Lottery revenue rises in March to $67.9 million record

LITTLE ROCK — Bolstered by surging scratchoff ticket sales, the Arkansas Scholarship Lottery’s revenue in March rose $20.1 million over the same month a year ago to $67.9 million, to set a record.

The lottery has been selling tickets since Sept. 28, 2009. The previous record haul was $63 million in January, said Scott Hardin, a spokesman for the state Department of Finance and Administration, under which the lottery operates.

The amount raised for college scholarships last month increased about $1 million over a year ago to $8.3 million. The record amount raised for scholarships in any month is $13.8 million in January 2016.

The Arkansas Scholarship Lottery reported the figures in its report to Gov. Asa Hutchinson and the Legislature’s lottery oversight subcommittee. The lottery has helped finance Arkansas Academic Challenge Scholarships for more than 30,000 college students during each of the past 10 years.

In another lottery-related development, lottery Director Eric Hagler said the agency opposes a bill to create the Arkansas Lottery Keno and ILottery Act. Some state lawmakers have taken a dim view in the past about the lottery launching keno games.

Rep. Les Eaves, R-Searcy, chairman of the House Rules Committee, said Tuesday he doesn’t expect the bill to be considered by the committee during the ongoing legislative session.

In March, scratchoff ticket revenue rose $18.1 million over a year ago to $59.7 million, while draw-game revenue increased $2 million to $8.1 million.

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

Asked why scratch-off revenue experienced a large increase last month, coupled with an increase in drawgame revenue, lottery Gaming Director Mike Smith said the lottery launched a popular multiplier theme of scratchoff tickets in March.

“The multiplier themed games have become a staple product that is in high demand by our players,” he said in the lottery’s written statement about last month’s results. “Our draw games, especially our in-state games, have continued to be popular with our players this fiscal year.”

Lottery Sales Director Mark Hearn said “We pulled our sales representatives out of the field in March 2020, which initially caused a dip in sales.

“Our reps are back in the field and we are seeing the benefits of a return to a hands-on approach to providing premium support for our retail network,” he said. The lottery had 1,972 retailers at the end of March.

Hagler said “[federal] stimulus money, a change in the tax-deadline [and] the reopening of the larger economy have also likely served to benefit sales.”

Revenue set a record, but not net proceeds.

“Net Proceeds do not always track sales in linear fashion,” Hagler said. “Couple this fact with the accounting adjustments on cash sales, and the result is a lag on reporting.” For example, unclaimed prizes for March totaled $1.024 million, an amount that will be transferred to scholarships at the end of fiscal 2021, on June 30, he said.

He also said an adjustment in April’s report “completes the total picture for March. We expect to see an approximate $2 million in additional net proceeds from March’s effort,” Hagler said.

FISCAL YEAR SO FAR

During the first nine months of fiscal 2021, revenue totaled $456 million, compared to $368.8 million in 2020.

So far in 2021, scratchoff revenue totaled $378.1 million, compared to $310.4 million in 2020. Draw-game revenue totaled $77.4 million, compared to $57.9 million in 2020.

The amount raised for college scholarships totaled $71.6 million, compared to $57.5 million in 2020.

The unclaimed prize reserve fund totaled $7.6 million at the end of March. Under state law, the balance minus $1 million will be transferred to college scholarships at the end of the fiscal year.

The lottery’s previous director, Bishop Woolsey, projected 2021 revenue at $456.8 million and the amount for college scholarships at $78.2 million. He said this in May 2020, not long after the start of the covid-19 pandemic.

In 2020, lottery revenue reached $532 million to set a record, and $89.4 million was raised for college scholarships, which was the sixth-largest amount in the lottery’s history.

The record amount raised for college scholarships was $98.6 million in 2019. Woosley attributed the drop to poor sales for Mega Millions and Powerball tickets.

KENO, iLOTTERY

House Bill 1869 by Rep. Aaron Pilkington, R-Clarksville, would create the Arkansas Lottery Keno and Ilottery Act.

In June, Woosley told lawmakers the lottery is considering implementing the game of keno and a digital channel as an iLottery offering.

Under Act 8 of the Second Extraordinary session in 2014 — sponsored by now-Senate President Pro Tempore Jimmy Hickey, R-Texarkana — the Legislature temporary barred the lottery from deploying keno games through a ban on “multi-draw screenbased” lottery games until March 13, 2015.

Hagler, who started work as the lottery’s director in August, said, “We are aware of and we are opposed to HB1869.

“One question is, who is behind this piece of legislation? It isn’t the Office of the Arkansas Lottery,” he said.

The adoption of keno is far different than simply adding a new game to the lottery’s portfolio, and physical keno is an equipment-intensive endeavor, which will require the lottery to lease additional equipment from a vendor, Hagler said.

“In short, this type of heavy lift benefits the vendor from inception; the strain is on the Lottery in the early years — and perhaps beyond,” he said. “When presented with promises of increased revenue, it is important to remember, ‘revenue is a possibility, but the expenses are guaranteed.’”

Eaves said he talked to Pilkington and doesn’t expect Pilkington to ask the committee to consider the bill during the session.

“That’s a big bill and probably a big lift” to get out of the House Rules Committee, Eaves said.

Pilkington couldn’t be reached for comment Tuesday.

SCHOLARSHIPS

The Arkansas Division of Higher Education has projected it will distribute $91 million in Academic Challenge Scholarships in 2021 to 31,000 students.

It distributed $90.6 million of those scholarships to 31,469 students in 2020.

The scholarships are financed with lottery proceeds and $20 million a year in general revenue.

Academic Challenge Scholarships peaked at a total $132.9 million in 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 the lottery’s excess proceeds to provide up to $800 a year for students enrolled in programs that lead them to being qualified in 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 certain programs.