Lottery-related news broke on two fronts last week. Both involve money, or rather the lack of it, from the games that fund college scholarships.
Most significantly, the state Department of Higher Education reported that the agency has had to spend from reserves for scholarships funded by the lottery.
When Arkansas voters approved the constitutional amendment that allowed the lottery, the expectation was that people who played the games, both scratch-off cards and draw games like Powerball, would keep playing enough to sustain a state scholarship program.
This dip into a $20 million lottery reserve fund suggests trouble for the program, which has already been altered to provide less money for qualifying students than it originally made available. The department had to take about $12 million out of reserves to cover spring semester scholarships.
The reserve fund exists because lawmakers saw a need to cover short-term shortages in cash flow for scholarships. Obviously, it was a good call to have that money available.
The question is how long the reserves will cover the gap as revenue from the lottery continues to dwindle.
Originally projected to produce about $100 million a year for scholarships, the lottery brought in $82.7 million its first year, $94.2 million the next and $97.5 million the next. In fiscal 2013, the take for scholarships was down to $90 million. The forecast for this fiscal year, which ends June 30, is $82.2 million.
Shane Broadway, the higher education director, reported last week that the lottery reserve fund has since been replenished and the department is banking money for the next round of Academic Challenge scholarships to be awarded for the fall semester.
Obviously, he can't know until then whether the lottery will produce enough scholarship money to cover all obligations or if he'll need to tap the reserves again.
The longer-term question is how long the reserves will last and whether lottery revenue will ever meet those higher expectations.
The lottery simply isn't performing quite as predicted and the "new" is long gone for those who've played the games.
That brings us to the other lottery-related news.
The Arkansas Lottery Commission voted to implement new games intended to boost sales and ultimately beef up the amount of money going to scholarships.
They're called monitor games. Players can buy a ticket and watch the drawings, typically held every four minutes, on screen. The monitor games, like Keno and Quick Draw, could be made available in restaurants or taverns or retail outlets.
There is no indication what these monitor games might produce in revenue, once the commission gets them installed. The expectation is, however, that they will enliven participation in the lottery.
The lottery needs something. According to Lottery Director Bishop Woosley, net revenue for this fiscal year through March was $55.5 million. That compares to $67.2 million at the same time in 2013, or, coincidentally, roughly equal to the $12 million that Broadway had to pull out of reserves to cover spring-semester scholarships.
The commission vote to approve the new games came despite opposition from a legislative oversight committee. The committee passed a "motion of non-support," an unusual vote, after Woolsey explained the recommendation he later took to the lottery commissioners.
Among the questions lawmakers had was whether state voters intended to permit such games when they approved the constitutional amendment to allow the lottery.
Although the commission vote was not unanimous, the panel nonetheless set implementation of monitor games in motion last week.
Commission support is apparently based on the idea that the introduction of new games to a lottery is akin to putting new products on line in a business enterprise.
Such change is necessary to remain relevant and compete for the consumer's dollar, or so the argument goes.
So, the Lottery Commission will spend money theoretically to make more money to continue to operate the lottery and to fund scholarships, all in the name of relevancy and despite legislative "non-support."
Over the five-year life of the Arkansas lottery, the only truly relevant element is the number of students who have benefited from the scholarships.
They number more than 30,000 now.
Arkansas may not be getting all it hoped for from the lottery, but it is still getting something.
Commentary on 04/23/2014