As in most US states, Missourians love to play the lottery. Whether they buy scratch tickets or Powerball entries, the state takes a cut. And in Missouri, that money is spent on one thing: education.
Around 40% of in-state lottery sales go to Missouri
The Missouri Lottery began in 1986. In-state lottery drawings, scratch tickets and multi-state drawings are open to Missouri gamblers 18 and over. Unfortunately, online lottery purchases are prohibited in The Show Me State. And there’s no effort in the Missouri General Assembly to change that at this time.
The Mega Millions and Powerball jackpots have surpassed the $1 billion mark six times since 2016, three times in the last year. While these jackpots are massive, the winner does not take home the full amount. Withholdings are taken for both federal and state taxes, though percentages vary depending on the amount won and a state’s laws.
In Missouri and in most other states, around 60% of winnings from in-state lotteries and scratch tickets go to the winners. The remaining 40% goes to the state after deducting administrative expenses.
With multi-state lotteries like Mega Millions and Powerball, approximately 50% of ticket revenue remains in the prize pool. The other half is split between participating states.
Missouri taxes winnings over $600
In Missouri, the state taxes lottery winnings over $600 at 4%. The IRS takes 24% of winnings over $5,000. Depending on the amount, winners may also owe additional taxes in the future based on income.
Of all participating states, Missouri is on the lower end when it comes to state tax withholdings. North Dakota withholds the lowest percentage, just 2.9% for winnings $5,000 and higher. New York withholds the highest amount, a staggering 10.9%.
Most states have set the minimum threshold for state tax at $5,000, but Missouri has set theirs at $600.
There are also some states and US territories that do not collect any taxes from lottery winnings, such as:
- New Hampshire
- Puerto Rico
- South Dakota
- US Virgin Islands
Missouri funds public education with lottery proceeds
Each state selects the particular causes that benefit from its lottery proceeds. Some choose multiple beneficiaries, while others pick just one.
In August 1992, Show Me State voters passed Amendment 11, earmarking Missouri lottery proceeds for the sole benefit of public education.
The Missouri Lottery has allocated over $7.5 billion toward public education programs since 1986. It makes up around 4% of the state’s total funding for public education.
During 2022 alone, more than $337 million in lottery proceeds were allocated to Missouri’s public education programs. The Missouri Department of Elementary and Secondary Education (MDESE) distributed $203.3 million of this across various programs last year. In some instances, this funding accounted for up to 89% of a project’s resources. Last year’s benefiting programs included:
- Foundation Program: $140.8 million (4% of total program funding)
- Special Education Excess Costs: $19.6 million (33% of total funding)
- Early Childhood Special Education Program: $16.5 million (8% of total funding)
- Classroom Trust Fund: $15.3 million (4% of total funding)
- Residential Placements: $5 million (89% of total funding)
- Performance-Based Assessment Program: $4.3 million (20% of total funding)
- Vocational Rehabilitation Program: $1.4 million (2% of total funding)
- Virtual Schools: $389,778 (36% of total funding)
Looking ahead, the MDESE expects to collect around $388 million from lottery proceeds in 2023. And since Missouri sports betting remains illegal for the time being, eager bettors will likely continue turning to the lottery for solace.