N.C. lottery sales fall short of expectations in first fiscal year

Ticket sales for the North Carolina lottery's first fiscal year fell well short of expectations, generating about $110 million less in education funds than legislators had projected.

The North Carolina Education Lottery on Tuesday put another $69.4 million in a dedicated state fund for education, making the final quarterly transfer to the fund for the year ending June 30.

The Lottery Education Fund has now received $375.3 million since the first tickets were sold in March 2006. Fund money, which is equal to at least 35 percent of net lottery revenues, is earmarked for initiatives such as class-size reduction, preschool programs, school construction and college scholarships for needy students.

"We think this is enormous that in our first 15 months of operations the (lottery) has raised over $375 million of new money for North Carolina's students," Tom Shaheen, the lottery's executive director, said in a written statement.

The lottery also said it had generated gross sales of $889.3 million for the previous fiscal year, about 25 percent less than the $1.2 billion in ticket sales originally projected in the lottery's first full year. This spring, Shaheen said the lottery would be hard pressed to reach $1 billion in ticket sales.

Overall lottery revenues, including unclaimed prizes and other items, reached $894 million for the fiscal year.

The gross sales resulted in $313 million in education funds from the lottery during the year, less than the $425 million that legislators projected in last year's state budget.

Lottery officials did not immediately return a message Tuesday asking about the lower-than-expected sales, but Shaheen has said in the past that he believes one of the reasons is low prize payouts, particularly for scratch-off games.

Gov. Mike Easley wants legislators this year to tinker with the lottery law passed in 2005 to give the lottery more flexibility in raising the prize payouts, which he says will encourage more people to buy tickets.