State lottery sales are down. Here’s what that means for programs that rely on the revenue

While casino gambling revenue in Nebraska continues to grow, the financial picture for the Nebraska Lottery, operated by the state’s Department of Revenue, is less rosy.

Nebraska Lottery sales declined by more than 16% in the fiscal year ending in July 2025, according to a report released Monday by the state auditor’s office. The $36 million drop in sales also resulted in a nearly $10 million decline in the lottery’s transfers to beneficiary funds.

The lottery beneficiaries are outlined in a constitutional amendment that was approved by Nebraska voters in 2004.

Lottery proceeds are distributed among the Nebraska Environmental Trust Fund (44.5%), the Nebraska State Fair Board (10%), legislatively directed education programs (44.5%) and the Compulsive Gamblers Assistance Fund ($500,000+1%).

When lottery revenues decline, the beneficiaries can suffer.

The Nebraska Environmental Trust, for example, receives its entire operating budget from lottery funds. Executive director Holly Adams said the smaller transfers mean her organization will award fewer or smaller grants. The Environmental Trust awards grants to projects that protect wildlife habitats and improve air, water and soil quality.

Around 40% of the Nebraska State Fair’s operating budget comes from the Nebraska Lottery. State Fair Executive Director Jaime Parr said most of that is used for capital improvement projects.

“Video screens that we changed out a couple years ago come with a hefty price tag,” she said. “We would not be able to do that again right now, with the forecast that is being shared about the lottery.”

Each November, beneficiaries meet with the Nebraska Lottery to receive a revenue forecast. Parr said the forecast allowed the fair to plan for a lower year and adjust its budget accordingly.

Education programs were also hit by lower lottery sales.

Around two-thirds of the funding for the Nebraska Opportunity Grant program comes from the state lottery. The Nebraska Opportunity Grant was awarded to 13,386 students in the most recent fiscal year, down slightly from the prior year.

Any student who attends a Nebraska postsecondary institution and has a minimum Student Aid Index as determined by the Free Application for Federal Student Aid (FAFSA) is eligible. However, only around 43% of eligible students received grants due to a lack of funds, according to Ritchie Morrow, a financial aid officer with the Nebraska Coordinating Commission for Postsecondary Education.

‘When we have a reduction in the money that's available to be awarded to those students, it's either fewer students that are able to be helped or less dollars to them, less money that can be awarded to students to help with their educational expenses,” he said.

In September, the lottery reported higher revenue and marked its sixth best three-month period since its inception in 1993, resulting in more than $14 million being transferred to its beneficiary funds. That period coincided with a national Powerball jackpot of $1.787 billion that was won Sept. 6.

State auditor Mike Foley is not so sure the short-term bump will last.

“The longer-term impact of new forms of gaming on future lottery proceeds seems ominous,” Foley said. “The protracted course of lottery ticket sales is what matters most, and only time will tell if it experiences a significant ongoing decline.”

Foley speculated that online gambling, whether through potential mobile sports betting legalization or other online, out-of-state platforms, could further hurt lottery revenues.

Nebraska Lottery Director Brian Rockey said he shares the auditor’s concern regarding the decline in revenue, while highlighting continued interest in large lottery jackpots.

"The gaming landscape in Nebraska has changed dramatically in recent years," he said. "But as the Auditor noted, the Lottery has seen revenue surges during recent high jackpot periods, confirming that Nebraskans are still enthusiastic lottery players."