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.

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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.

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"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.

  • Armen Keteyian

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