Lottery sales lag 3 months; revenue up

Amount for scholarships not meeting expectations

— Arkansas’ lottery ticket sales last month dropped by $9.2 million from sales of $39 million a year ago, the third consecutive month in this fiscal year in which ticket sales lagged behind year-ago sales, the lottery’s director said Monday.

But the lottery raised about $348,000 more for college scholarships last month compared with the $6.97 million raised in September 2011, according to a written report from Director Bishop Woosley to the Arkansas Lottery Commission.

“If there is a silver lining, sometimes when sales go down, you also are going to pay less out [for lottery vendors and some other expenses] and, in turn ... actually make more money,” Woosley said.

He said ticket sales declined last month compared with September 2011 largely because the lottery’s first$20 scratch-off ticket was only a few months old, was popular and sold well in September 2011, and another $20 scratch-off ticket was several months old last month and didn’t sell as well.

Among other things, lottery officials blamed high gasoline prices, high temperatures and high electricity bills for the dip in sales in July and August.

Through the first three months of fiscal 2013, the lottery’s revenue has declined by $14.5 million over the same period in fiscal 2012 to $98.5 million, according to Woosley’s report.

Scratch-off ticket sales dropped by $16.1 million to $79.5 million during this period, while draw game ticket sales increased by $1.5 mil-lion to $18.8 million.

So far in fiscal 2013, the lottery raised $20 million for college scholarships compared with $21.6 million to the same period in fiscal 2012, the report said.

The $20 million includes $18.5 million in transfers to the state Department of Higher Education for college scholarships and $1.5 million in unclaimed prizes that will be transferred to scholarships at the end of the fiscal year.

For fiscal 2013, Woosley has projected $98 million in net proceeds based on projected ticket sales of $480.5 million. The net proceeds become the scholarship funds.

In fiscal 2012, the lottery raised $97.5 million for scholarships based on $473 million in ticket sales.

Woosley, whom the commission promoted to director in February from his previous job as chief legal counsel, said he’s still hoping the lottery raises what he projected for college scholarships in fiscal 2013.

“You cannot ever tell with jackpots. You just can’t tell what’s going to pop up, and those are often what makes a difference in having a good year and a bad year or a mediocre year,” he said.

So far this month, Woosley said, the lottery’s scratch-off ticket sales have rebounded since the lottery started selling its new $20 scratch-off ticket.

During the first week of this month, the lottery had its best week of scratch-off ticket sales since May, he said, and last week was the lottery’s second best week of scratch-off ticket sales since the July 1 start of the fiscal year.

“I think what we are seeing is a trend. We are moving on and we are going to be selling more and recovering a little bit from what we endured in July and August and September,” Woosley said.

The lottery has seen ticket sales drop for three or four months in a row at least three times during its three years of operations, and “we saw ultimately increases in sales,” he said.

Commissioner George Hammons of Pine Bluff pressed Woosley about whether the lottery would meet its goal of raising $98 million for scholarships in fiscal 2013.

Woosley replied, “I am hopeful that we will, but realistically I think it is going to be hard for us to catch up.

“We are in our third year and there may be a little bit of complacency and we may be in that situation where the natural progression ... is a little bit of a downward trend,” he said.

“But what I have told my staff is I don’t want to go back to my bosses in July of 2013 and not have turned over every rock that we can to meet our goal,” Woosley said. “We are behind and we are going to have to catch up.”

More competition for Arkansas’ lottery is developing.Commission Chairman Ben Pickard of Searcy said Mississippi officials are considering a lottery in their state. Mississippi is the only neighboring state that doesn’t have a state lottery.

Woosley said a constitutional amendment allowing the creation of a lottery was approved in 1993 in Mississippi, but lawmakers never approved a bill to allow the creation of a lottery.

“There is a strong push and I guess maybe it is in this next session where they are going to go back and reconsider it,” he said. “I don’t have any hair, but if I [did] it would have stood up a little bit. ... That’s going to be competition.”

Pickard said he attended an international lottery conference in Montreal, Canada, last month at which the emphasis was on the selling lottery tickets over the Internet.

“I am not advocating this, and I understand that Arkansas is not going to do it, and I hope we don’t do it,” he emphasized.

Pickard said he has no idea how much the sale of lottery tickets over the Internet in other states would affect Arkansas’ lottery ticket sales.

Woosley said Georgia and Illinois’ lotteries are selling lottery tickets over the Internet, and South Carolina’s lottery, among others, is considering doing that.

Pickard said Woosley and his staff are doing an outstanding job.

“But there are things that occur outside of our control that may impact [how much the lottery raises for scholarships] and we need to be as accurate as we can,” he said.

During its first three years of ticket sales from Sept. 28, 2009-Sept. 28, 2012, the lottery sold $1.423 billion in tickets, paid out $899 million in prizes and $80.4 million in retailer commissioners and bonuses, and raised $286.4 million for college scholarships, Woosley said.

He said the lottery has helped pay for more than 90,000 scholarships during the past three years.

For several months, key lawmakers have said they plan to overhaul the Academic Challenge scholarship program, funded largely by the lottery, in the 2013 session. But no consensus has emerged on how to do that yet.

In other business Monday, the commission approved an amendment to the lottery’s 2009 contract with Athens, Greece-based vendor Intralot Inc.

Under the amendment, Intralot agreed to provide 600 17-or 19-inch player advertising displays for lottery retailers in return for the lottery returning 400 monitors that could be used for keno.

Woosley has said player advertising displays would be similar to a television and show lottery advertising for jackpot games, new games, promotions, and social-media sites.

In June of 2009, then-lottery Director Ernie Passailaigue said he envisioned keno as being played in bars or restaurants by people watching monitors for winning numbers that pop up every five minute. But Gov. Mike Beebe and key legislators said they weren’t interested in having keno instituted in Arkansas.

The lottery may buy more player advertising displays from Intralot for $200 apiece under the amendment.

Woosley said these displays would be placed near lottery terminals at retailers by Jan. 21.

Front Section, Pages 1 on 10/16/2012

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