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story.lead_photo.caption Lottery revenue in fiscal 2018 - Photo by Arkansas Democrat-Gazette / SOURCE: Arkansas Scholarship Lottery reports

Large Mega Millions and Powerball jackpots in January fueled a $7 million increase over the same month last year in the Arkansas Scholarship Lottery's revenue, to $44 million.

Net proceeds -- the amount raised for college scholarships -- inched up by nearly $300,000 from the same month a year ago to $8.2 million, the lottery said in its latest monthly report to Gov. Asa Hutchinson and the Legislative Council's lottery oversight subcommittee.

"Any time you see a significant sales increase, what generally follows is a higher prize expense, [and] we saw that this January," lottery Director Bishop Woosley said Monday when asked why the lottery's net-proceeds increase last month lagged its revenue increase on a percentage basis. "The increase in prize expense had an impact on our proceeds."

For the first seven months of fiscal 2018, the lottery set a record in revenue collection, but net proceeds were around the average of the past few years.

Revenue and net proceeds in January fell short of the 2016 records for the month. Bolstered by a $1.6 billion Powerball jackpot in January 2016, the lottery collected $58.7 million in revenue and raised $13.8 million for college scholarships. That is the record for any month since the lottery started selling tickets Sept. 28, 2009.

The lottery has helped finance more than 30,000 Arkansas Academic Challenge Scholarships during each of the past seven fiscal years.

The Legislature has cut the size of future scholarships three times during the past several years because of net proceeds falling short of initial projections and more students than initially projected getting the scholarships.

The state Department of Higher Education's latest projection is that in fiscal 2018, scholarships totaling $93.3 million will be awarded to 34,472 students.

So far, the largest amount in scholarships distributed in a fiscal year was $132.9 million given to 33,522 students in fiscal 2013. Fiscal years start July 1.

In January, scratch-off ticket revenue increased from $31.2 million a year ago to $33.7 million, while the draw-game ticket revenue increased from $5.7 million a year ago to $10.2 million, the lottery reported. Other revenue included retailer fees that totaled about $52,700 in January.

Draw games include Powerball, Mega Millions, Natural State Jackpot, Cash 3, Cash 4, Lucky for Life and Fast Play.

Woosley said the Mega Millions jackpot reached $450 million and the Powerball jackpot reached $559 million last month, and "those jackpots caused a surge in draw game sales for the month."

"We had a strong instant ticket launch anchored by our 'Loaded' family of instant ticket games that has done very well," he said.

"In addition, our $20 'Million Dollar Winner' ticket that launched in December is still enjoying strong sales," he said. Instant tickets also are called scratch-off tickets.

The lottery's retailers totaled 1,942 on Jan. 31, compared with 1,933 a year ago.

Since Aug. 1, a new law has given retailers the option of accepting debit cards on ticket purchases. Before that law took effect, retailers had been limited to accepting only cash.

Woosley said, "We do not yet have any numbers regarding how many retailers are allowing the purchase of lottery tickets using debit cards.

"It would be impossible to give a specific amount related to how much monthly revenues can be attributed to debit card sales, as we cannot track those sales in our system. However, if I had to estimate the impact, I would say approximately 5% of lottery sales each month can be attributed to debit cards," he said in a written statement.

During the first seven months of fiscal 2018, revenue reached $287.3 million -- up from $249.9 million during the same period in fiscal 2017.

So far in fiscal 2018, scratch-off ticket revenue has totaled $229.9 million -- an increase from $202.8 million in the same period in fiscal 2017 -- and draw-game ticket revenue has totaled $56.8 million, an increase from $46.6 million in the same period in fiscal 2017. Retailer fees have totaled about $495,000.

During the first seven months of fiscal 2018, net proceeds for college scholarships totaled $49.5 million, compared with $44.2 million during the same period in fiscal 2017.

Unclaimed prizes totaled $1.1 million in January to increase the unclaimed prize reserve fund to $5.2 million in fiscal 2018.

At the end of each fiscal year, the lottery distributes the balance of the unclaimed prize reserve fund, minus $1 million, to college scholarships.

"We are currently $7.4 million over budget as to what we projected to raise for scholarships," Woosley said.

Woosley has projected the lottery will end the fiscal year with revenue at $459 million and net proceeds at $83.5 million.

Revenue and net proceeds peaked in fiscal 2012 at $473.6 million and $97.5 million, respectively, before dipping in each of the next three fiscal years. Since fiscal 2016, revenue and net proceeds have rebounded.

The Arkansas Academic Challenge Scholarship program is financed annually out of net proceeds and $20 million in general revenue. In addition, there is a $20 million lottery reserve fund that covers temporary cash shortfalls to pay scholarships; it's reimbursed with future net proceeds.

The Legislature in 2017 created a new scholarship program to be financed out of lottery proceeds. It's called the Arkansas Workforce Challenge scholarship program and will use any excess lottery proceeds to fund scholarships for students enrolled in higher-education programs that lead to qualification for jobs in high-demand occupations.

Eligible students will have to be in a program at a public or private higher-education institution that leads to an associate degree or a certificate program in industry, health or information technology and qualifies them to work in an occupation identified by the Department of Workforce Services under Act 613 of 2017. The scholarship award will be the lesser of $800 or the cost of a certificate program or program of study, including tuition, fees and other charges; textbooks or other course materials; and equipment needed for a course.

The state Department of Higher Education projects it will have at least $5 million on hand to distribute for the Workforce Challenge Scholarship in the coming school year, said department spokesman Alisha Lewis.

A Section on 02/13/2018

Print Headline: Big January jackpots boost lottery's revenue

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