February lottery take shrugs off snow days

Revenue increased by $1.4 million over same month last year, officials say

The Arkansas Scholarship Lottery’s revenue in February increased by $1.4 million from the same month a year ago to $42 million, despite ticket sales lagging for several days during last month’s heavy snowfall.

However, the amount raised for college scholarships last month dropped by $1.7 million from a year ago to $5.5 million.

The lottery reported its financial results for February last week in its monthly report to Gov. Asa Hutchinson and the Legislative Council’s lottery oversight subcommittee.

The lottery started selling tickets on Sept. 28, 2009, and has helped raise money for Arkansas Academic Challenge Scholarships for more than 30,000 students during each of the past 10 fiscal years.

Scratch-off ticket revenue in February totaled $35.4 million, up from $34.5 million a year ago, and draw-game ticket revenue totaled $6.6 million, up from $6 million a year ago, the lottery reported.

Draw games include Mega Millions, Powerball, Fast Play, Natural State Jackpot, Cash 3, Cash 4 and Lucky for Life.

During the snow days that started on Valentine’s Day, ticket sales bottomed out at $232,373 on Feb. 15 before increasing to $357,453 on Feb. 16, slipping to $259,559 on Feb. 17 and then inching up to $304,635 on Feb. 18, according to the lottery.

Lottery Director Eric Hagler said increased revenue last month was likely the result of several factors.

“We would be remiss to ignore the effects of a semiclosed economy and the resulting limited entertainment options” during the covid-19 pandemic, he said in a written statement.

“However, we would be equally remiss to ignore the strategies and efforts of lottery team members,” Hagler said. “We would be rightly, quite circumspect, if our plans did not yield positive results.”

He said most of last month’s $1.7 million drop in the amount raised for scholarships is associated with the lottery having $1.9 million in unclaimed prizes in February, compared with $87,085 a year ago.

“The unclaimed prizes will be swept into net proceeds in June 2021, the end of our fiscal year,” Hagler said.

“Accordingly, while we reported $5.5 [million] in net proceeds for the period, the anticipated adjusted number should be in the $7.4 [million] range — which is actually $200k higher than year-overyear for the same period.”

The February results occurred on the heels of a big January fueled by large jackpots in multistate draw games.

Bolstered by ticket purchases for a $1 billion Mega Millions jackpot and a $730 million Powerball jackpot, revenue in January totaled $62.9 million to set a record for any month at the 11-yearold lottery.

“We would be remiss to ignore the effects of a semi-closed economy and the resulting limited entertainment options (during the covid-19 pandemic).” —Eric Hagler, lottery director

In January, the lottery raised $10.9 million for college scholarships, but that fell short of the overall record — $13.8 million in 2016. In January 2016, ticket purchases were fueled by a $1.6 billion Powerball jackpot.

FISCAL 2021

February is the eighth month of fiscal 2021, which ends June 30.

During the first eight months of fiscal 2021, revenue totaled $388.1 million, up from $320.9 million during the same period in fiscal 2020.

Both scratch-off and drawgame revenue have increased this fiscal year compared with last fiscal year. Scratch-off revenue totaled $318.3 million, an increase of nearly $50 million from $268.7 million in the same period in fiscal 2020.

Draw games brought in $69.3 million, an increase of nearly $18 million from $51.7 million in the same period in fiscal 2020. So far in fiscal 2021, the lottery has raised $63.2 million for scholarships, up from $50.1 million in the same period in fiscal 2020.

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

As of Feb 28, that fund totaled $6.6 million, after receiving $1.9 million in unclaimed prizes in February.

For fiscal 2021, former lottery Director Bishop Woosley projected revenue at $465.8 million and the amount for scholarships at $78.2 million during what he called in May “a great deal of uncertainty in the lottery world and the world in general.”

In fiscal 2020, lottery revenue reached $532 million to set an annual record, while $89.4 million was raised for scholarships, which was the sixth-largest in the lottery’s history. The record amount raised for scholarships was $98.6 million in fiscal 2019. Woosley attributed the drop in fiscal 2020 to poor sales for Mega Millions and Powerball tickets.

SCHOLARSHIPS

So far in fiscal 2021, the Arkansas Division of Higher Education has spent $65 million on Arkansas Academic Challenge Scholarships, $1.9 million on Concurrent Challenge Scholarships and $469,465 on Workforce Challenge Scholarships, said division spokeswoman Alisha Lewis.

The division has projected that it will distribute $91 million in Academic Challenge Scholarships to 31,000 students in fiscal 2021. It distributed $90.6 million in those scholarships to 31,649 students in fiscal 2020. These scholarships are financed with lottery proceeds and $20 million a year in state general revenue.

The total amount of Academic Challenge Scholarships peaked at $132.9 million in fiscal 2013, going to 33,353 students. The total amount awarded of that scholarship has dropped since then largely because the Legislature cut the amounts of the initial scholarships.

The 2017 Legislature created the Workforce Challenge 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 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 certificate program under certain conditions.

POSSIBLE CHANGES

In advance of this year’s regular legislative session, Division of Higher Education Director Maria Markham promoted the idea of creating a need-based scholarship program called Challenge Plus financed with excess lottery proceeds. Legislation to create the program hasn’t been introduced yet.

Senate President Pro Tempore Jimmy Hickey, R-Texarkana, said he is working on legislation so the state puts back sufficient money to cover the scholarships a year in advance of distributing the money to colleges, with the funding of the Academic Challenge Scholarship the top priority and the other lottery-financed scholarships funded on a pro rata basis.

According to the lottery, the Workforce Challenge Trust Fund had a balance of $82.4 million and the Academic Challenge Trust Fund had a balance of $26.5 million, as of Feb. 28.

Sen. Joyce Elliott, D-Little Rock, has filed Senate Bill 462 that would change the eligibility requirements for the Academic Challenge Scholarship and authorize the Higher Education Division to decide on scholarship amounts.

Act 1105 of 2015 — sponsored by Hickey — requires high school graduates to have ACT scores of at least 19 or the equivalent on comparable college entrance exams to be eligible for the Academic Challenge Scholarship.

High school graduates previously were required to have completed the Smart Core curriculum or achieved either a high school grade point average of at least 2.5 or a minimum score of 19 on the ACT or its equivalent.

They would be required to have either a high school grade point average of at least 2.5 on a 4.0 scale or a minimum score of 19 on the ACT or the equivalent score on an ACT equivalent to be eligible for the Academic Challenge Scholarship under Elliott’s Senate Bill 462.

Under the bill, the Higher Education Division would determine the scholarship award amounts for an academic year for full-time recipients at four-year colleges by evenly dividing the available funding among the eligible applicants. The division also would determine the scholarship award amounts for recipients at two-year colleges.

Act 1105 of 2015 cut the size of the Academic Challenge Scholarship amounts for firstyear college students.

Under Act 1105, the scholarship was reduced from $2,000 to $1,000 for the freshmen year at the twoand four-year colleges, and increased from $3,000 to $4,000 for the sophomore year at four-year colleges and from $2,000 to $3,000 for the sophomore year at two-year colleges. Scholarship recipients receive $4,000 as juniors and $5,000 as seniors at the four-year colleges.

Supporters of Act 1105 said it would shift scholarship money to students who completed their studies and help guard against the scholarship program running short of funds, while opponents said they worried it would hurt poor and minority-group students.