The Virginia Lottery reaped a record profit last year, providing an unexpected boon to public education and raising some officials’ hopes that Gov. Ralph Northam will seek to restore money cut from the budget this year for expanding the use of school counselors for student mental health.

The $650 million in profits collected in the last fiscal year represents more than $50 million above the lottery revenues included in each year of the revised two-year budget that took effect July 1.

“That’s a pretty strong finish,” House Appropriations Director Robert Vaughn said Wednesday.

But while Vaughn hopes the extra money will prompt Northam to amend the budget to expand the number of school counselors — a priority of the House of Delegates — the state’s top finance official cautioned that the revenues might not be sustainable as other gambling outlets expand in Virginia to compete for those dollars.

“We knew the lottery was looking for a good year, and we’ll put it to good use, but we have to be careful in using it on continuing operations,” Secretary of Finance Aubrey Layne said in an interview Wednesday.

Lottery profits are earmarked for education, with 40 percent to be returned directly to local school systems to use as they like. The remainder pays the state’s share of K-12 education under the Standards of Quality formula that determines local share, as well as other categorical educational needs.

“With this funding we are not only supporting a variety of important programs in our public schools, we are also making critical investments in our young Virginians and expanding opportunities for them to succeed,” Northam said in an announcement of the lottery results.

The governor will propose a new two-year budget in December, along with revisions to the current budget for this fiscal year. The General Assembly will act on the budget during its 60-day session that will begin in January.

Vaughn said he hopes Northam will use some of the lottery windfall to restore counseling positions cut during budget negotiations earlier this year. The governor had proposed $36 million to allow the state to hire enough school counselors to get closer to a ratio of 1 counselor to every 250 students, compared with the current ratio of 1 to 350 — and higher in middle and elementary schools.

The House backed the governor’s counselor funding, which supported one of the recommendations of a select committee on school safety that House Speaker Kirk Cox, R-Colonial Heights, urged in response to the mass shooting at a high school in Parkland, Fla., early last year.

But the funding was cut by two-thirds — to $12.1 million, or enough to hire 250 counselors statewide — in a budget compromise with the Senate.

Layne said the administration has made no decisions about how the additional money should be used. He warned that state officials don’t know the effect on the lottery from casino-style gambling operations Colonial Downs has opened in New Kent County or its associated “historical horse racing” emporiums that have opened in Richmond and Roanoke County, with at least one more to come in Hampton.

Gambling is likely to be a dominant issue in the General Assembly next year, as legislators review a pending study of the potential for allowing casinos in as many as five localities, as well as Northern Virginia, and permitting sports gambling under a landmark U.S. Supreme Court ruling last year that gave states authority to regulate betting on sporting events.

“I don’t have a clue whether this [lottery profit] is a barometer for what’s going to happen next year,” Layne said.

For the lottery, the expansion of gambling venues represents both a potential threat and an opportunity, as legislation that directed the pending study by the Joint Legislative Audit and Review Commission would give the lottery board authority to regulate new gambling enterprises.

“As the competitive environment for gaming continues to evolve in Virginia, the Lottery remains a successful, well-run business and a proven, trusted brand,” Virginia Lottery Executive Director Kevin Hall said in the governor’s announcement. “We’re working to develop and deliver new types of games in new ways using new technology to meet customers where they are today.”

The lottery collected more than $27 million in one week in the run-up to a Mega Millions drawing in October that featured a $1.537 billion jackpot.

The $650 million profit from last year was more than $40 million higher than the previous record, which was $606 million in fiscal 2017-2018.

The self-funded agency also has unveiled a new way of playing the lottery with MobilePlay, allowing customers to play on a mobile app with their smartphones and other personal devices while on the premises of the 5,300 retailers that sell lottery tickets in Virginia.

“Whether or not you choose to purchase lottery products, your local public schools still share in the benefits of this well-run business,” said Ferhan Hamid, chairman of the lottery board.

mmartz@timesdispatch.com

(804) 649-6964

Staff writer Justin Mattingly contributed to this report.

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