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Lottery hits records for revenue, scholarship money

by Michael R. Wickline | July 18, 2021 at 12:00 a.m.

The Arkansas Scholarship Lottery last fiscal year set records for revenue and scholarship fundraising, collecting $632.5 million in revenue and raising $106.6 million for college scholarships during the COVID-19 pandemic.

Lottery officials attributed fiscal 2021’s record numbers, in part, to factors brought by the pandemic, projecting next year’s totals will dip.

The lottery noted its annual figures Monday in its monthly report to Gov. Asa Hutchinson and the Legislative Council’s Lottery Oversight Subcommittee.

Lottery Director Eric Hagler said numerous factors contributed to the lottery’s revenue increasing from $532 million in fiscal 2020 to $632.5 in fiscal 2021 — which ended June 30 — including the gaming department offering a suite of games that players found fun and compelling and the sales team supporting lottery retailers.

“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 unprecedented tailwinds for lottery performance,” he said in a written statement.

Hagler said the lottery’s net proceeds for college scholarships increased from $89.4 million in fiscal 2020 to $106.6 million in fiscal 2021 because “outsized sales and tight internal expense controls served as the foundation for producing record returns to scholarships.”

The lottery has been selling tickets since 2009.

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

The lottery’s previous high-water mark for total revenue in a fiscal year was the $532 million collected in fiscal 2020, which ended June 30, 2020. The lottery’s previous record for the amount raised for scholarships was $98.6 million in fiscal 2019, which ended June 30, 2019.

The lottery’s total revenue and proceeds for college scholarships in fiscal 2021 both outpaced the projections the lottery’s previous director, Bishop Woosley, made in the uncertainty at the outset of the COVID-19 pandemic.

Woosley projected fiscal 2021’s revenue at $456.8 million and the net proceeds for college scholarships at $78.2 million.

Last year, Woosley submitted his resignation, effective Aug. 3, to pursue other opportunities after serving as the lottery’s director since February 2012.

On Aug. 6, Hagler, a financial services lawyer, started as the lottery’s director.

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. At that time, the state Department of Finance and Administration had estimated about $55 million for scholarships. Arkansas Advocates for Children and Families, a lottery foe, forecast about $61.5 million.

The lottery has been part of the finance department since February 2015, when Gov. Asa Hutchinson, a Republican, signed into law a measure that put his administration in charge of the lottery and abolished the independent nine-member Lottery Commission that controlled the agency.

Scholarship money

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 distributed $86 million in Academic Challenge Scholarships to 31,240 students, according to the division. 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.

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 the lottery’s 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 $1.9 million in Concurrent Challenge scholarships to 11,418 students. For fiscal 2022, the division projects distributing $2.7 million for these scholarships to 13,000 students.

Fiscal 2021

The lottery’s scratch-off revenue increased from $452.2 million in fiscal 2020 to $529.3 million in fiscal 2021, according to the lottery’s reports.

Hagler said scratch-off ticket revenue has been trending positively since 2016, so last fiscal year was a continuation of the trend.

The lottery’s draw-game revenue increased from $79.1 million in fiscal 2020 to $102.5 million, the lottery’s reports show.

The lottery’s draw games included Powerball, Mega Millions, the Natural State Jackpot, Cash 3, Cash 4, Fast Play and Lucky for Life.

Hagler said January and February were strong months for draw-game ticket sales, driven primarily by significant multistate jackpots. The Natural State Jackpot draw game also is proving to be attractive to Arkansans, with a resident winning $400,000 last month.

The lottery’s revenue included retailer application, fidelity, bond and services fees that increased from $489,152 in fiscal 2020 to $643,516 in fiscal 2021. The lottery’s retailers totaled 1,960 on June 30, compared with 1,967 a year before, according to the lottery’s reports.

In June, the last month of fiscal 2021, the lottery’s revenue increased from $52.4 million a year ago to $53.3 million. The lottery’s scratch-off revenue for the month inched up from $45.4 million a year ago to $45.8 million. Meanwhile, the lottery’s draw-game revenue increased from $6.9 million a year ago to $7.4 million.

In June, the amount raised for college scholarships increased from $14.9 million a year ago to $15.1 million.

Top seller

Among the lottery’s nearly 2,000 retailers, the Winners Corner board game and lottery ticket seller in Little Rock sold the most lottery tickets in fiscal 2021, according to the lottery’s records.

The mobile phone app Jackpocket, which allows lottery players in Arkansas to buy draw-game tickets through their smartphones and collect their winnings without leaving home, is available through the retailer at 6801 W. 12th St. in Little Rock.

The lottery retailer sold $2.9 million in tickets in fiscal 2021, outpacing the $2.4 million sold at the Road Runner store in Bryant, at 23190 Interstate 30, and the $2 million sold at the Exxon One Stop in Pine Bluff, at 2901 W. 28th St., according to the lottery’s records.

In fiscal 2020, the Quik Run Co. store in Little Rock, at 7515 Baseline Road, sold the most in tickets among the lottery’s retailers, at $2.3 million. In fiscal 2021, the store sold $1.9 million in tickets to rank fourth among the lottery’s retailers.

Fiscal 2021 started July 1, 2020.

Jackpocket said Monday in a written statement that the app company began operating in Arkansas in May 2020.

“Since that time, we’ve seen a consistent growth in demand for our service across the state,” the company said.

Outside Arkansas, Jackpocket operates in eight states and Washington, D.C., according to the company. The other states are: Colorado, Minnesota, New Hampshire, New Jersey, New York, Ohio, Oregon and Texas.

Fiscal 2022

For fiscal 2022, Hagler has projected the lottery’s total revenue at $509.2 million — a drop from $632.5 million in fiscal 2021 — and the amount to be raised for college scholarships at $88.6 million, a decline from $106.6 million in fiscal 2021.

The basis underlying the projected fiscal 2022 budget is the compilation of projections submitted by lottery gaming director Mike Smith and lottery sales director Mark Hearn, Hagler said.

Smith said that “some of the factors that helped to stimulate sales in [fiscal 2021] likely will not be present in [fiscal 2022].”

“We feel sales will normalize in [fiscal 2022], but remain very competitive,” he said in a written statement.

Hearn said the lottery believes that the usual sales pattern will occur as businesses reopen, along with other forms of entertainment.

“The opening of other business, rising fuel and food costs will impact the amount of expenditure capital people have,” he added in the written statement.

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