Lottery revenue dips from year ago

August revenue for the Arkansas Scholarship Lottery dipped from a year ago, when a $758 million Powerball jackpot helped fuel ticket sales.

Last month’s lottery revenue dropped by nearly $9 million from year-ago figures to $40.3 million, and the amount raised for college scholarships slipped by nearly $2.8 million to $6.1 million, according to the lottery’s monthly report to Gov. Asa Hutchinson and the Legislative Council’s lottery oversight subcommittee.

Scratch-off ticket revenue declined by $2 million compared with a year ago to $33.5 million, and draw-game ticket revenue fell by $6.9 million to $6.7 million. The lottery’s draw games include Powerball, Mega Millions, Natural State Jackpot, Cash 3, Cash 4, Fast Play and Lucky for Life.

Powerball and Mega Millions sales alone accounted for $7.5 million of the difference in sales this August compared with a year ago, said lottery Director Bishop Woosley.

Woosley said money for college scholarships last month dropped from a year ago because draw games are more profitable for the lottery than scratch-off tickets, which meant the increase in drawgame revenue in August 2017 led to more money for college scholarships then.

The lottery’s total revenue in August represented its second-highest for the month since the lottery started selling tickets in September 2009. Yet the amount raised for college scholarships last month represented the sixth-highest total for the month.

In August, the lottery paid the last of a bonus accrual to lottery vendor Scientific Games International, about $300,000; two $200,000 scratch-off ticket prizes; a $390,000 Lucky for Life prize; $270,000 and $115,000 Natural State Jackpot prizes; a $150,000 Powerball prize; two $100,000 scratch-off ticket prizes; and 14 prizes of $50,000 each, Woosley noted.

“All these prizes impact the bottom line, but more than anything, the timing of the prize can impact our return,” he said.

The lottery has helped finance more than 30,000 Arkansas Academic Challenge Scholarships during each of the past eight years. The scholarships also are financed by $20 million a year in state general revenue and a $20 million reserve fund covering temporary cash shortages.

The Legislature cut the size of scholarships three times during the first several years of the lottery, after more students than initially projected received the awards and the lottery’s net proceeds fell short of initial projections.

In fiscal 2018, which ended June 30, 34,943 students received Arkansas Academic Challenge Scholarships totaling $91 million, said Alisha Lewis, a spokesman for the state Department of Higher Education. The department projects about 35,000 students will receive scholarships totaling about $90 million in fiscal 2019, which started July 1.

The total amount awarded for Arkansas Academic Challenge Scholarships peaked in 2013 at $132.9 million, according to the Higher Education Department.

With the rebound of the lottery, the Legislature in 2017 created a new scholarship program funded with the lottery’s excess net proceeds.

The Workforce Challenge Scholarship program provides aid of up to $800 a year for students enrolled in certificate and associate degree programs for high-demand occupations in information technology, health care and industrial manufacturing.

This is the first school year in which the scholarship has been available. About 700 people applied for the scholarship, and 600 of them have qualified, Lewis said. The department has $1 million budgeted for the program this fiscal year, “but there is ample surplus that can be reallocated,” she said.

During the first two months of fiscal 2019, the lottery’s revenue totaled $82.7 million, a decline from $86.2 million in the same period in 2018, the lottery reported.

So far in 2019, the lottery’s net proceeds for college scholarships have reached $11.2 million, compared with $15.5 million in the same period in 2018, according to the lottery.

In 2019, the lottery’s revenue so far is about $5 million over projection, and net proceeds for college scholarships are up by $1.2 million over projections, Woosley said.

The lottery’s unclaimed prizes totaled $673,613 in August, increasing the unclaimed prize reserve fund balance to $2.6 million after the first two months of the fiscal year. Under state law, the balance of the reserve fund, minus $1 million, is transferred to college scholarships at the end of each fiscal year.

For 2019, Woosley projected revenue of $482.9 million and $85.9 million for college scholarships.

In 2018, the lottery raised $91.9 million for college scholarships, the third-largest amount in nine years of operation. It fell short of the $94.2 million and $97.5 million raised in 2011 and 2012, respectively.

Also in 2018, the lottery collected the most revenue in its nine years — $500.4 million, exceeding the previous peak of $473.6 million in 2012.