater price; unauthorized sale; forged/altered ticket
MINNESOTA	349A.01, et seq.	15% lottery operations; 2.75% advertising; 60% prizes; rest to lottery fund/special revenue fund with 40% of these net proceeds going to Minnesota Environment and Natural Resources Trust Fund		For delinquent state taxes; child support; court ordered restitution; or amount due any other claimant agency	1 year/30% of unclaimed prize money is added to prize pools of subsequent lottery games; 70% of unclaimed money is distributed as follows: 60% to the general fund and 40% to the Minnesota environment and natural resources trust fund	Sale to or purchase by minors; sale at greater price; unauthorized sale
MISSISSIPPI	Prohibited 97-33-31

Table 39: State Lotteries—Continued

State	Code Section	Distribution of Revenue	Additional Purpose	Prize Subject to Garnishment	Time Limit to Claim Prize/Disposition	Prohibited Related Activities
MISSOURI	313.200, et seq.	After expenses and prizes paid, remaining moneys to general revenue fund; 45% prizes, then expenses, remainder to general revenue fund		Only pursuant to an appropriate judicial order; set-offs for delinquent child support	180 days/revert to state lottery fund	Sale to minors; sale at greater price; forged/altered ticket; unauthorized sale
MONTANA	23-7-101	45% prize money; after expenses, net revenue transferred to state lottery fund. Net revenue transferred to state general fund effective 7/1/99		For prizes over $600. those owing child support through state child support enforcement agency	6 months/paid into state lottery fund	Sale to minor; purchase only with cash or check; no credit
NEBRASKA	9-801, et seq.	40% prizes, 25% divided among Education Innovation Fund, Environmental Trust Fund, Compulsive Gambler's Assistance Fund, Nebraska Scholarship Fund	Education Fund to encourage and fund high performance learning innovations, pilot projects, and model programs	On prizes over $500, any outstanding state tax liability or child or spousal support	Period of time set by regulation/used at discretion of tax commissioner for purposes set out in lottery statutes	Sale to person under 19 years of age; at price other than proscribed; unauthorized sale; alter ticket; no phone; mail or credit sales
NEVADA	Prohibited. Art. 4 §24 Nevada Constitution
NEW HAMPSHIRE	287-F:1, et seq.: "Tri-State Lotto" with Maine and Vermont	50% common prize pool; operating costs charged proportionally to each state	For raising additional revenue	Yes	1 year/credited to prize pool	Sale at greater price; sale to minor; unauthorized sale

Table 39: State Lotteries—Continued

State	Code Section	Distribution of Revenue	Additional Purpose	Prize Subject to Garnishment	Time Limit to Claim Prize/Disposition	Prohibited Related Activities
NEW JERSEY	5:9-1, et seq.	Payment of prizes and expenses with appropriations to state institutions and state aid for education	Entire net proceeds to be used for state institutions and state aid for education including higher education and senior citizen education	For arrears of court-ordered child support obligations, and former recipients of Aid to Families with Dependent Children (AFDC), food stamps, or low income home energy assistance who were overpaid	1 year/allocated in same manner as lottery revenue is allocated by state	Forged/altered tickets; sale above fixed price; unauthorized sale
NEW MEXICO	6-24-1, et seq.	50% to prizes minus operating expenses with net remaining revenues: to lottery tuition fund	To benefit state residents by funding critical capital outlay needs of public schools and provide tuition assistance to resident undergraduates at New Mexico post-secondary schools	On prizes over $600, those owing debt to or collected by human services department for child support enforcement	Time period established by authority/paid into prize fund	Sale at greater price; sale to minors; unauthorized sale; no sales on credit; forged/altered tickets; influencing winning of prize through fraud or deception
NEW YORK	Tax §1600, et seq.	40–60% for prizes depending on the game; 45–25% to state lottery fund	Supplemental aid to all school children; signs must be posted to assist compulsive gamblers; special instant game in New York City to benefit anti-crime division	On prizes over $600, applied against past-due support (including alimony, child or spousal support or maintenance) and against any public assistance benefits given an individual within the last 10 years (not to exceed 50% of prize)	1 year/retained in lottery prize account to be used for special lotto or supplemental lotto prizes or for promotion purposes to supplement other games on an occasional basis	Sale to minors (under 18)
NORTH CAROLINA	Prohibited. §14-289, et seq.

Table 39: State Lotteries—Continued

State	Code Section	Distribution of Revenue	Additional Purpose	Prize Subject to Garnishment	Time Limit to Claim Prize/Disposition	Prohibited Related Activities
NORTH DAKOTA	53-12-01 et seq.	50% for prizes, payment of expenses, 5% to compulsive gambling prevention and treatment fund, remainder to state general fund		For prizes over $600, those owing debt to agencies, with priority to child support payments	Set by attorney general, but no more than 1 year	forged/altered tickets; sale to minors; sale above fixed price
OHIO	3770.01, et seq.	50% prize payment less operation expenses; then at least 30% Lottery Profits Education Fund	Lottery Profits Education Fund used to support elementary, secondary, vocational, and special education programs in appropriations made by the general assembly	On prizes over $600, for default of support payment under support order	180 days/returned to state lottery fund in unclaimed lottery prizes fund	Sale at greater price; unauthorized sale; sale to minor; influence lottery sales agent; on Ohio fairgrounds at annual exhibition
OKLAHOMA	Prohibited. Tit. 21 §§1051, et seq.
OREGON	461.010, et seq.; Art. XV §4 Oregon Constitution	50% prizes; 16% expenses; 34% benefit public purpose (state lottery fund for jobs and economic development in Oregon)	To provide additional moneys for public purpose of creating jobs and furthering economic development in Oregon without additional or increased taxes	On prizes in excess of $600, garnishment for person in arrears on child support obligation	1 year/remain property of lottery commission and be allocated to the benefit of the public purpose (may be exempt from 1 year redemption period if in active military service with evidence of possession of winning—then have 1 year after discharge to redeem	Sale at greater price; sale to minors; altered/forged tickets
PENNSYLVANIA	Tit. 72 §§3761-101, et seq.	40% to pay prizes; after expenses, rest pursuant to "Senior Citizens Property Tax or Rent Rebate and Older Persons Inflation Needs Act"	For purpose of providing property tax relief to the elderly and to provide free or reduced fare transit service for the elderly; also to curb illegal gambling operations in Pennsylvania	Yes	1 year/paid to state lottery fund for statutorily prescribed purposes	Sales in excess of fixed price; unauthorized sales; sales to minors

Table 39: State Lotteries—Continued

State	Code Section	Distribution of Revenue	Additional Purpose	Prize Subject to Garnishment	Time Limit to Claim Prize/Disposition	Prohibited Related Activities
RHODE ISLAND	42-61-1, et seq.	45–65% prize fund (keno 45–72%) less expenses; 25% (15% for keno) to general revenue fund (different percentages for video lottery games)		For prizes over $600, set-off for unpaid child support arrearages over $500	1 year/reverts to lottery fund	Sales above fixed price; sales to minors; altered /forged tickets
SOUTH CAROLINA	SC Const. Art. 17, Sec. 7 gives legislature authority to conduct lotteries, 59-150-10 et seq.	45% prizes, 15% expenses, remainder in Education Lottery Account only appropriated for educational purposes and programs		For prizes over $500, subject to attachments, garnishments, or executions issued pursuant to law	180 days/reverts to Education Lottery Account	Sales to minors, altered/forged tickets
SOUTH DAKOTA	42-7A-1, et seq.	Expenses and prizes (approx. 50%) from lottery operating fund; net proceeds to state general fund; state corrections facility construction fund, and state capital construction fund (lottery expenses may not exceed amount of net proceeds to these funds) Video lottery income directly deposited in state property tax reduction fund. SDCL§42-7A-24		For prizes in excess of $100, liability setoff program to satisfy debts owed or collected through state agencies (child support payments have priority)	1 year or period deemed appropriate by executive director/added to prize pools of subsequent lottery games	Counterfeiting lottery tickets; sale at greater price; sales to minors
TENNESSEE	Prohibited. Art. XI, §5 Tennessee Constitution

Table 39: State Lotteries—Continued

State	Code Section	Distribution of Revenue	Additional Purpose	Prize Subject to Garnishment	Time Limit to Claim Prize/Disposition	Prohibited Related Activities
TEXAS	Govt §§466.001, et seq.	Payment of prizes, cost and expenses not to exceed 12%; establishment of pooled bond fund, lottery prize reserve fund, unclaimed prize fund, and prize payment account, balance to foundation school fund		Delinquent tax, child support payments, or default in student guaranteed loan shall be deducted	180 days/provides additional money to state lottery account; $20 million for TX Dept. of Health teaching hospital account, $5 million for Health and Human Services Commission for inpatient hospital services, rest to general fund	Sales to minors; sales by phone; stolen, forged or altered tickets; sale at greater price; sale on credit; unauthorized sale; sale for food stamps or with AFDC check; influencing selection of winner; fraud
UTAH	Prohibited. Art. VI, §27 Utah Constitution
VERMONT	T.31 §651, et seq.; and "Tri-State Lotto," T.31 §671, et seq.	After payment of prizes and expenses, proceeds go to state lottery fund, which after expenses, goes to general fund to be used solely for capital expenses and debt service. Not less than 50% to be paid in prizes			After one year, unclaimed prizes revert to state lottery fund	Sale to minors; sale at greater price; no license to convicted felons.
VIRGINIA	58.1-4000, et seq.	Operating costs and administration not to exceed 10% (with special reserve fund); rest to general fund solely for purpose of public education		Unpaid child support obligations and payment of public assistance owed by individual	180 days/paid into Literary Fund (prizes of less than $25 go into state lottery fund)	Sale over fixed price; sales to minors; altered/forged tickets

Table 39: State Lotteries—Continued

State	Code Section	Distribution of Revenue	Additional Purpose	Prize Subject to Garnishment	Time Limit to Claim Prize/Disposition	Prohibited Related Activities
WASHINGTON	67.70.010, et seq.	State lottery fund used for: payment of prizes and lottery administration; deposits to education construction and student achievement fund; distribution to county for payment of baseball stadium bonds (for no more than 20 years)		On prizes over $600, any debts to state agency or political subdivision may be setoff	180 days/retained in state lottery fund for further use as prizes	Sale to minors; sale at greater price; altered/forged tickets
WEST VIRGINIA	29-22-1	45% disbursement as prizes; 15% operation and administration expenses; excess is net profit: goes to school building debt service fund (up to $18 million); lottery education fund; school construction fund; lottery senior citizens fund; commerce division of tourism and parks		For delinquent payment of child or spousal support	180 days/reverts to state lottery fund for the purpose of awarding additional prizes	Altered/forged tickets; unauthorized sales; sale at greater price; sales to minors
WISCONSIN	565.01, et seq.; Wis. Const. Art. IV Sec. 24	Proceeds deposited into state treasury for property tax relief		Prizes over $1000 are subject to child support payments and spousal support	180 days/used for future prizes	Forging ticket; sales to minors
WYOMING	Prohibited. 6-7-101, et seq.