Outgoing Tennessee lottery head optimistic that revenue for college scholarships won’t keep dropping

Tennessee’s outgoing chief executive of the lottery education corporation told state officials she was optimistic revenue designated for college scholarships won’t keep falling.

“I don’t think you’ll see the same level of growth,” said Rebecca Paul, the Tennessee Education Lottery CEO, to the state funding board on Oct. 19. “But I think we’ve stemmed the decline.”

Lottery officials project revenue will remain flat for the next several years, but not fall as it has over the past five years. 

Tennessee legalized lottery and scratch-off tickets in the early 2000s, earmarking the revenue for college scholarships. For years, the lottery generated hundreds of millions of dollars and grew consistently, allowing officials to expand grants to nearly 170,000 students.

Last year, Tennessee awarded about $500 million in college scholarships while the lottery generated roughly $420 million, creating a structural deficit after Tennessee legalized online-only sports betting in 2019.

“Most people who do sports betting have bought a lottery ticket or two,” Paul said. “Take $5 billion out of the market, and it has to come from somewhere.”

State lawmakers have been playing a more active role in the lottery and its revenues since legalizing sports betting. Initially, sports gambling money went to the lottery education fund and the lottery corporation regulated it.

But in 2025, lawmakers diverted that revenue to schools as part of the deal to pass private school vouchers, creating the structural deficit.

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Tennessee House Speaker Cameron Sexton, a Crossville Republican, led a successful effort earlier this year to pass legislation to reset the lottery board and make Paul’s compensation package a public record.

Paul has led the state’s education lottery since its founding and is one of the state’s highest-paid employees, earning $650,000 a year, a salary that lawmakers have scrutinized since she was first hired. She is stepping down at the end of the year, and the state has not yet chosen her replacement. 

Sexton has played an active role in wrestling sports betting regulation away from the lottery, amid complaints about the suspension of a company owned by a prominent financial donor to his political campaigns.