Arkansas Scholarship Lottery revenue grows by 8%; scholarship proceeds shrink

Unclaimed prizes will lift scholarships, official says

Arkansas Scholarship Lottery tickets are shown in this file photo.
Arkansas Scholarship Lottery tickets are shown in this file photo.


The Arkansas Scholarship Lottery's October revenue increased by about 8% over a year ago, but the amount raised for college scholarships dropped by about 8%.

Last month, the lottery's total revenue increased from $42.6 million in 2020 to $46.2 million this year, the lottery reported Wednesday in its monthly report to Gov. Asa Hutchinson and the Legislative Council's lottery oversight subcommittee.

For the month, the amount raised for college scholarships dropped from $8.4 million in 2020 to $7.7 million this year, according to the report.

Lottery Director Eric Hagler attributed the dip to a normal accounting adjustment.

"We have not closed an instant [scratch-off] game in the last sixty days," he said Wednesday in a written statement. "Unclaimed prizes and the correlated adjustment will bring it back in line."

At the end of each fiscal year, the lottery transfers the balance of its unclaimed prize reserve fund, minus $1 million, to college scholarships under state law.

The lottery has been selling tickets since Sept. 28, 2009, and has helped finance Arkansas Academic Challenge scholarships for more than 30,000 college students during each of the past 11 fiscal years.

As for the lottery's increased revenues in October, Hagler said lottery officials have been pleased with performance of their current suite of games.

He said that there are early indicators of "a positive halo effect" from fiscal 2021 that ended June 30 or that "limited entertainment options during the pandemic created a stronger demand for lottery games."

"We hope that market gains achieved last year prove to be sustainable," Hagler said.

In October, the lottery's scratch-off ticket revenue increased from $35.4 million a year ago to $36.9 million, while the lottery's draw game revenue increased from $7.1 million a year ago to $9.1 million, according to the lottery.

The lottery's draw games include Powerball, Mega Millions, Fast Play, Natural State Jackpot, Lucky for Life, Cash 3 and Cash 4. Draw game sales are more profitable to the lottery than scratch-off ticket sales.

The lottery's gaming director, Mike Smith, said most of the lottery's draw games increased sales last month over a year ago, and Powerball revenues increased by about $1.6 million. The lottery reported Powerball sales at $3.07 million in October, compared with $1.54 million a year ago.

The Powerball jackpot was advertised at an estimated $635 million on Oct. 2 and at an estimated $685 million on Oct. 4, Smith said. Powerball had a $699.8 million winning jackpot on Oct. 4, and a single winner purchased the winning ticket in Morro Bay, Calif.

A family of themed scratch-off tickets was launched on Oct. 2 and provided a solid month of scratch-off revenue, he said. Last year, tickets were launched in the last week of September, rather than in October, he said.

FISCAL 2022

During the first four months of the fiscal 2022, which started July 1, the lottery's revenue totaled $190.9 million, compared with $189.5 million in the same period in fiscal 2021.

So far in fiscal 2022, scratch-off ticket revenue totaled $156.2 million, compared with $162.1 million in the same period in fiscal 2021, while draw game revenue totaled $34.3 million thus far in fiscal 2022, compared with $27.1 million in the same period in fiscal 2021.

The lottery has raised $32 million for college scholarships, compared with $32.5 million in the same period in fiscal 2021.

The lottery's unclaimed prize reserve fund totaled $2.8 million at the end of October, after receiving $127,936 in unclaimed prizes last month.

Hagler said the lottery's total revenue is $32.3 million better than the lottery's projected budget, and the amount raised for college scholarships is $6.1 million better than the lottery's projections through Oct. 31.

"We are mindful that rising fuel costs, inflation on staples, and supply chain constraints raise questions of uncertainty as we progress towards the half-year mark," he said.

"All of these issues were factored into our FY22 budget, and while we are pleased with early performance, we are also cautious in revising our outlook."

For fiscal 2022, Hagler has conservatively forecast a drop in total revenue from a record $632.5 million in fiscal 2021 to $509.2 million. He projected a reduction in the amount raised for college scholarships from a record $106.6 million in fiscal 2021 to $88.6 million.

SCHOLARSHIPS

The Arkansas Academic Challenge scholarships are financed with lottery proceeds, plus $20 million a year in state general revenue.

The state Division of Higher Education forecast that it will hand out $90 million in scholarships to 31,000 students in fiscal 2022, after awarding about $86 million in fiscal 2021.

So far in fiscal 2022, the division has awarded Academic Challenge scholarships to 27,813 students and disbursed $36.09 million in these scholarships, said Nick Fuller, an assistant director of finance at the state Department of Education.

The amount handed out for Academic Challenge scholarships peaked at $132.9 million in fiscal 2013, going to 33,353 students. Scholarship totals have dropped largely because the Legislature has cut the amount of the initial awards several times.

The 2017 Legislature created the Workforce Challenge Scholarship to use excess proceeds to provide up to $800 a year for students enrolled in programs that lead to qualifications in high-demand occupations.

Division officials said they expect to distribute $450,000 for these scholarships in fiscal 2022. In fiscal 2021, the division reported it distributed $487,865 in Workforce Challenge Scholarships.

"For Workforce Challenge we have awarded 1,335 students and disbursed $234,383," so far in fiscal 2022, Fuller said.

The 2019 Legislature created the lottery-financed Concurrent Challenge program. High school juniors and seniors are eligible to receive the scholarships for a semester or an academic year in which they are enrolled in an endorsed concurrent course or certain programs.

For fiscal 2022, the division projects distributing $2.7 million for these scholarships to 13,000 students. For fiscal 2021, the division reported that it handed out $2.4 million in Concurrent Challenge scholarships to 14,091 students.

Fuller said the Concurrent Challenge program has awarded scholarships to 4,296 students and disbursed $787,246 in scholarships thus far in fiscal 2022.

"This one has quite a few more awarded students than disbursed funds from the last update," he said. "That is due to a few larger rosters that have been submitted back to us, but have yet to have funds sent back to the institution on behalf of those students."

Fuller added that the Arkansas Academic Challenge, Workforce Challenge and Concurrent Challenge scholarship programs "seem to be continuing on pace with our initial projections for year end totals at this time."


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