Tennessee Lottery Revenue Drops, Raising Concerns Over Future Scholarship Funding

Slowdown in lottery growth could impact HOPE Scholarship and Tennessee Promise programs

Apr. 2, 2026 at 3:52am

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The Tennessee Education Lottery, which helps fund scholarships like the HOPE Scholarship and Tennessee Promise, saw an 18% revenue drop in the 2024-2025 fiscal year, with expenses increasing by 7%. Officials cited the rise of sports betting as a contributing factor, and lawmakers warned the slowdown could have real consequences for the state's ability to effectively fund these programs in the coming years.

Why it matters

The Tennessee Education Lottery is a crucial funding source for scholarships that provide educational opportunities for many Tennessee students. A significant decline in lottery revenue could jeopardize the long-term stability of these programs and limit access to higher education for those who rely on them.

The details

State data shows lottery revenue dropped by about 18%, or nearly $90 million, compared to the previous year, while expenses increased by roughly 7%. Tennessee Lottery President and CEO Rebecca Paul said part of the shift may be due to the rise of sports betting, which has slowed the lottery's annual growth from around 4% to just 2%.

  • The decline in lottery revenue occurred during the 2024-2025 fiscal year.
  • Last year, lawmakers redirected most of the revenue from sports betting to other projects, including building and maintaining public schools.

The players

Rebecca Paul

The President and CEO of the Tennessee Lottery.

Bo Watson

A Republican state senator representing the Hixson area, who warned that the slowdown could have real consequences for the state's ability to effectively fund lottery-backed programs.

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What they’re saying

“We do believe sports wagering has had some impact on this. We've taken that from about four percent growth a year to 2% growth.”

— Rebecca Paul, Tennessee Lottery President and CEO

“Essentially, we'll no longer have the capacity in the next couple of years to fund all of the programs effectively that we have tied to the lottery.”

— Bo Watson, State Senator

What’s next

State officials said some of the shortfall has been offset by revenue from sports betting, but lawmakers will need to address the long-term stability of lottery-funded programs and determine how to ensure continued support for scholarships like the HOPE Scholarship and Tennessee Promise.

The takeaway

The decline in Tennessee Lottery revenue raises concerns about the future funding of crucial scholarship programs that provide educational opportunities for many students in the state. Lawmakers will need to find a way to address this issue and ensure the long-term sustainability of these important initiatives.