The California Lottery was created with a ballot measure in 1984, approved by 58 percent of voters. Ticket sales began on October 3, 1985, with an instant game called California Jackpot. In the first 24 hours, 21.4 million tickets were sold, and sales reached $1 billion after only four months.
The Lottery’s first draw game was Lotto 6/49, launched October 14, 1986. Today, draw game offerings include SuperLotto Plus, Mega Millions, Fantasy 5, Daily 4, Daily 3, Daily Derby and Hot Spot, a pari-mutuel version of fast-draw keno. By law, every lottery game in California must have a pari-mutuel prize structure.
A significant step forward was taken in April 2010, when the state Legislature approved a change in the Lottery Act that allowed the Lottery to use its discretion in setting prize payouts. Assembly Bill 142 allowed the Lottery to follow best practices around the industry to increase sales and therefore increase revenues to beneficiaries.
Under the original Lottery Act, education was mandated to receive 34 percent of sales, with administrative expenses capped at 16 percent of sales. AB 142 changed those requirements and set an expense cap of 13 percent, with prizes and education contributions making up the remaining 87 percent. The Lottery now has the flexibility to pay out a higher percentage of its revenues in prizes than it has in the past, but only if it does so in a way that increases the total amount of money that goes to public schools and colleges. These changes paved the way for a significant increase in sales.
The Lottery’s primary mission is to provide supplemental funding for public schools and colleges. It generates more than $1 billion annually in revenue for education, distributed as follows:

• 63 percent goes to salaries and benefits for educators, helping school districts fund class-size reduction programs and hire classroom aids, nurses, school psychologists and specialists.
• 20 percent is used to purchase instructional materials for the classroom, including textbooks, classroom supplies, computers and software, library books and laboratory equipment.
• 17 percent supports other educational programs and services.