Lottery income per U.S. state in 2013. This income is divvied up into three places. Some goes to the prize winner,
some pays for the cost of administering the lottery and the rest is government revenue. Several states don't administer
lotteries: Alabama, Alaska, Hawaii, Mississippi, Nevada, Utah.
Wyoming started up a lottery in July 2013 and isn't included
here. The District of Columbia also runs a lottery but data isn't provided in the source data.
West Virginia really gouges it's residents. Less than 20% of its
lottery income goes to prize money and it has the fifth highest
lottery income per person.
Delaware and Rhode Island aren't much better.
Something weird is going on with the New Jersey data. The apportionments don't add up to the total lottery income
(click the 'Share of Lottery Income' radio button). This is an issue with the source data.
I think the prize money shown here is taxed, both at the federal and state level. Assuming this is the case, government revenues from lotteries are effectively higher than the number shown here. This site, USA Mega, shows how the tax rates across states.
Data source: U.S. Census Bureau