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Lottery's May revenue, scholarship funds drop

But student-aid record forecast, chief says by Michael R. Wickline | June 11, 2021 at 7:04 a.m.
Arkansas Scholarship Lottery tickets are shown in this file photo.

During the second May of the covid-19 pandemic, the Arkansas Scholarship Lottery's revenue dropped by $3.5 million from a year ago to $57.6 million and the amount raised for college scholarships slipped by about $1 million, compared with a year ago, to $7.5 million.

But lottery Director Eric Hagler said Thursday that lottery officials expect to raise more than $100 million for college scholarships in fiscal 2021, which would represent a new record in a fiscal year for the lottery. The fiscal year ends June 30.

The Arkansas Scholarship Lottery has been selling lottery tickets since Sept. 28, 2009.

It has helped finance Arkansas Academic Challenge Scholarships for more than 30,000 students during each of the past 11 fiscal years.

Scratch-off ticket revenue in May fell by about $4 million from a year ago to $48.7 million, while draw-game revenue increased last month by about $500,000 from a year ago to $8.3 million, the lottery reported Thursday in its monthly report to Gov. Asa Hutchinson and the Legislative Council's lottery oversight subcommittee.

Asked about last month's drop in scratch-off ticket revenue, Hagler said the onset of the covid-19 pandemic and a relatively closed economy severely limited Arkansans' entertainment options in May 2020 and "the resulting abnormal social and economic conditions actually served to benefit the sales of lottery tickets."

Scratch-off tickets, which also are called instant tickets, provide an immediate "win proposition" and represent "an easy to engage entertainment option," he said in a written statement.

Hagler said draw-game revenue increased in May compared with a year ago as a result of increased Powerball and Mega Million ticket sales related to larger jackpots and "organic growth around our Natural State Jackpot draw game."

The lottery's other draw games include Cash 3, Cash 4, Lucky for Life and Fast Play. For the lottery, draw game ticket sales are more profitable than scratch-off ticket sales, but the lottery has been largely dependent on scratch-off ticket sales since it began operating. At first, it sold only scratch-off tickets.

Hagler said in the written statement that the amount raised for college scholarships dropped last month by $1 million compared with a year ago because "net proceeds do not rise proportionately to sales."

While monthly net proceeds figures for college scholarships are an important mid-term metric, "the real measure of performance is the annual level of funding delivered by [the lottery] for the benefit of scholarships for Arkansas students," said Hagler, who has been director since Aug. 6.

POTENTIAL RECORD

Sometime in July, lottery officials expect to report a record-setting amount of money raised for college scholarships in this fiscal year, Hagler said.

"We are forecasting record net proceeds in excess of $100 million for fiscal 2021," Hagler said. "We are not there yet, so we cannot make this representation today."

The current record for the largest amount raised for scholarships was in fiscal 2019, when net proceeds reached $98.6 million.

In 2008, voters approved the constitutional amendment authorizing the Legislature to create the scholarship lottery. The lottery's leading proponent, then-Lt. Gov. Bill Halter, a Democrat, had projected it would raise about $100 million a year for college scholarships. Others suggested lower figures.

May is the 11th month of the fiscal year.

During the first 11 months of fiscal 2021, the lottery has raised $91.5 million for college scholarships, compared with $74.4 million in the same period in fiscal 2020.

The unclaimed prize reserve fund totaled $8.4 million on May 31, after increasing by $757,609 in May. At the end of the fiscal year, the balance of the unclaimed prize reserve fund, minus $1 million, is transferred to college scholarships.

Amid uncertainty at the outset of the covid-19 pandemic, the lottery's previous director, Bishop Woosley, had projected fiscal 2021's net proceeds for college scholarships would total $78.2 million. The lottery raised $89.4 million for college scholarships in fiscal 2020.

Woosley also projected fiscal 2021 revenue at $456.8 million.

But during the first 11 months of fiscal 2021, revenue totaled $579.2 million, up from $479.5 million in the same period in fiscal 2020.

The total revenue collected thus far in fiscal 2021 exceeds the record for an entire fiscal year -- $532 million in fiscal 2020.

So far in fiscal 2021, scratch-off revenue totals $483.4 million -- up from $406.8 million in the same period in fiscal 2020 -- and draw-game revenue totals $95.1 million -- up from $72.1 million in the same period a year ago.

SCHOLARSHIPS

In fiscal 2021, the Arkansas Division of Higher Education has distributed $86 million in Arkansas Academic Challenge Scholarships to 31,240 students, said division spokeswoman Alisha Lewis, It 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, Lewis said.

These scholarships are financed with lottery proceeds and $20 million a year in state general revenue.

Academic Challenge Scholarships peaked at $132.9 million in fiscal 2013, going to 33,353 students. The total amount awarded has dropped off largely because the Legislature cut the amount of the initial scholarship.

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

Thus in fiscal 2021, the Division of Higher Education has distributed $487,865 in Workforce Challenge Scholarships, Lewis said. The division expects to distribute $450,000 of 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.

In fiscal 2021 so far, the Division of Higher Education has handed out $1.9 million in Concurrent Challenge scholarships to 11,418 students, Lewis said. In fiscal 2022, the division projects distributing $2.7 million of these scholarships to 13,000 students.

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