After another monthly report of declining revenue, the Arkansas Lottery Commission amended its revenue projections Wednesday to reduce the estimated amount of money that will be paid out for college scholarships by almost $6.8 million.
The revision came at the request of Lottery Director Bishop Woosley, who warned that other state lotteries “are leaving us behind” and that the Arkansas Lottery may soon be a “dinosaur.”
He proposed downgrading the agency’s revenue projections from about $89.5 million to less than $82.8 million. At least one lottery commissioner pointed out that the outlook is increasingly negative.
“Two years ago, we were at $98.5 million as a budget. This year we were at$89.5 [million] and now at $82 [million],” said Commissioner Mark Scott of Bentonville. “I’m concerned with what that number may be a year from now. I know you realize the enormity of the situation we’re in and the trajectory we’re on.”
In his report Wednesday, Woosley said the biggest decline in the agency’s projected proceeds came from scratch-off tickets, which took in $24.8 million in sales last month, $6.1 million - or almost 20 percent - below what was budgeted for the month. Overall sales of scratch-off tickets during fiscal 2014, which started on July 1, are about $15.4 million less than sales for the same months in fiscal 2013.
Woosley said sales for number games like Mega Millions and Powerball are up compared with last year by about $7.2 million through the first seven months of fiscal 2014, but those games generally take in a quarter to one-third the revenue that scratch-off tickets generate.
Shane Broadway, director of the Arkansas Department of Higher Education, said his staff received the revised projections Wednesday afternoon and would need time to study them.
“We’re still finalizing the final student [enrollment] rosters” to determine how many qualify for scholarships, Broadway said. “We will take that revised budget and go run scenarios to see what impact it will have once those rosters are complete. That will take several days to run through before we’ll have a better idea of what this change will mean.”
Woosley said he fully understands the situation but that in some respects his hands are tied on making any big changes that would significantly increase revenue. He said adding games or new scratch-off tickets can only increase revenue so much.
“When I go to conferences, I’m saying things like ‘We can’t do that, or we can’t do that.’ [Other lotteries] are leaving us behind. They’re not waiting on us. … And I’m not trying to do anything but keep us relevant,” he said. “We’re going to be a dinosaur if we don’t do some of these things. … Some of it might be the inability to do online [games]. Some of it is the cash-only requirement for ticket sales. Some of it is games we legally are allowed to play, that we don’t play.”
Scott and Commissioner Bruce Engstrom of North Little Rock asked Woosley for a wish list of changes that might help improve the situation. Scott said he didn’t want to be looking at revenue numbers in the $70 million or $60 million range next year.
Commissioners discussed ideas Wednesday that have been rejected previously, including allowing customers to buy lottery tickets with debit cards and allowing for monitor games such as Keno. Keno supporters describe it as a game similar to Powerball played on a more frequent basis with winning numbers drawn and broadcast over closed-circuit TV throughout the day.
Both measures would have to be approved by the Legislature before the agency could put them into effect.
The commission’s marketing committee will study the matter of taking debit cards, but not credit cards, for payment, Woosley said, and return with a recommendation in June or July, in time for the lottery staff to begin talking to legislators before the 2015 legislative session.
Commissioner Doug Pierce of Jonesboro said the committee would want to be careful about the potential effect that changes would have on retailers and whether the new policy would hurt vendors. He said studies suggest that sales would have to increase by 6 percent for vendors to maintain their current level of profit and offset transaction fees charged by banks and card companies.
If approved, Woosley said retailers would be given the options of accepting cards and setting a minimum purchase amount before accepting them.
Woosley said that despite the obstacles the Arkansas Lottery faces, it is still ranked 16th of the 45 state lotteries in terms of per-capita sales.
The lottery is coming off a $284,000 loss in its Million Dollar Raffle game that sold tickets through the end of December. It was the state’s second Million Dollar Raffle. The first one was profitable.
Woosley said the lottery staff should not spend so much time and effort on games that pull them away from the agency’s “bread and butter” - scratch-off tickets and numbers games.
“It’s unlikely we would do that [raffle] again,” he said. “In the future we may want to seriously consider whether or not we want to enter into these kinds of seasonal, short term or niche games.”
Front Section, Pages 1 on 02/20/2014