State lottery revenue for July up by $8.5M over last year
by Michael R. Wickline | August 12, 2020 at 7:20 a.m.
The front entrance of the Arkansas Scholarship Lottery office is shown in this Jan. 30, 2019 file photo.
In the fourth full month of the covid-19 pandemic in Arkansas, the Arkansas Scholarship Lottery's revenue in July increased by $8.5 million over the same month a year ago to $49.7 million and exceeded the lottery's projected budget by $14.2 million.
The amount raised last month for college scholarships increased by $4 million over year-ago figures to $8.5 million and outdistanced the projected budget by $3.3 million, the lottery reported this week in its monthly report to Gov. Asa Hutchinson and the Legislature's lottery oversight subcommittee.
The lottery's new director, Eric Hagler, said Tuesday that the record revenue for the month of July -- coupled with two large prizes being paid in July 2019, one of which was a $1 million Play It Again winner -- bolstered net proceeds.
The lottery has been selling tickets since Sept. 28, 2009.
It has helped finance Arkansas Academic Challenge Scholarships for more than 30,000 students a year during nine of the previous 10 fiscal years.
The revenue, particularly for scratch-off tickets, and the amount raised for college scholarships have surged since April amid the covid-19 pandemic and lower gas prices. The first presumptive positive covid-19 case in Arkansas was detected in Pine Bluff on March 11.
Southland Casino Racing in West Memphis, Oaklawn Racing Casino Resort in Hot Springs and the Saracen Annex -- across the street from the Saracen Casino Resort under construction in Pine Bluff -- were closed from mid-March through May 18. They operated at up to one-third capacity from May 18 until June 15, and since then have operated at up to two-thirds capacity under the Arkansas Department of Health's directive because of the pandemic.
Hagler, who started work as the lottery's director Thursday, said the pandemic has had a mixed effect on the lottery industry as a whole because of the various levels of restrictions each state has implemented.
Arkansas' lottery, "under the mindful direction of Governor Hutchinson, has been able to continue to operate during the pandemic," he said in a written statement.
"The lottery continued to be available and was sold in essential businesses during the pandemic which has and continues to contribute to our strong sales," Hagler said.
He said there is "no real way" to determine what, if any, impact the $600 per week supplemental federal unemployment benefit payments that expired July 31 played in boosting lottery revenue.
REVENUE INCREASE
Scratch-off ticket revenue in July increased by $8 million over the same month a year ago to $42.9 million, while draw-game revenue increased by about $600,000 from a year ago to $6.8 million, the lottery reported this week.
Other revenue included fees paid by retailers, which totaled $46,015 last month. The lottery's retailers totaled 1,959 at the end of July.
Hagler said the increased scratch-off ticket revenue resulted from the lottery continuing to launch "fun and exciting" scratch-off tickets that "our players want to play."
Draw game revenue increased last month because "while our national games have continued to lag in sales due to the lack of a large jackpot run, our Natural State Jackpot, Cash 3, Cash 4 and Fast Play have all seen a growth in sales, accounting for the overall increase in draw sales," Hagler said.
The unclaimed prize reserve balance totaled $1.1 million at the end of July, after gaining $138,541 in unclaimed prizes. At the end of the fiscal year, the balance of the fund minus $1 million will be transferred to unclaimed prizes.
Hagler succeeded Bishop Woosley as the lottery's director. Woosley resigned, effective Aug. 3, after serving as the lottery's director since February 2012.
Revenue totaled $532 million in fiscal 2020, which ended June 30, eclipsing the previous record of $516.2 million in fiscal 2019.
The amount raised for scholarships reached $89.4 million in fiscal 2020, which was the sixth-highest amount in the lottery's history. The record amount raised for college scholarships was $98.6 million in fiscal 2019.
Last month, Woosley attributed the drop in the amount raised for college scholarships to the "terrible draw game sales we had," as the sales for Mega Millions and Powerball jackpot games "were the worst we've ever seen." Draw game tickets are more profitable for the lottery than scratch-off tickets.
For fiscal 2021 that started July 1, Woosley projected revenue would total $465.8 million and raise $78.2 million for scholarships.
If the lottery hits those projections, that would be the lowest amount of revenue since its revenue totaled $449.9 million in fiscal 2017 and the lowest amount raised for scholarships since it raised $72.6 million in fiscal 2015.
As for his fiscal 2021 projections, Woosley explained in May, "there is a great deal of uncertainty in the lottery world and the world in general right now.
"Economic circumstances have been changing by the week or even by the day over the past month. It is almost impossible to project what changes there will be to the economy and consumer behavior at this point," he said.
"In addition, we were forced to change the multi-state games to account for the dramatic drop in sales. At this point, there is uncertainty how long those changes will remain in place. We created the budget using current trends in sales and did our best to provide a very conservative, yet realistic budget for next fiscal year. I would not be surprised if we fared better than what we have budgeted. The impact of the casinos was included, but the uncertainty and the economic conditions weighed the most in our process," Woosley said at that time.
MORE SCHOLARSHIPS
The state Division of Higher Education provided $89.1 million in Arkansas Academic Challenge Scholarships to 27,439 students in fiscal 2020, said Alisha Lewis, a division spokeswoman.
The division forecasts that it will distribute $91 million in these scholarships to 31,000 students in fiscal 2021.
The total Academic Challenge Scholarship distribution peaked at $132.9 million in fiscal 2013, going to 33,533 students. That's dropped since then, largely because of the Legislature cutting the amount of the initial scholarship three times in 11 years. These scholarships also are financed by $20 million a year in state general revenue.
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 programs that lead them to being qualified for high-demand occupations.
The Division of Higher Education has paid out $278,038 in Workforce Challenge Scholarships to 1,729 students in fiscal 2020, Lewis said. In fiscal 2021, it forecasts paying out $2 million in the scholarships to 2,000 students.
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 scholarships for a semester or academic year in which they are enrolled in an endorsed concurrent enrollment course or certificate program under certain conditions.
In fiscal 2020, the division paid out $1.4 million Concurrent Challenge Scholarships to 2,923 students, Lewis said.
"I got an email notification that we have eight institutions that haven't submitted the roster from last spring to us," she said.
"We're still processing academic year '21 applications as fast as we can with school starting," Lewis said.
CORRECTION: The casinos in Arkansas have operated at up to two-thirds capacity since June 15 under the Arkansas Department of Health's directive because of the pandemic. They operated at up to one-third capacity from May 18 until June 15 under the department's previous directive after being closed from mid-March until May 18. A previous version of this article incorrectly described the changes at the casinos.