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North Carolina Lottery Sales Surge as Education Transfer Share Declines, Audit Finds
A North Carolina performance audit found that lottery sales reached $6.6 billion in fiscal year 2025 while the share transferred to education fell as Digital Instant games expanded.
North Carolina lottery sales rose by more than half between fiscal years 2023 and 2025, while the share of sales transferred to education fell as Digital Instant games expanded rapidly, a performance audit released September 8, 2026, found.
The North Carolina Office of the State Auditor reviewed the changing factors behind transfers to the Education Lottery Fund in an audit of the North Carolina Education Lottery. The review examined sales, the lottery's game mix and expenses during the audited period.
Gross lottery sales increased from $4.3 billion in fiscal year 2023 to $6.6 billion in fiscal year 2025. The growth in total sales did not produce a corresponding increase in the percentage directed to the Education Lottery Fund.
That portion declined from 23% of sales in fiscal year 2023 to 16% in fiscal year 2025. The change means that education transfers represented a smaller share of the lottery's overall sales by the end of the period examined by auditors.
The total dollar value of those transfers followed a different pattern. Transfers increased from $1.02 billion in fiscal year 2023 to $1.09 billion in fiscal year 2024, then decreased slightly to $1.08 billion in fiscal year 2025.
The audit identified Digital Instant games as a major part of that shift. The games had no reported sales in fiscal year 2023, but produced $2.60 billion in sales by fiscal year 2025.
Digital Instant games accounted for about 40% of all lottery sales in fiscal year 2025. Their expansion changed the composition of the lottery's business during the same period that traditional lottery game sales declined.
The audit attributed the lower transfer percentage primarily to the growth of Digital Instant games, the decline in traditional-game sales and the use of games with higher payouts. Those factors affected how much of the lottery's sales could be transferred to education.
Prize expense also increased during the period under review. It rose from 66% of gross sales to 76%, reducing the share of sales remaining for other purposes, including transfers to the Education Lottery Fund.
Despite the lower percentage, the lottery continued to generate substantial dollar amounts for the state. The North Carolina Education Lottery estimated that it raised $1.14 billion for education in fiscal year 2026.
The lottery also reported generating more than $1 billion for the state in each of the four years before its September 8, 2026 publication. Current draw information is available through the lottery's latest North Carolina lottery results page.
The North Carolina Education Lottery reported raising more than $13 billion for North Carolina since its launch in 2006. More than 100 school construction projects have benefited from grants funded through the lottery.
The audit's findings raise a policy question about how the Education Lottery's performance should be measured. Auditors recommended that the lottery and the General Assembly clarify whether the primary objective should be maximizing the total dollars transferred to education, maintaining a minimum transfer percentage or balancing both goals.
That recommendation reflects the tension documented in the audit. North Carolina's lottery recorded sharply higher sales and continued to transfer more than $1 billion annually, but the percentage of sales going to education declined as Digital Instant games became a significant part of the program and prize expenses grew.