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July revenue shows decline at state lottery

Scholarship money also slips to $8.3 million from year ago by Michael R. Wickline | August 13, 2021 at 1:00 a.m.

LITTLE ROCK -- The Arkansas Scholarship Lottery's revenue and the amount raised for college scholarships slipped in July compared to the record-setting haul of a year ago.

The lottery's revenue in July dropped from $49.7 million from the same month in 2020 to $47.5 million.

Scratch-off ticket revenue declined from $42.9 million to $39.9 million and draw-game ticket revenue increased from $6.8 million to $7.6 million, the lottery reported this week in its monthly report to Gov. Asa Hutchinson and the Legislative Council's lottery oversight subcommittee.

Lottery Gaming Director Mike Smith said Wednesday, "We anticipated that our [scratch-off ticket] sales would soften a little versus last year.

"Also, our new games launched a day earlier this year on June 29th and last year they launched on June 30th. That one day of sales was booked in last [fiscal year]," he added in a written statement.

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

Smith said draw game ticket revenue increased year to year partly because "we had had higher jackpots this July for Mega Millions and Powerball in July."

Among other things, the Natural State Jackpot also grew to $400,000 this year before being hit on July 7, he said.

In July, Powerball revenue increased over the same month a year ago from $1.5 million to $1.7 million, MegaMillions revenue inched up from $1.1 million to $1.2 million, and Natural State Jackpot revenue increased from $695,319 to $865,010.

The lottery's retailers totaled 1,959 on July 31, the same year as a year ago.

SCHOLARSHIP MONEY

The lottery in July raised $8.3 million for college scholarships -- a dip from the $8.5 million raised in the same month a year ago, the lottery reported.

Lottery Director Eric Hagler, a former financial services attorney who started work at the lottery on Aug. 6, 2020, said the amount raised for scholarships is not directly correlated to sales.

"There are many factors to consider, including unclaimed prizes, which are included in net proceeds for year-end reporting," he said. "The net proceeds metric for July 2022 are in-line with our [fiscal 2022] budget, which is our guide."

July is the first month of fiscal 2022, which ends June 30, 2022.

At the end of the fiscal year on June 30, the lottery transfers the balance of the unclaimed prize reserve fund minus $1 million to college scholarships under state law.

On July 31, the unclaimed prize reserve fund totaled $1.6 million after gaining $645,750 in unclaimed prizes.

The lottery started selling scratch-off tickets on 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.

In fiscal 2021, the lottery set records for total revenue and the amount raised for college scholarships in any fiscal year in its nearly 12-year history.

Amid the covid-19 pandemic, revenue totaled $632.5 million in fiscal 2021, beating the previous record of $532 million in fiscal 2020.

The lottery raised $106.6 million for college scholarships in fiscal 2021, outdistancing the previous high of $98.6 million in fiscal 2019.

Hagler said last month, "With regard to external factors, we have consistently reported throughout the year that a closed economy, limited entertainment options and the effects of federal stimulus funds were producing unlimited tailwinds for lottery performance" in fiscal 2021.

In fiscal 2022, Hagler has projected total revenue would be $509.2 million and the amount to be raised for college scholarships at $88.6 million.

Last month, Smith said "some of the factors that helped to stimulate sales in [fiscal 2021] likely will be be present [in fiscal 2022]" and "we feel sales will normalize in [fiscal 2022]."

30,000-PLUS SCHOLARSHIPS

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

In fiscal 2021, the Arkansas Division of Higher Education spent $86.05 million on Academic Challenge Scholarships. "We have a few rosters outstanding," said division spokeswoman Alisha Lewis.

The division distributed $90.6 million of those scholarships to 31,469 students in fiscal 2020.

The division forecasts that it will hand out $90 million in these scholarships to 31,000 students in fiscal 2022.

The amount handed out for Arkansas 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 scholarships 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 led to qualifications in high-demand occupations.

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

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 2021, the division reported it handed out $2.42 million in Concurrent Challenge scholarships to 14,091 students, said Lewis. For fiscal 2022, the division projects distributing $2.7 million for these scholarships to 13,000 students.

UNSUCCESSFUL LEGISLATION

During this year's regular session, the Senate Education Committee balked at three bills that would have made changes to the Academic Challenge Scholarship program.

The three bills were:

• Senate Bill 648 by Sen. Lance Eads, R-Springdale, that would have created a need-based scholarship funded by lottery proceeds called the Arkansas Academic Challenge Plus Scholarship Program. Qualifying students would have had to maintain eligibility for the program and demonstrate financial need as determined by the Free Application for Federal Student Aid under the bill. Arkansas has been one of the few states without a need-based program since lawmakers eliminated two aid programs in 2017.

• Senate Bill 457 by Sen. Breanne Davis, R-Russellville, that would have made people who are accepted into certain programs for people with intellectual disabilities eligible for the Academic Challenge Scholarship program.

• Senate Bill 462 by Sen. Joyce Elliott, D-Little Rock, that would have made a student who has either a score of 19 on the ACT or a grade-point average of at least 2.5 eligible for the program.

Act 1105 of 2015 -- sponsored by now-Senate President Pro Tempore Jimmy Hickey, R-Texarkana -- requires high school graduates to have ACT scores of at least 19 or the equivalent on comparable college entrance exams to be eligible for the Academic Challenge Scholarship. High school graduates previously were required to have completed the Smart Core curriculum or achieved either high school grade-point averages of at least 2.5 or minimum scores of 19 on the ACT or its equivalent.

Act 1105 of 2015 also cut the size of the Academic Challenge Scholarship amounts for first-year college students. The scholarship was reduced from $2,000 to $1,000 for the freshmen year at the two- and four-year colleges, and increased from $3,000 to $4,000 for the sophomore year at four-year colleges and from $2,000 to $3,000 for the sophomore year at two-year colleges. Scholarship recipients receive $4,000 as juniors and $5,000 as seniors at the four-year colleges.

Print Headline: July revenue shows decline at state lottery

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