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State lottery revenue falls in December

Proceeds for scholarships dip; big prize payouts cited by Michael R. Wickline | January 12, 2017 at 5:45 a.m.
Lottery revenue in December.

The Arkansas Scholarship Lottery's total revenue dropped in December compared with a year ago, and the amount raised for college scholarships was the lowest ever reported for the month, thanks to prize payouts.

The lottery's total revenue slipped from $38.6 million in December 2015 to $35.3 million last month as revenue from both scratch-off and draw-game ticket sales dipped compared with a year ago, the lottery reported this week in its monthly report to Republican Gov. Asa Hutchinson and the Legislative Council's lottery oversight committee. The lottery's draw games include Powerball, Mega Millions, the Natural State Jackpot, Cash 3, Cash 4, Fast Play and Lucky for Life.

Net proceeds slipped as well, from $6.4 million in December 2015 to $4.6 million last month, the lottery reported. Last month's net proceeds are the lowest the lottery has reported for December since the lottery started posting monthly totals on its website in 2010.

The lottery's net proceeds fell last month because "we handed out a great deal of prizes, including a million dollar instant ticket prize and a $500,000 Play It Again winner," lottery Director Bishop Woosley said in a written statement Wednesday. Instant tickets also are referred to as scratch-off tickets.

"These winners were paid out in addition to several other high tier winners that cashed their tickets in December. That increased prize expense had a drastic impact on the amount of [proceeds] we raised," he said.

The lottery's scratch-off ticket revenue dropped from $32 million in December 2015 to $29.4 million last month, while the lottery's draw-game ticket revenue slipped from $6.5 million in December 2015 to $5.9 million last month, the lottery reported. The lottery's revenue also included retailer fees.

Woosley said the majority of the lottery's drop in overall revenue in December was in scratch-off ticket revenue, but added that's "a little misleading."

"We launched our instant tickets for the month of December on Nov. 29. Therefore we 'lost' two days of sales, which normally would have bolstered the December numbers. Had those two days been added to the December numbers, we would have likely had sales more even with last December," he said.

The lottery's draw-game revenue dropped in December compared with a year ago because in December 2015 "we had a Mega Millions jackpot over $100 million and a Powerball jackpot over $300 million," and the sales for those games dropped last month, Woosley said.

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The lottery helped finance more than 30,000 Arkansas Academic Challenge Scholarships during each of the past seven fiscal years. The Legislature has cut the size of future scholarships three times as a result of the lottery's net proceeds lagging behind initial projections and more students than projected obtaining the scholarships.

During the first six months of fiscal 2017, revenue totaled $212.8 million -- up from $205.2 million in the first six months of fiscal 2016 -- according to the lottery's report. Fiscal 2017 started July 1.

So far in fiscal 2017, scratch-off ticket revenue has reached $171.6 million compared with $169.7 million in the same period in fiscal 2016. Thus far in fiscal 2017, draw-game revenue has totaled $40.8 million compared with $35 million in the same period in fiscal 2016.

During the first six months of fiscal 2017, net proceeds for college scholarships have totaled $36.3 million -- up from $36 million in the same period in fiscal 2017.

The lottery reported an unclaimed-prize balance of $5 million as of Dec. 31, after adding $904,455.11 to its balance in December.

Act 1180 of 2011 requires that unclaimed prize money, minus $1 million, be transferred to the state Department of Higher Education's scholarship account on the last day of each fiscal year.

Woosley, who has been the lottery's director since February 2012, said, "So far, we are also up $1.7 million in proceeds versus our budget for the fiscal year.

"We are in a much better position at this time in the fiscal year versus where we have been in the past," he said.

For fiscal 2017, Woosley is projecting revenue of $463.4 million and net proceeds at $80.9 million.

In fiscal 2016, lottery revenue totaled $456.3 million, an increase of $47.1 million over the previous fiscal year. Net proceeds increased by $12.7 million, to $85.3 million, over what was raised in fiscal 2015. Fiscal 2016 ended June 30.

The lottery's revenue and net proceeds rebounded in fiscal 2016 with the help of a record Powerball jackpot of $1.6 billion, after declining for three consecutive fiscal years after peaks in revenue at $473.6 million and net proceeds of $97.5 million in fiscal 2012.

In its self-described ambitious business plan for the lottery, lottery consultant Camelot Global Services forecasts net proceeds for college scholarships at $93 million in fiscal 2018, $99 million in fiscal 2019, $104 million in fiscal 2020 and $109 million in fiscal 2021.

Lottery foe Jerry Cox, president of the Family Council, said Wednesday that he may ask a lawmaker to sponsor and seek approval of legislation to require the lottery to use 25 percent of its revenue for college scholarships. Net proceeds made up 18.7 percent of its revenue in fiscal 2016.

"If we could get to 25 cents, we would at least be making progress and that would provide a lot more scholarships, and I think they could do that with the percentage of [revenue] allocated for prizes," he said.

Lottery officials have warned lawmakers in the past that that type of proposal would eventually reduce the lottery's revenue and net proceeds.

Metro on 01/12/2017

Print Headline: State lottery revenue falls in December

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