Subcommittee hears about bringing keno gambling to state

LITTLE ROCK — The Legislative Council on Friday signed off on a second-year contract extension for consultant Camelot Global Services, a day after the state lottery director told lawmakers the lottery is looking at implementing the game of keno, opposed by some lawmakers in the past.

Camelot’s contract extension starts July 1 and runs through June 30, 2022. The company helps the Arkansas Scholarship Lottery increase sales.

On Thursday, Bishop Woosley, Arkansas Scholarship Lottery director, told the council’s lottery oversight subcommittee, “There has been a recommendation for keno and obviously that is not a done deal.”

In keno, a computer randomly draws 20 numbers from a field of 80 numbers every four minutes, Woosley said Friday. Players can select one to 10 numbers or use the computer-generated “Quick Pick” selection.

Keno retailers are equipped with a monitor displaying the results, he said.

A win occurs when some or all the numbers selected by the player are matched by the computer. The more numbers a player matches, the higher the payout.

The lottery director also raised the possibility of sales without physical cards and tickets. Woosley told lawmakers Thursday, “I don’t want to scare anybody.

“[But] the future requires a lot of touchless and remote purchasing, so we have considered an iLottery situation and again that is not imminent,” Woosley said. “If we are in a situation where this [pandemic] continues and people are not wanting to go to stores and people are not wanting to [go to convenience stores]. That’s where we sell our tickets. Other states in the industry have the ability to do iLottery [and] their iLottery sales went up 30% to 40% during this period.”

The iLottery could mean selling lottery tickets using a mobile device; purchasing a loaded card in a brick-andmortar retailer that a player then loads on his mobile device to earn credits towards play; or loading credits into an account and scanning a QR code at a retailer to activate the games, Woosley explained Friday.

Woosley on Thursday recalled the Legislature in a special session in June 2014 enacted a law temporarily barring the lottery’s deployment of the keno game until March 2015.

“Those are things that we might bring back and say, ‘Would anyone be outraged if we did this?’” he said.

State officials initially signed a contract with Camelot in November 2015 through June 30 of this year, with options for two one-year extensions, to help develop and implement a business plan for the lottery.

The contract was signed several months after Gov. Asa Hutchinson and the Legislature put the lottery under the control of the state Department of Finance and Administration and eliminated the nine-member Arkansas Lottery Commission.

Camelot “has been a good partner,” Woosley told the subcommittee. “The gist of this [contract extension] is we continue to have pretty much the same relationship at a reduced cost and most of that reduced cost is based on our education over the last five years.”

Under the two-year contract extension, Woosley said the lottery continues to provide base compensation of up to $650,000 a year for Camelot Global Services, but he doesn’t expect to have to use the consulting firm’s services much. The lottery also will no longer pay for Camelot’s travel.

Starting July 1, Camelot will receive 11.75% of all net operating income between $78.2 million and $88.03 million

and 20% of any net operating income above $88.03 million, under the contract extension. Woosley is projecting proceeds of $78.2 million for college scholarships in 2021.

“There is a carrot at the end of this … to where if we make more and it is because of their help, they’ll make more as well,” Woosley said.

The incentive compensation under the contract extension applies to all games of the lottery until the Powerball/or and Mega Million jackpots exceed $400 million.

If those jackpots exceed $400 million, Camelot will be paid 4% of gross profit for each draw of Powerball and Mega Millions.

Prior to the start of any scratch-off ticket exceeding $20 and any new in-state draw game, the lottery and Camelot will agree to an incentive compensation amount on those games’ proceeds.

The contract extension includes a provision to allow the lottery or Camelot Global Services to terminate the extension at any time and for any reason with 30 days’ notice to the other party with no financial penalties.

Under the current contract with Camelot, Woosley said the company has been paid a base compensation rate up to $650,000 for any services the lottery requested and “in the beginning of the contract, that equalled roughly $650,000 and it has decreased every year as we have needed them a little bit less or there has been less requirements of Camelot.

“The last couple of years have been somewhere in the neighborhood of $300,000. This may be a little bit less as well,” he said.