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story.lead_photo.caption The front entrance of the Arkansas Scholarship Lottery office is shown in this Jan. 30, 2019 file photo. ( Josh Snyder)

Through the first eight months of fiscal 2020, the Arkansas Scholarship Lottery's revenue dipped by $19.7 million from the same period last fiscal year to $321 million as draw-game ticket revenue dropped and scratch-off ticket revenue inched up.

Thus far in fiscal 2020, the amount raised for college scholarships has declined by about $8.7 million from the same period in fiscal 2019 to $50.1 million. Fiscal 2020 started July 1.

These figures are in the lottery's report for February delivered Tuesday to Gov. Asa Hutchinson and the Legislative Council's lottery oversight subcommittee. The report also showed that total revenue in February dropped by about $400,000 compared with the same month a year ago to $40.6 million, while the amount raised for college scholarships slipped by more than $900,000 from year-ago figures to $7.2 million.

During the first eight months of fiscal 2020, draw-game revenue dropped by $22.9 million from the same period in fiscal 2019 to $51.7 million and scratch-off ticket revenue increased by $3.2 million over the same period in fiscal 2019 to $268.7 million.

"The $22 million deficit is solely related to the sales difference between October 2018 versus October 2019," lottery Director Bishop Woosley said Tuesday in a written statement.

SMALLER JACKPOTS

"In October 2018 we had a $1.5 billion Mega Millions jackpot and a $750 million Powerball jackpot," he said. "Sales from those games during that month account for the $20 million difference in the two years."

The reduced draw-game revenue meant less money raised for college scholarships so far in fiscal 2020 compared with the same period in fiscal 2019. Draw games are more profitable than scratch-off games. The other draw games include the Natural State Jackpot, Cash 3, Cash 4, Lucky for Life and Fast Play.

In fiscal 2019, the lottery had record revenue of $516.2 million and also set a record in the amount raised for college scholarships at $98.4 million. The lottery's financial fortunes were bolstered by several large national jackpots.

The lottery started selling tickets on Sept. 28, 2009, and has helped finance Arkansas Academic Challenge Scholarships for more than 30,000 students in each of the past nine fiscal years.

For fiscal 2020, Woosley has projected total revenue at $497 million and net proceeds -- the amount raised for scholarships -- at $89.3 million.

"We are down in revenue by almost $2.8 million versus [the] budget," Woosley said. "We are up $4.7 million in instant tickets versus [the] budget and down $7.6 million in draw games versus [the] budget.

"Thus far, we are down $1.5 million versus our [net] proceeds budget for the year," he said.

"Hopefully, our instant ticket success will continue, and the draw games will catch fire and we will have at least one jackpot run to end the year which will help us get back to even or better," Woosley said. Instant tickets also are called scratch-off tickets.

At the end of the fiscal year, the lottery's unclaimed prize reserve balance, minus $1 million, will be transferred to college scholarships. On Feb. 29, the unclaimed prize reserve balance totaled $7.2 million.

SCHOLARSHIP AWARDS

The state Division of Higher Education has forecast it will distribute $94.6 million to 33,315 students in fiscal 2020.

The amount distributed for scholarships peaked at $132.9 million in fiscal 2013; they went to 33,522 students. The total handed out dropped to $112.7 million for 35,303 students in fiscal 2014 before dropping below $100 million for each fiscal year since then, according to the Higher Education Division. That's largely the result of the Legislature cutting the amount of the initial scholarships three times in 10 years.

The 2017 Legislature created the Workforce Challenge Scholarship program to use excess lottery proceeds to provide up to $800 a year for students enrolled in higher-education programs that lead to them being qualified to work in high-demand occupations.

The Higher Education Division has projected awarding 1,945 Workforce Challenge Scholarships totaling $1.6 million in fiscal 2020 -- up from 214 students who received about $170,000 in fiscal 2019, according to division spokeswoman Alisha Lewis.

The 2019 Legislature created the lottery-financed Arkansas Concurrent Challenge Scholarship program under Act 456. High school juniors and seniors are eligible to receive the scholarship for a semester or academic year in which they are enrolled in an endorsed concurrent enrollment course or certificate program under certain conditions.

Lewis said Tuesday that the Division of Higher Education doesn't have a projection for how much money it expects to distribute for the Concurrent Challenge Scholarship program in fiscal 2020. The rules for the program were approved last month, she noted.

CASINO IMPACT

Woosley said Tuesday that "the casinos and Mississippi lottery have impacted us to some extent, though it is unclear how much given that our draw-game sales have been so poor this year due to lower jackpots."

Woosley provided information showing how much, at this point in the fiscal year, total revenue in the following counties dropped compared with the same period a year ago:

• Chicot County, by $607,598, or 23%, to $1.98 million

• Crittenden County, by $811,463, or 13%, to $5.5 million.

• Garland County, by $1.1 million, or 11%, to $9.4 million.

• Jefferson County, by $1.4 million, or 10%, to $12.7 million.

• Phillips County, by $440,005, or 19%, to $1.8 million.

Last month, an official for lottery consultant Camelot Global Services told lawmakers that the lottery has increased competition with the expansion of race tracks in Hot Springs and West Memphis into full-fledged casinos, and the development of the Saracen Casino Resort in Pine Bluff, along with sports betting at each casino site, as well as with the new Mississippi lottery now selling Powerball and Mega Millions tickets.

Among other things, the Arkansas Scholarship Lottery should consider the possibility of introducing the game of keno because some other lotteries offer the game, said John Skrimshire, vice president of commercial operations for Camelot Global Services.

Woosley said Tuesday that keno is like other draw games, except it has more frequent draws.

"The game involves a field of 80 numbers where a player chooses between one and 10 numbers and a computer randomly draws 20 numbers," he said. "These draws occur every four and six minutes depending on the lottery that offers the game. If the lottery were to decide to launch a keno game, it would be like the standard keno games offered by other lotteries and gaming entities in the U.S.," he said.

Woosley said keno is part of the addendum in the five-year business plan that "we approved and presented" to the Legislative Council's lottery oversight subcommittee in 2016.

"Camelot has recommended we investigate the possibility of launching keno, review implementing a digital platform which may lead to iLottery sales and reconfiguring the Natural State Jackpot game as potential new sources of revenue," he said.

"There is no set time for a decision to be made on whether we will pursue any of these alternatives," Woosley said. "Hopefully, we will have a decision soon as to a path forward for new sources of revenue."

Sen. Jimmy Hickey, R-Texarkana, who sponsored a law in a July 2014 special session to temporarily bar the lottery from offering electronic monitor games through March 13, 2015, said Tuesday he hopes the lottery doesn't implement keno.

"I think whenever when the people put in the lottery they never envisioned that would be keno games," he said, referring to the 2008 general election when voters approved Amendment 87 to the Arkansas Constitution on creating a state scholarship lottery.

Lottery revenue in fiscal 2020

Metro on 03/11/2020

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