The California State Lottery Act of 1984 authorizes a California State Lottery and provides for its operation and administration by the California State Lottery Commission and the Director of the California State Lottery. Existing law requires that not less than 87% of the total annual revenues of the state lottery be returned to the public in the form of prizes and net revenues to benefit public education, as specified, and requires at least 50% of annual lottery revenues to be returned to the public in the form of prizes. Existing law, to become operative following notification from the Controller to the Legislature and the Governor that certain events have occurred, changes the revenue allocation formula so that not less than 84% of the total annual revenues of the state lottery be returned to the public in the form of prizes and net revenues to benefit public education, as specified, and requires 50% of the total annual revenues to be returned to the public in the form of prizes.

This bill would require the director, on or before August 1, 2022, at least once every 5 years, to conduct a study to determine the optimal prize payout rate range to maximize the amount of funding allocated to public education each year by the lottery and would require the director to recalculate the optimal prize payout rate at least once every 5 years. lottery. The bill would require the commission, commencing with the 2023–24 2021–22 fiscal year, and consistent with the above formula, to use the optimal prize payout rate range to set the lottery’s budget each fiscal year.