Halfway through the current fiscal year, the Arkansas Scholarship Lottery's revenue reached $303 million -- an increase of $13 million -- over the same period in the previous fiscal year with the help of large jackpots.
During the first six months of fiscal 2023 that started July 1, the amount raised for college scholarships is $53.3 million, an increase of $6.7 million over the same period in fiscal 2022.
The figures are in the lottery's monthly report this week to Gov. Sarah Huckabee Sanders and the Legislative Council's lottery oversight committee.
As for the increase in the lottery's revenue so far in fiscal 2023, lottery Director Eric Hagler said the lottery's revenue production is fluid and it's not a mathematical guarantee stemming from budget or prior years' performance.
"When jackpots rise, consumers enter the game," Hagler said in a written statement. "As player participation increases, jackpot raises become larger. This is how billion dollar jackpots are achieved. All of which drive revenue from sales at a higher margin."
So far in fiscal 2023, the lottery's scratch-off ticket revenue dropped from $238.7 million in the same period in fiscal 2022 to $230.7 million, while the lottery's draw-game ticket revenue increased from $50.9 million in the same period in fiscal 2022 to $71.9 million, the lottery reported.
The lottery's draw-game tickets include Powerball, Mega Millions, Fast Play, Natural State Jackpot, Lucky for Life, Cash 3, Cash 4 and Arkansas LOTTO.
The Powerball jackpot reached $2 billion -- the largest ever in the United States -- on Nov. 7 and a winning ticket was sold in Altadena, Calif. The lottery's draw-game revenue in November totaled $18 million -- a substantial increase from $7.2 million in November 2021.
Hagler said draw-game margins are significantly higher than those generated by instant or scratch-off tickets.
The lottery has raised more money for college scholarships so far in fiscal 2023 than in the same period in fiscal 2022 because "increased sales of higher margin products drive earnings and net proceeds," he said. "When the sales of draw games rise, we see a corresponding lift in net proceeds due, again, to margin spread."
At the end of each fiscal year, the lottery transfers the balance of its unclaimed prize reserve fund, minus $1 million, to scholarships. The lottery's unclaimed prize reserve fund totaled $6.7 million on Dec. 31, after receiving$1.4 million in unclaimed prizes in December.
The lottery's total revenue of $303 million during the first six months of fiscal 2023 and the $53.3 million raised for college scholarships in the same period exceed previous highs for the lottery for the first half of a fiscal year.
For fiscal 2023, the lottery is projecting total revenue of $535.9 million and raising $91.4 million for college scholarships.
In fiscal 2022, the lottery collected revenue of $580.2 million and raised $99.7 million for college scholarships. They were the second-largest amounts the lottery has reported in any fiscal year, trailing only fiscal 2021 when the lottery collected revenue of $632.5 million and raised $106.6 million for college scholarships.
Lottery officials attributed the records set in fiscal 2021 in part to factors brought on by the covid-19 pandemic, such as people spending more time at home.
December is the sixth month of fiscal 2023.
The lottery's total revenue in December dropped from $52 million in the same month a year ago to $50.8 million.
The lottery's scratch-off revenue for the month slipped from $42.5 million a year ago to $40.5 million, while the lottery's draw-game ticket revenue increased from $9.4 million a year ago to $10.2 million, according to the lottery.
In December, the amount raised for college scholarships dipped from $7.4 million a year ago to $6.4 million
"We are pleased with December performance and are keenly aware of how far the Lottery has improved earnings since the low-water mark of 2014," Hagler said.
"During December, we saw significant jackpots in the draw game category, which served to buoy earnings through draw games," he said. The Mega Millions jackpot was a significant driver of revenue in December, he said.
The lottery reported Mega Millions ticket revenue of $2.8 million in December, up from $1.4 million in the same month a year ago.
The Mega Millions jackpot is estimated at $1.35 billion for tonight's drawing. If that jackpot amount is won, it would be the second-largest jackpot in Mega Millions history, according to news reports.
The amount raised for college scholarships slipped in December compared with a year ago as a result of the accrual to cash accounting adjustment swung to the negative in December and the lottery's one-time marketing expenses related to the launch of its new LOTTO game, Hagler said.
SCHOLARSHIPS
The Arkansas Academic Challenge scholarships are financed with lottery proceeds, plus $20 million a year in state general revenue.
So far in fiscal 2023, the Division of Higher Education has handed out Academic Challenge Scholarships totaling $39.1 million to 28,146 students, according to Nick Fuller, the division's assistant director of finance.
In fiscal 2022, which ended June 30, the division awarded a total of $75.1 million in Arkansas Academic Challenge Scholarships to 28,716 students.
Fiscal 2022 is the first fiscal year in the past 12 fiscal years that Arkansas Academic Challenge Scholarships were awarded to fewer than 30,000 students. Fuller has said that's because of the continued trend of overall enrollment decline in higher education and the total number of high school students continuing to get smaller, leading to a smaller pool from which scholarships are awarded.
For fiscal 2023, the division projects awarding a total of $78 million in Arkansas Academic Challenge Scholarships to 27,250 students.
The amount handed out for the Academic Challenge Scholarships peaked at $132.9 million in fiscal 2013, with awards going to 33,353 students. Scholarship totals have dropped largely because the Legislature cut the amount of initial scholarships several times.
The 2017 Legislature created the Workforce Challenge Scholarship to use excess proceeds to provide up to $800 per year for students enrolled in programs that lead to qualifications in high-demand occupations.
So far in fiscal 2023, the Division of Higher Education has handed out Workforce Challenge Scholarships totaling $326,048 to 1,996 students, Fuller said Thursday.
In fiscal 2022, the division awarded these scholarships to 690 students and disbursed $605,694. In fiscal 2023, the division projects it will distribute Workforce Challenge Scholarships to 1,000 students and disburse $1 million.
The 2019 Legislature created the Concurrent Challenge program that allows high school juniors and seniors to receive the scholarships for a semester or an academic year in which they are enrolled in an endorsed concurrent course or certain programs.
So far in fiscal 2023, the division has handed out Concurrent Challenge Scholarships totaling $1.1 million to 5,184 students, Fuller said.
For the Concurrent Challenge program, the division awarded scholarships to 16,432 students and disbursed $2.7 million in fiscal 2022. In fiscal 2023, the division projects awarding Concurrent Challenge Scholarships to 13,750 students and disbursing $2.75 million.
Lottery’s performance so far in fiscal 2023