Impact of virus weighed as lottery revenue dips

The Arkansas Scholarship Lottery has weathered the coronavirus crisis for the most part so far, despite the pandemic having a devastating impact on the nation’s lottery industry, lottery Director Bishop Woosley said.

Lotteries have experienced varying degrees of sales reductions due to covid-19, he said. States with shelter-in-place orders or other restrictions on residents are experiencing greater sales declines because lottery players cannot easily get to retail locations to purchase tickets, said Woosley, who is president of the North American Association of State and Provincial Lotteries.

The Arkansas lottery’s March revenue slipped by $4.1 million from a year ago to $47.8 million and the amount raised for college scholarships dipped by $1.2 million to $7.3 million, the lottery reported Friday in its monthly report to Gov. Asa Hutchinson and the Legislative Council’s lottery oversight subcommittee.

Scratch-off revenue last month inched up by about $866,000 over the same month a year ago to $41.6 million, while draw-game revenue dropped by about $5 million, to $6.1 million, the lottery reported. Draw games include Powerball, Mega Millions, Natural State Jackpot, Cash 3, Cash 4, Fast Play and Lucky for Life.

Woosley said that, in March 2019, the Arkansas lottery was bolstered by a $750 million Powerball jackpot and that’s why draw-game revenue was significantly

larger when compared with last month. Draw-game tickets are more profitable to the lottery than scratch-off tickets.

“Otherwise, we had a very good month and actually beat our instant ticket sales last March by around $800,000,” he said in a written statement. Instant tickets also are called scratch-off tickets.

“It is really amazing considering the turn of events of the last 2 to 3 weeks of the month,” Woosley said.

Arkansas had its first confirmed positive case of coronavirus on March 11. Gov. Asa Hutchinson, who has resisted requiring people to stay at home to ride out the pandemic, has touted what he has called his “target approach” to combating the virus.

The state lottery, which started selling tickets Sept. 28, 2009, has helped finance more than 30,000 Arkansas Academic Challenge Scholarships in each of the past nine fiscal years.

March is the ninth month of fiscal 2020, which ends June 30.

During the first nine months of fiscal 2020, revenue totaled $368.8 million —

a drop from $392.7 million in the same period in fiscal 2019.

So far in fiscal 2020, scratch-off revenue reached $310.4 million — an increase from $306.3 million in the same period in fiscal 2019. Draw-game revenue totaled $57.9 million — a drop from $85.7 million in the same period a year ago.

Woosley said that in this fiscal year, the largest jackpot was $400 million, compared

with a $1.5 billion Mega Millions jackpot, Powerball jackpots of $750 million and $700 million, and several other jackpots exceeding $500 million in fiscal 2019.

“It is impossible to compete with those type of jackpots when the draw-game jackpot levels are lower,” he said.

During the first nine months of fiscal 2020, the lottery has raised $57.5 million for college scholarships, down from $68.3 million in the same period a year ago.

“The drop in draw-game sales is the sole reason for the difference in our proceeds for this fiscal year versus last fiscal year,” Woosley said.

At the end of each fiscal year, the lottery transfers the balance of the unclaimed prize reserve fund minus $1 million to college scholarships.

On March 31, the unclaimed prize reserve fund totaled $8 million, after receiving $856,502 in unclaimed prize funds in March.

For fiscal 2020, Woosley has projected total revenue at $497 million and $89.3 million raised for scholarships.

Woosley said that both nationwide lotteries, Powerball and Mega Millions, have been forced to change their games. Their starting jackpots are now $20 million instead of $40 million.

“Based on the drop in sales, the jackpot levels in the games could not be funded,” he said. “As a result, the two multistate groups voted to temporarily change the starting jackpot and guaranteed minimum jackpot rolls to ensure that their members’ liability was decreased, and the jackpots were funded.”

Woosley said it’s too early to determine whether closing the casinos in Hot Springs, Pine Bluff and West Memphis around mid-March has had any impact on Arkansas lottery sales, but the Mississippi lottery continues to have a small impact on sales in Chicot and Phillips counties.

The Mississippi lottery started selling scratch-off tickets in late November and Powerball and Mega Millions tickets in late January.

The Arkansas lottery reported having 1,972 retailers on March 31, up from 1,922 a year ago.

The state Division of Higher Education has forecast that it will distribute $94.6 million in Arkansas Academic Challenge Scholarships to 33,315 students in fiscal 2020. So far in fiscal 2020, the division has spent $88.6 million on these scholarships, said Alisha Lewis, spokeswoman for the division.

The total scholarship distribution peaked at $132.9 million in fiscal 2013 to 33,533 students.

The total dropped to $112.7 million for 35,303 students in fiscal 2015 before dropping below $100 million for each fiscal year since. That’s largely the result of the Legislature cutting the amount of the initial scholarships three times in 11 years.

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 higher-education programs that lead to them being qualified to work in high-demand occupations.

The Division of Higher Education has projected awarding 1,945 Workforce Challenge Scholarships totaling $1.6 million — up from 214 students who received about $170,000 in fiscal 2019. So far, the division has spent $300,000 on those scholarships in fiscal 2020, Lewis said.

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 scholarship for a semester or academic year in which they are enrolled in an endorsed concurrent enrollment course or certificate program under certain conditions.

“We haven’t spent any [funds] on Concurrent Challenge, but we haven’t received all those rosters,” Lewis said. “We have received rosters for fall 978 students and spring 914 students for a total of $365,585.”