Ice, snow in state put chill on December lottery sales

— A Christmas snow and ice storm cooled ticket sales at the Arkansas lottery as the lottery’s revenue in December dipped by $5.4 million from a year ago to $34.3 million, the lottery’s director said Friday.

December is the fifth month in this fiscal year in which lottery revenue and ticket sales have slipped below year-ago figures.

During the first six months of this fiscal year, which started in July, the lottery’s revenue of $206.2 million lags behind revenue during the same period last year by $20.8 million, said lottery Director Bishop Woosley.

The lottery has raised $43 million for college scholarships so far in fiscal 2013 — $2.7 million less than in the same period in fiscal 2012, he said.

“We just need to make up some ground in the spring, which I think we will do with our spring [scratch-off ticket] launches and promotions,” said Woosley, who has been the lottery’s director since February and has worked at the lottery since July 2009.

Arkansas’ lottery started selling tickets on Sept. 28, 2009, and raised $82.7 million for scholarships during a ninemonth period in fiscal 2010.

It generated $94.2 million for college scholarships in fiscal 2011, its first full fiscal year, and then $97.5 million in fiscal 2012.

Woosley originally projected the lottery would raise $98.5 million for college scholarships in fiscal 2013. But he later lowered his estimates, telling lawmakers in November that they “are probably safe to assume” that the lottery will raise “somewhere in the $89 million-$90 million” range for college scholarships in fiscal 2013 “if sales trends continue to hold.”

A legislative committee last month recommended that the Legislature cut the amounts of the largely lottery-funded Academic Challenge Scholarships to $3,300 a year at the state’s four-year universities and $1,650 a year at two-year colleges for future first-time recipients. The committee members said they recommended the cuts because more students than projected are getting the scholarship and the lottery hasn’t raised as much money as projected.

More than 30,000 students have received the scholarships during each of the past three years.

Currently, students who were first awarded the scholarships in the 2010-11 school year receive $5,000 a year to attend universities and $2,500 a year for colleges. Those first awarded the scholarships in the 2011-12 or 2012-13 school years get $4,500 a year at universities and $2,250 at colleges.

In November, a record Powerball jackpot boosted ticket sales by $2.8 million over November 2011 to $39.3 million.

Woosley said the lottery’s ticket sales in December were down only slightly compared with a year ago until the Christmas snowstorm and “related blackouts tanked sales” the last week of December.

“If our retailers cannot sell tickets for lack of power and our players cannot drive to a retailer to buy them, we lost sales,” he said. He estimated the lottery lost $2 million to $3 million in ticket sales as a result of the weather last month

As to whether the decline in ticket sales is natural for a 3-year-old lottery, Woosley said that’s tough to determine “with the economic and weatherrelated factors we have been dealing with over the past six months.”

“You certainly have to think that is possibly a part of the decline in sales,” he said. “Typically, a lottery peaks and sales drop after 1 1/2 to two years. We have been fortunate here that our sales were sustained for longer than that.

“I think we have stopped or slowed the bleeding that we saw earlier in the summer and fall of last year, and have been making progress towards sustaining growth in the future,” Woosley said.

State Rep. Mark Perry, DJacksonville, said he expects the lottery ticket sales to pick back up in the next few months, in part because people will have tax-refund money to spend.

“February and March are pretty good months,” and ticket sales “will cycle back around,” he said.

Perry said he doesn’t believe that the lottery’s ticket sales have peaked.

“The chance of winning is going to be there,” he said.

Sen. Johnny Key, R-Mountain Home, said it’s difficult to say whether the lottery’s decline in ticket sales is typical for a 3-year-old lottery.

Many people have been under financial pressure during the past year and changed their spending habits, and that’s affected lottery ticket sales, he said.

Key said he has drafted a bill that would change the way lottery scholarship money is distributed. Rather than getting the same amount of money each year, future first-time recipients would get $2,000 scholarships in their freshman years, $3,000 scholarships in their sophomore years, $4,000 scholarships in their junior years and $5,000 scholarships in their senior years no matter whether they attended a fouryear university or a community college.

“Some of my colleagues are looking at that or some variance of that, [and] I am discussing it with others,” said Key, a former co-chairman of the Legislature’s lottery oversight committee.

“I am not sure what it is going to look like when I file it, but I do anticipate filing something to change the structure [of the scholarship program],” he said.

But Perry, a former co-chairman of the lottery oversight committee, said he supports cutting the size of the scholarships for future first-time recipients to $3,300 a year at the state’s four-year universities and $1,650 a year at two-year colleges.

“We were pretty conservative in lowering that amount,” he said. “We could always go back and decrease them next year if we need to.”

Front Section, Pages 1 on 01/19/2013

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