A co-chairman of the Legislature's lottery oversight committee pressed lottery Director Bishop Woosley on Thursday about his plans to improve sales and grow funds for college scholarships.
The Arkansas Scholarship Lottery expects to raise less money for scholarships for the third-consecutive fiscal year.
"It's time for us to start thinking outside the box," committee Co-chairman Sen. Jimmy Hickey, R-Texarkana, told Woosley.
Hickey said deploying electronic-monitor games, which lottery officials had proposed, isn't an option for boosting ticket sales and sustaining scholarship funds.
"We need somehow to get some clear direction on what we are trying to do to increase those revenue numbers, along with the expenses that we've already cut," Hickey said. "I've been getting question after question [about] what are we going to do now."
The lottery plans to hire a consultant in the next few months to draw up a business plan, said Woosley, who has been director since February 2012.
He said the lottery has been successful at improving scratch-off ticket sales, noting that scratch-off sales have increased for the first time in three years.
The lottery has added Wal-Mart Stores Inc. as a retailer, rebranded its advertising campaign and ended two draw games, he said. It also plans to boost its advertising for other draw games, such as the Lucky for Life game that's more profitable than scratch-off tickets, he said.
On Feb. 26, Gov. Asa Hutchinson signed into law Hickey's bill abolishing the nine-member Lottery Commission and merging the lottery into the state Department of Finance and Administration.
The lottery has helped finance scholarships for more than 30,000 students in each of the past five fiscal years. But the Legislature has cut the size of the scholarships for some future recipients three times, partly as a result of the lottery's net proceeds falling short of initial projections.
During the first 11 months of fiscal 2015, which ends June 30, revenue has dipped by $5.2 million (1.4 percent) from the same period in fiscal 2014 to $375.4 million, Woosley reported.
Scratch-off ticket sales have increased by $8.7 million (3 percent) to $306.6 million in fiscal 2015, while draw-game ticket sales have declined by $14 million (17.1 percent) to $68.1 million.
The multistate Powerball and Mega Millions jackpot games accounted for $13.5 million of that drop in what's a nationwide problem, he said.
The lottery has raised $64.1 million for scholarships during the first 11 months of fiscal 2015, a decline of $5.3 million (7.7 percent) from the same period in fiscal 2014, Woosley said.
But that doesn't factor in $4.4 million in unclaimed proceeds during the first 11 months of fiscal 2015 that will be transferred to scholarships at the end of the fiscal year.
Woosley said he expects the lottery will raise about $74.3 million or $74.4 million for college scholarships in fiscal 2015, if it meets its projected budget in June, and fall short of his projection for about $78.1 million.
The lottery started selling tickets on Sept. 28, 2009.
After raising $82.7 million for scholarships in nine months in fiscal 2010, the lottery raised $94.2 million during the first full fiscal year, 2011.
Proceeds for scholarships climbed to $97.5 million in fiscal 2012 but dropped to $90.3 million in fiscal 2013. In 2014, proceeds fell to $81.4 million.
The Arkansas Academic Scholarship program is financed through the lottery, plus $20 million a year in state general revenue and a $20 million lottery reserve account used to temporarily cover cash shortfalls in the program.
Hickey asked Woosley about the plans for hiring a consultant.
Woosley said that the governor's office is reviewing a proposed request for qualifications for a consultant to develop a business plan and that the office had been reviewing the proposal for less than a week.
The proposed request for qualifications envisions hiring a consultant during the first week of August.
The consultant would develop a business plan and "serve us on an hourly basis to help us implement that business plan as needed," Woosley said.
After the committee's meeting, Woosley said he has budgeted $200,000 for hiring a consultant, but he doesn't know how much a consultant will cost.
Hickey said in an interview that he "wants us to hire someone knowledgeable" and not any particular company.
In September, at Hickey's request, the Legislative Council voted to hire, without taking bids, Camelot Global Services of Philadelphia and London, and pay a consulting fee of $149,500, plus reimbursement for travel expenses up to $20,000. The Capitol Advisors Group lobbying firm of Bill Vickery and Mitchell Lowe represents Camelot Global Services, according to the firm's lobbyist registration.
The consultant told lawmakers in December that "the overriding strategy must be to move the lottery away from a gambling organization to a consumer goods sales and marketing organization."
The lottery has too many scratch-off and draw games, lags behind its peers in per-capita sales and profits, pays more than its peers to its vendors and isn't perceived as trusted, the consultant said in a wide-ranging report released in December.
In other business Thursday, the lottery oversight committee signed off on the proposals for one-year extensions to the supplemental advertising, marketing and media service contracts with Mangan Holcomb Partners and Mitchell Communications Group.
Woosley said the lottery has spent $2.3 million with Mangan Holcomb Partners and $321,000 with Mitchell Communications Group during the past year.
Hickey advised Woosley that "we are all going to try to work together with this to try to turn [the lottery] around, and we just want to make sure we are dotting all our i's and crossing our t's with this.
"I hear all of this stuff about the lottery maturing [and its revenue and net proceeds declining as result]," Hickey said.
"The way I look at it is Ford Motor Co. has been around a long time and basically they have been selling an automobile with four wheels. They just figured a different way to market it, so their customers would keep buying," he said.
A Section on 06/12/2015