State lottery revenue up 9% in November

The Arkansas Scholarship Lottery’s total revenue in November rose by about $4 million, or 9%, over the same month a year ago to $47.1 million, but the amount raised for college scholarships dropped by about $1 million, or 12%, to $7.2 million.

Scratch-off ticket revenue last month increased by about $3.3 million over the same month a year ago to $39.8 million and draw game revenue rose by about $648,000 from November last year to $7.2 million, the lottery reported Friday in its monthly report to Gov. Asa Hutchinson and the Legislative Council’s lottery oversight subcommittee.

The lottery has been selling tickets since Sept. 28, 2009, and has helped fund Arkansas Academic Challenge Scholarships for more than 30,000 students during each of the past 11 fiscal years.

Scratch-off ticket revenue increased year-to-year because the lottery had two game launches this November, said the agency’s Gaming Director Mike Smith.

New scratch-off games entered the market at the first and end of November, which is a bit out of the ordinary for the lottery, while new games entered the market only only once in November 2020, he said.

In addition, this November’s new scratch-off games outsold the new games introduced in the same month a year ago by 4.5%, he said.

Draw game revenue increased in November by nearly 10% over November a year ago in part because the Powerball jackpot game’s sales increased by about 30%, Smith said. The lottery’s Powerball revenue in November totaled $2.19 million, up from $1.72 million a year ago, according to the lottery’s

reports.

The Powerball jackpots in November compared with a year ago were comparable, so when “you consider that Powerball added a third draw day this year, the benefits become obvious,” he said in a written statement.

Lottery Director Eric Hagler said the amount raised for college scholarships fell in November compared with a year ago because the reduction “is premised upon the accrual to cash adjustment that is periodically made throughout the year.”

The lottery’s income in November was $8.2 million, with the amount raised for scholarships at $7.2 million.

“Thus, while we earned $1.3 million more in November 2021 [compared with November 2020 income], the accounting adjustment served to impair the net proceeds number,” Hagler said in a written statement. “Net proceeds are currently trending at $5.3 million over budget and we fully expect to see a further swing to the upside during the next adjustment.”

FISCAL 2022

November is the fifth month of fiscal 2022, which started July 1 and ends June 30, 2022.

For fiscal 2022, Hagler has conservatively forecast a drop in total revenue from a record $632.5 million in fiscal 2021 to $509.2 million and a reduction in the amount raised for college scholarships from a record $106.6 million in fiscal 2021 to $88.6 million.

During the first five months of fiscal 2022, revenue totaled $238 million, compared with $232.6 million during the same period in fiscal 2021.

So far in fiscal 2022, the lottery has raised $39.2 million for college scholarships, compared with $40.8 million in the same period in fiscal 2021. At the end of each fiscal year, the lottery transfers the balance of the unclaimed prize reserve fund minus $1 million to college scholarships.

At the end of November, the unclaimed prize reserve fund totaled $3.7 million, after receiving $915,180.79 in unclaimed prizes in November.

Hagler said lottery officials are extremely pleased with the current performance, with total revenue $40 million in excess of their budget forecast and the amount raised for scholarships exceeding the budget by $5.3 million.

“Our executive team closely monitors performance versus budget and we use it to inform our ongoing business decisions,” he said.

SPORTS GAMBLING

The Arkansas Racing Commission is scheduled on Dec. 30 to consider rules authorizing the state’s casinos to offer mobile sport gambling. If the commission approves them, the casinos will be able to offer mobile sports gambling as soon as the Legislative Council signs off on the rules.

The goal would be to get the council’s approval at its January meeting, said Department of Finance and Administration spokesman Scott Hardin. The council is to meet Jan. 28. The Super Bowl is set for Feb. 13.

Asked whether lottery officials expect mobile sports gambling to impact lottery sales, Hagler said, “All retail distributors compete for a limited pool of consumer discretionary spend.

“Thus, any new arrival to the marketplace is likely to have some impact, but the amount of market disruption is hard to predict,” he said. “We see betting on sports to be a completely different gaming experience than playing your lottery numbers in a draw game or picking up a handful of scratchers.”

Hardin said the finance department is looking at the amount of revenue generated by states that allow mobile sports betting.

“While a formal revenue impact is not yet complete, we expect the amount wagered on sports would increase significantly with the mobile option, leading to additional state revenue,” he said Friday. “Since the first sports wager was placed in Arkansas in July 2019, players have wagered a total of $95 million on sports through the state’s three casinos,” Hardin said. “October 2021 was a record month for sports betting in Arkansas with $9.6 million wagered. To put that in perspective, the amount wagered in July was $2.9 million. Football season and an increasing interest in sports betting certainly played a role in the October record.”

SCHOLARSHIP FORECAST

The Arkansas Academic Challenge scholarships are financed with lottery proceeds plus $20 million a year in state general revenue.

The state Division of Higher Education forecast that it will hand out $90 million in these scholarships to 31,000 students in fiscal 2022, after awarding about $86 million in fiscal 2021.

So far in fiscal 2022, the division has awarded Academic Challenge Scholarships to 27,864 students and disbursed $39.2 million, said Alisha Lewis, assistant director of operations at the division.

The amount handed out for Academic Challenge Scholarships peaked at $132.9 million in fiscal 2013, going to 33,353 students. Scholarship totals have dropped largely because the Legislature has cut the amount of the initial awards several times.

The 2017 Legislature created the Workforce Challenge Scholarship to use excess proceeds to provide up to $800 a year for students enrolled in programs that lead to qualifications in high-demand occupations.

Division officials said they expect to distribute $450,000 for these scholarships in fiscal 2022. In fiscal 2021, the division reported it distributed $487,865 in Workforce Challenge Scholarships.

For the Workforce Challenge Scholarships, so far in fiscal 2022, the division has awarded 1,394 students and disbursed $239,339, Lewis said.

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.

For fiscal 2022, the division projects distributing $2.7 million for these scholarships to 13,000 students. For fiscal 2021, the division reported that it handed out $2.4 million in Concurrent Challenge scholarships to 14,091 students.

For the Concurrent Challenge Program, the division has awarded scholarships to 5,123 students and disbursed $951,558 in scholarships so far in fiscal 2022, Lewis said.