The Arkansas Lottery Commission is considering relocating its Springdale claims center and will soon weigh whether to renew the leases for its claims centers in Camden and Jonesboro.
Lottery players can claim prizes up to $500 at the lottery's nearly 1,900 retailers. Prizes up to $1 million can be collected at the Camden, Jonesboro or Springdale locations or at a fourth claims center in Little Rock.
Prizes above $1 million can be collected only at the Little Rock center. Winning tickets also can be submitted, by mail, to the Little Rock center.
Lottery Director Bishop Woosley told the commission's audit and legal committee Wednesday that the claims centers in Camden, Jonesboro and Springdale are costing the lottery money, but they are "a convenience and perception issue" for the lottery in those parts of the state.
Combined, the three locations employ six people. On average, they process a combined 8.5 prize checks per day, a lottery auditor reported. They also sell tickets.
If there's no claims center in Northwest Arkansas, players can drive to Little Rock to claim prizes they can't collect from retailers or they can mail in their claims, he said.
After the committee's meeting, lottery spokesman Patrick Ralston said Wednesday afternoon that an estimate of the cost savings from closing the centers in Camden, Jonesboro and Springdale wouldn't be available until today, because it "will have to be extracted out of another larger report, since the costs associated with those three claim centers are not segregated from those of the Little Rock center.
"The difficulty is in determining the potential damage to sales by removing this service to our customers in the more distant corners of the state," he said.
"Whether we keep the claim centers or go to a mail-based claim system will be based on customer perception and the value customers place on the convenience of having a nearby claim center," Ralston said.
Commissioner Dianne Lamberth of Batesville supports moving the Springdale claims center from its location at 3896 Elm Springs Road to 3155 N. College Ave. in Fayetteville, the lottery's chief legal counsel, Jean Block, wrote in an email dated July 8 to the commission.
It costs about $27,000 per year to rent the current site; annual rent at the new location would be about $17,000, Block told the committee Wednesday.
The five-year lease for the Springdale claims center ends Sept. 30, she said. The lease is with Mathias Shopping Centers Inc., according to a report by lottery internal auditor Matt Brown.
Block said an Arkansas Building Authority official emailed her a list of 22 possible alternative sites, and Lamberth asked former Commissioner Mike Malone of Fayetteville to drive by the sites, of which he recommended a handful. Lottery Treasurer Tim Parrish visited the top three sites and recommended 3155 N. College Ave, Block said.
The lottery must give 30 days' notice to terminate its lease in Springdale, and the lease could be extended by up to 90 days, she said.
Woosley said the Fayetteville site is a better location for the claims center than the current site based on a "visibility perspective."
Block advised Lamberth in an email dated June 27 that the Fayetteville site has 1,274 square feet and the Springdale site has 1,800 square feet, which she said is more than is needed.
But Commissioner Julie Baldridge of Little Rock, who formerly was the lottery spokesman, said she's disappointed that there wasn't an investigation about contracting with large retailers to serve as claims centers. The option of sharing space with a local government or a state agency also wasn't reviewed, she said.
Block replied that the lottery's finance officials had concerns about using large retailers as claims center sites, and the Arkansas Building Authority was informed that "we were open to all arrangements."
Commissioner Mark Scott of Conway, who formerly lived in Bentonville, said the Fayetteville site would not be good. The Interstate 540 corridor might be a better spot, and Northwest Arkansas Regional Airport in Highfill might be a good option, he added.
Block said the five-year leases for the claims centers in Camden and Jonesboro expire on Nov. 30, and she expects that the Arkansas Building Authority will provide her lists for alternative sites in the next few weeks. These existing leases also could be extended by up to 90 days, she said.
The lease for the Jonesboro claims center is with Nix Development Corp. and cost $22,500 a year for about 1,500 square feet in fiscal 2014, according to Brown's report. The lease for the Camden center is with Camden Center Inc. and cost $14,906 a year for about 1,160 square feet in fiscal 2014, the report said.
The Camden, Jonesboro and Springdale centers each have a claims manager and an assistant, the report said.
The Camden center processed an average of 2.1 checks a day, while the Springdale center processed an average of 2.9 checks per day, and the Jonesboro site processed an average of 3.5 checks per day based on figures in the period from fiscal 2011 through the first quarter of fiscal 2014, according to Brown's report.
In contrast, the Little Rock center processed an average of 23.5 claim checks per day, including those received by mail, the report said. The Little Rock center has a claims manager and two assistants, the report said. Its lease is with Little Rock Union Plaza LLC for $28,845 a year for about 1,875 square feet in fiscal 2014.
The commission's audit and legal committee directed the lottery's staff members to develop a cost estimate of moving the Springdale center to Fayetteville and to also review other options.
The committee later endorsed Brown's proposal for the lottery to hire a full-time employee and a part-employee to audit and observe drawings for games such as Cash 3 and Cash 4 rather than have auditors in the Legislative Audit Division continue to do that work.
Over a five-year period, Brown estimated, the lottery would spend $415,314 to have its own employees audit the drawings rather than spend $621,000 for auditors from the division, saving $205,686.
The Arkansas Scholarship Lottery's revenue dipped in fiscal 2014 by $29.5 million from fiscal 2013 to $410.6 million as the amount raised for college scholarships slipped by $8.9 million to $81.4 million. It's the second-consecutive year that the net revenue and net proceeds for scholarships have dropped.
Metro on 07/17/2014