27% of Michigan Lottery Revenue Totalling $1.3 Billion Sent to School Aid Fund

The Michigan Lottery emerged as perhaps the most viable sector of the state’s billion-dollar gambling industry in 2023, after yet another financially impressive year. Unlike the sports betting and casino segments that pay direct taxes to the state of Michigan, the Michigan Lottery contributes to the state through the School Aid Fund.

After another over $1 billion sent to the School Aid Fund, the Lottery has now supported public education in the state with over $28 billion since 1972. This is also the fifth year since 2019 that lottery contributions to the Fund have been at least $1.3 billion.

Each fiscal year, the Michigan Lottery expresses its expenditure in terms of the cent spent per daily gotten from lottery tickets. For the 2023 fiscal year, the lottery earmarked 61 cents for every dollar to player prizes, 27 cents to the School Aid Fund, nine cents to commissions for ticket retailers while the remaining three cents is used to fund the Lottery’s administrative costs.

According to Governor Gretchen Whitmer, this fixed contribution amounted to over $1.3 billion. Michigan law requires that all profits generated from the lottery be directed to the School Aid Fund, thereby explaining why the amount is so enormous. This Fund is used to support and improve public education across the state.

“The Lottery’s contribution of $1.3 billion to the School Aid Fund provides a critical source of financial support for public schools throughout Michigan,” Jessica Weare, the acting Commissioner of the Michigan Lottery said in a statement.

“Continuing the incredible streak of billion-dollar contributions to the School Aid Fund is a testament to the hard work and ingenuity of the entire Lottery team, the dedication of our retailers and vendors, and the support of Lottery players.”

In 2022, the Michigan Lottery contributed $1.25 billion to the School Aid Fund while in 2021, the contribution was significantly higher with the Fund receiving approximately $1.42 billion. The streak of billion-dollar contributions started in 2019 and has continued ever since. During this period, the amount generated into the School Aid Fund is well above $6.2 billion.

“The Michigan Lottery’s fifth-straight contribution of more than $1 billion to our state’s School Aid Fund will improve education outcomes and support students,” Gov. Whitmer said in a statement.

“In addition to investing in our schools, each Lottery ticket purchase also supports local businesses, building on our economic momentum. With about 97 cents of each dollar spent on the Lottery returned to Michiganders in the form of contributions to the School Aid Fund, prizes, and commissions to local vendors and retailers, the Lottery makes a real difference for communities across Michigan. Congratulations to the Lottery team on another successful year.”

For the third year running, the Michigan Lottery returned $3 billion worth of player prizes in 2023. That brings the total prize amount collected by players since 1972 above the $50 billion mark. Retailers also received over $350 million in commissions for ticket sales. Vendors and retailers have earned almost $1.7 billion in ticket commissions since 2019.

The market for lottery tickets have burgeoned significantly in 2023, with lottery tickets on sale in over 10,000 stores across the Great Lakes State. In fact, about 6% of that figure were said to have sold individual tickets worth more than $1 million.

While it is a tad too early to call it, there is an anticipation that Michigan may cross $2 billion in total tax revenue and contributions for 2023. Back in 2022, the state reported a total of $1.96 billion from its tax contributions.

$1.25 billion of that figure came from the Michigan Lottery to the School Aid Fund, making the Lottery the biggest tax contributor in the state. $399.9 million came from Michigan online casinos while another $20.5 million was generated by online sportsbooks.

Detroit casinos were the third largest contributors with a tax revenue of $257.4 million with tribal casinos trailing in fourth place after pooling $30.4 million worth of taxes.

As it stands, the Lottery’s contribution is already $50 million more than the previous year. In the same vein, tax revenue from online casinos alone currently total $441.3 million, with December’s figures yet to be considered. All of this combine to make the $2 billion projection quite feasible.