The History, Benefits, and Concerns of the Illinois State Lottery

By: Quinn Newman


Overview 

The Illinois Lottery was established in 1974 as a way to help fund Chicago’s K-12 school programs as well as many other causes over the years. The lottery generates about $3 billion per year with the state collecting over $700 million. Originally intended to help fund education, the program has received its fair share of criticism and success. This piece provides a history of the legislation, its purpose, and the future of the organization. 

History 

The Illinois Lottery was established in 1974 as a way to help fund Chicago’s K-12 school programs as well as many other causes over the years. Prior to its intuition, Illinois public schools were traditionally underfunded due to an over reliance on property taxes, leading to unequal distribution of funds from district to district and inadequate schools across the board. The Lottery was proposed as a solution to this lack of funding in order to make up for the fact that areas with “less property value must tax at a higher rate to make up for a lower “Equalized Assessed Valuation” (EAV) per pupil, such areas are less likely to attract industrial and commercial business” meaning less spent per student. 

Sponsored by then-State Representative Edolo J. Giorgi of Rockford, the Lottery was an instant success, selling over 100,000,000 tickets by the end of 1974. The rest of the decade saw expansion of different games people can play. 

More investment into the Lottery and advertising throughout the 1980s netted nearly $2 billion dollars. With that success, a new department for the administration of the Lottery was created to help allocate revenue to the Common School Fund as opposed to the General Revenue Fund. 

In the early 1990s, the Lottery’s nightly drawings were broadcasted throughout Chicagoland. As its popularity increased, the state partnered with other states to create the “Big Game,” consisting of prizes totaling thousands of dollars such as the notable “Mega-Millions” jackpot. 

By 2000, over $10 billion dollars was allocated to the Common School Fund with much of the success being attributed to the innovative marketing campaigns used by the department to advertise the different games available. This included advertising on the Chicago “L,” highlighting previous winners, and extensive awareness campaigns. Since then, the Lottery has brought in billions of dollars for education in the state along with other projects and has been widely popular.

Revenue Sourcing

Although revenue received from the Lottery is variously allocated, most of it goes towards education if not spent on winners. Nearly 65 cents per every dollar goes towards prize money, 25 cents goes towards education, and the rest goes towards other causes. This includes recent initiatives with the Illinois Department of Public Health to help support individuals living with HIV/AIDs with a special ticket that raised over $7.6 million with HIV/AIDS. While a majority of the funding goes towards education, the fact that the funding is diversely spread out can be seen as a way to support the values of the average citizen of the state who care about supporting those with diseases like HIV and other charitable initiatives. This benefit for the community is self-evident, but the benefit to the individual winner is also great. 

Figure 1: Pie Chart created by Prairie State Policy via data Illinois Association of School Boards

Unlike in other states, Illinois protects the identity of those who win Powerball, Mega Millions, and all the other games. In 2018, then-Governor Bruce Rauner signed a bill into law to help protect people who win the Lottery from fraud and those looking to take advantage of them.

The Illinois Lottery is also an economic stimulator that benefits the businesses it cooperates with. Around 7,000 retail locations have been able to rake in around $2,928,423,481 in gross sales in 2018 alone. This has brought much needed sales to retail locations especially during the current economic slowdown from COVID. 

Concerns 

Despite its overall popularity, there are those who argue the Lottery does not distribute its fund in an equitable way, it is difficult to track where the dollars go, and that the pension fund takes up too much of the money meant for the classroom. Although many do not argue dismantling the institution, most of it is how to better enhance the efficiency of the organization. For example, the way the Lottery allocates money to the Common Education Fund and the other projects that makes it hard to figure out which money is going where. Additionally, some citizens have voiced concerns over transparency and complaints that the Lottery does not bring nearly enough funds for the needs of children’s education and that more of the revenue needs to be pointed towards. 

There are also concerns that more money goes into the Teacher’s pension fund as opposed to the classroom because the contributions to the Teachers’ Retirement in CPS have been paid from the Common School Fund. There are also those who argue that the money is spread disproportionally around the state. Several sources claimed “about 70 percent of Illinois’s Lottery funds come from the Chicago Metropolitan Area, and spending within Chicago is concentrated in communities of color on the South and West Sides.”

Conclusion

Despite its troubles, the Lottery continues to be important in Illinois citizen’s lives across the state and remains a reliable funding source for schools. Without that funding k-12 education throughout the state would be almost entirely reliant on property taxes which, as many people are leaving the state, cannot be relied on for funding in the future. Moreover, the lottery produced roughly $3 billion in revenue. in 2019. Without these funds the Illinois’ education, rare disease research, and other programs would be at risk and would result in even greater inequities. The fiscal benefit of having the Lottery certainly outweighs its cost, although room for reform is apparent. 

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