In the wake of 9/11, New York passed an emergency law expanding the scope of the state’s lottery to include video lottery terminals (VLT’s), and required that at least 60% of the winnings be funneled into a state educational fund.

Since the first VLT casino opened in 2004, the casinos began lobbying for a greater percentage of the winnings. Originally the VLT legislation limited the casino’s take to 25%. Currently the school’s share has fallen from 60% to 45%, and the casinos now keep 45% instead of 25%.

The difference between the original 60% and the current 45% contribution to NY public education is significant. New York’s VLT’s bring in about $1 billion of the $3 billion in New York State lottery profits each year. Buzzfeed’s investigative reporter Kevin Townsend describes that the 15% disparity between the original revenue and the current VLT revenue earmarked for education equates to over $250 million a year loss for the schools for each of the past three years alone.

An additional $200 million was diverted from the education fund to the non-profit New York Racing Association (NYRA) through a special state legislative agreement. The NYRA oversees the operations of the major New York pari-mutuel racetracks, and also keeps 7% of the racino VLT revenue with no cap, for an additional $32 million a year. Buzzfeed investigations also report allegations of corruption including bet tellers laundering drug money and leadership buying political favors.

BuzzFeed is not alone at looking deeply into the political powers-that-be involved in diverting educational funds. A comprehensive report published by Common Cause states that from 2005 through June 2012, gambling and horse racing interests spent nearly $50 million in political money in New York State — over $40 million on lobbying and roughly $7.1 million in campaign contributions.

Townsend reports that the Audit Director of the Office of the New York State Comptroller will be releasing a report in the next few weeks that details alleged misuse of NYRA funds.

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