For the third consecutive year, the Arkansas Scholarship Lottery's ticket revenue dipped in July from the previous year.
But the amount that the lottery raised for college scholarships increased in July over a year ago for the second consecutive year.
"Even though sales were lower [last] month, our unclaimed prizes were higher, prize expense a bit lower and our internal expenses were lower," and that helped the lottery raise more in July for college scholarships than a year ago, lottery spokesman Patrick Ralston said. That's happened several times previously, he said.
July is the first month in fiscal 2015 for the lottery, which started selling tickets Sept. 28, 2009.
Ticket sales and the amount raised for the Arkansas Academic Challenge Scholarships have dropped during each of the past two fiscal years.
In another lottery-related development, state Sen. Jimmy Hickey, R-Texarkana, said Thursday that he plans to ask the Legislature's lottery oversight committee to consider having the Legislative Council hire a consultant to determine whether the lottery is operating in the most efficient and effective way.
He declined to disclose the name of the consultant, adding that the proposed cost for the consultant's review is still being negotiated.
In last month's special session, the Legislature enacted another Hickey bill, to derail the lottery's plans to deploy electronic monitor games beginning Sept. 29. Lottery officials expected the games to help boost sales and the money raised for college scholarships.
The Legislature has twice cut the sizes of the scholarships in recent years because the lottery has fallen short of original projections for generating scholarship funds and because more students than originally expected have received the scholarships.
The state Department of Higher Education now estimates that it will award about 34,700 of the scholarships totaling $103.3 million in fiscal 2015, department Director Shane Broadway said.
That projection will be increased or decreased in October because the department is still processing scholarship applications and students who have been on probation.
In fiscal 2014, the department handed out lottery-funded scholarships totaling $112.6 million to about 35,300 students, according to its data.
The scholarships are financed from the lottery's net proceeds and $20 million a year in state general revenue.
July slump factors
Last month, the lottery's ticket revenue dropped by $2.1 million from the same month a year ago to $30.9 million, according to the lottery's reports to the Legislature's oversight committee.
Ticket revenue for July peaked in 2011 at $36 million after reaching $35 million in 2010.
Since then, the ticket revenue has dropped each July: to $33.7 million in 2012, to $33 million in 2013 and to $30.9 million last month.
Last month, the lottery sold $25.7 million in scratch-off tickets and $5.1 million in draw-game tickets as sales of the scratch-off games dipped by about $600,000 from a year ago and sales of draw-game tickets dropped by about $1.5 million.
Last month's lottery sales dropped largely as a result of larger Powerball jackpots in July 2013 than in July of this year, Ralston said. Powerball ticket sales have declined across the nation as well, he said.
Lottery Director Bishop Woosley said Powerball ticket sales were $1.86 million last month, compared with $3.2 million in July 2013.
Ralston said the ticket sales have declined in July for the past three years as a result of "a combination of the age of the lottery, summer sales being typically lower and the size of and/or jackpot fatigue of national jackpot games."
Last month, the lottery raised $5.9 million for college scholarships -- up from $4.8 million a year ago.
The lottery raised $8.5 million for scholarships in July 2010 and then that amount dropped to $7.1 million in 2011 and then to $4.7 million in 2012 before increasing to $4.8 million in 2013 and then $5.9 million last month.
Revenue-growth options
Earlier this year, the commission signed off on Woosley's recommendations to implement quick-draw electronic monitor games, ask lawmakers to change state law during their 2015 session to allow the purchase of lottery tickets with debit cards, increase the $4.5 million advertising budget by $500,000 in fiscal 2015 and lift the commission's ban on advertising on college campuses.
The commission also authorized the lottery to seek proposals from companies for a performance audit and consulting services on lottery operations to help identify possible ways to increase revenue.
Under the law the Legislature passed last month, the lottery is prohibited from offering electronic monitor games until March 13 so the General Assembly can weigh in when it meets next year.
Woosley's revenue projection for fiscal 2015 envisions $428 million in ticket sales and $81.2 million in net proceeds for college scholarships. But that calculation includes about $12.5 million in quick-draw game revenue with about $3.5 million of that going toward scholarships.
Ralston said lottery officials are still weighing whether Woosley's revenue projection will need to be cut as they learn more information about projected sales for a new draw game called the Monopoly National Premium Game that starts Oct. 19 and another new draw game called Lucky for Life that starts in January.
In fiscal 2014, ticket sales totaled $410.6 million, and it raised $81.4 million for scholarships.
In fiscal 2012, the lottery's revenue peaked at $473.6 million, and its net proceeds peaked at $97.5 million.
Scholarship amounts
For the second year in a row, first-time recipients of the scholarship will get $2,000 as freshmen, $3,000 as sophomores, $4,000 as juniors and $5,000 as seniors at four-year universities during the 2014-15 school year. New scholarship recipients at the two-year colleges each get $2,000 a year for both years.
Students who were first awarded the scholarships in the 2010-11 school year each received $5,000 a year to attend Arkansas universities and $2,500 a year to attend community and technical colleges for four years. Those who were first awarded the scholarships in the 2011-12 or 2012-13 school years each will continue to get $4,500 a year at universities and $2,250 at colleges.
Broadway said the Higher Education Department now has $35.4 million in lottery net proceeds and $10 million in general revenue to cover the cost for the Arkansas Academic Challenge scholarships this fall. The department also can tap up to $20 million from a reserve fund to pay scholarships to avert cash-flow problems.
Broadway said he's not worried about exhausting the reserve fund and running out of money to pay the scholarships during fiscal 2015.
But he added, "Everything [is] subject to change, if you have a series of months of net proceeds being lower than projected currently."
A Section on 08/15/2014