Where does Mega Millions money go after the jackpot?

(CBS News) With so many tickets being sold for the big Mega Millions jackpot Friday night, what happens to all that revenue, once the winners are paid? CBS News chief investigative correspondent Armen Keteyian looked into it.

In 2011, more Americans played the lottery than regularly attended church, bringing in $56 billion last year alone.

Revenue from that pie is divided in three ways: About 60 percent goes to prize winners; 15 percent to retailers, marketing and operations; and 25 percent, or about $14 billion, goes back to the states for government services.

Winning Mega Millions numbers announced

Duke professor Charles Clotfelter is the author of a book on state lotteries. "It's very hard to say that these lottery dollars really make a difference," he said.

Overall, 27 states earmark some or all lottery revenue for education. In Colorado, the dollars go to environmental protection; in Pennsylvania, senior citizen programs; and in Kansas, some of the money pays for juvenile detention facilities. Many states bought into the lottery based upon the belief they were adding more and more money for education.

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But a 2007 CBS News investigation discovered that was little more than a myth -- that state lotteries covered only a fraction of state education spending.

For example, in California last year, just one percent of that's state's $53 billion budget for K-12 education came from lottery funds.

Is The Lottery Shortchanging Schools?

"The net effect of say earmarked education lottery revenue on education expenditures is close to zero," said Clotfelter

The other big winner here will be the IRS -- the federal tax alone on a lump sum payment in the neighborhood of $100 million.

As far as what happens to folks who win the lottery? CBS News' research department learned that nine out of 10 burn through their winnings in five years.

[centralcacoast]

So in CA, that means that 530 million less would have gone to the schools without the Lotto. I know my school district can't afford any more cuts. No one ever said Lotto was going to make school districts rich. but it helps. And who buys? EVERY class is included.

[chyenna-2009]

Duke professor Charles Clotfelter is the author of a book on state lotteries. "It's very hard to say that these lottery dollars really make a difference," he said.


Overall, 27 states earmark some or all lottery revenue for education. In Colorado, the dollars go to environmental protection; in Pennsylvania, senior citizen programs; and in Kansas, some of the money pays for juvenile detention facilities. Many states bought into the lottery based upon the belief they were adding more and more money for education.


Mega Millions jackpot swells to $640 million
Mega Millions: What to do if you win
Long odds for winning Mega Millions jackpot


But a 2007 CBS News investigation discovered that was little more than a myth -- that state lotteries covered only a fraction of state education spending.


For example, in California last year, just one percent of that's state's $53 billion budget for K-12 education came from lottery funds.


Is The Lottery Shortchanging Schools?


"The net effect of say earmarked education lottery revenue on education expenditures is close to zero," said Clotfelter


The other big winner here will be the IRS -- the federal tax alone on a lump sum payment in the neighborhood of $100 million.

WHY DO CITIZINS IN THE ABOVE STATES LISTED ABOVE ALLOW THRSE CROOKS TO STEAL THEIR MONEY? SO, WHERE DOES THE MONEY REALLY GO. COME ON PEOPLE, STAND UP FOR YOURSELVES. GO AND GET YOUR MONEY BACK. ARE YOU AFRAID TO STAND UP AND FIGHT FOR YOUR RIGHTS?

[oneStarman]

I GUESS this is how we are going to have to fund HEALTH CARE. We will sell Lottery Tickets for Surgeries.

[Fill_F_Fill]

If government wants to limit gabling, they should stop lotteries. I mean, who buys lotto tickets? The rich or the poor?

[skeezix06]

I think my personal bank account would be a place for it to start at. lol.