Legislators Abolish Lottery Commission, Bring Lottery Under DF&A

Arkansas Lottery,

Yesterday, lawmakers passed a bill abolishing the Arkansas Lottery Commission and making the Lottery part of the Department of Finance and Administration.

When the Arkansas Legislature established the Arkansas Lottery Commission in 2009, they made it an independent state agency with its own commissioners and very little outside accountability.

As a result, Arkansas has rolled out more gambling more quickly than any other state lottery we know; we have seen Lottery officials paid exorbitant salaries while college scholarships funded by the Lottery declined.

Senate Bill 7 brings more accountability to the Lottery by disbanding the Lottery Commission and making the Arkansas Lottery answerable to the Department of Finance and Administration as well as the Governor’s Office.

The bill passed unanimously in the Arkansas Senate two weeks ago, and it passed overwhelmingly in the Arkansas House yesterday.

It now goes to Governor Hutchinson, who has said he will sign it.

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Lottery Finally Gives More than 20% of Gross Revenue for Scholarships

Arkansas Lottery

We have written over and over again about how the Arkansas Lottery continues to reach new lows in funding for scholarships. This week the lottery released its figures for January.

The report shows that the Arkansas Lottery took in almost $35.5 million in January and paid out almost $7.3 million for scholarships. That comes to about 20.6% of gross revenue.

However, in looking at the report, it appears the only way the Arkansas Lottery was able to come up with $7.3 million for scholarships was by pulling $1.6 million out of reserve. According to its financial statements, the Lottery had roughly $5.7 million in net proceeds for scholarships at the end of the month–which is roughly on par with what it has set aside for scholarships the past few months; by pulling an additional $1.6 million from its reserves, the Arkansas Lottery was able to pay out a little more for scholarships.

Month Gross Lottery Revenue Paid to Scholarships % Gross Revenue
July $30,925,067.43 $5,928,447.99 19.2%
August 31,571,412.10 5,296,965.80 16.8%
September 30,710,493.31 4,317,227.10 14.1%
October 32,959,739.29 5,939,625.59 18.0%
November 30,617,278.28 5,577,035.16 18.2%
December 34,507,731.54 5,474,318.77 15.9%
January, 2015 35,433,619.67 7,287,773.28 20.6%
Total $226,725,341.62 $39,821,393.69 17.6%

Setting aside almost twenty-one cents for scholarships from every dollar the Lottery made in January is nothing to brag about–Louisiana sets aside 35% by law–but it’s an improvement over the some of the figures we have seen since last summer, and it’s almost as good as some of the numbers we have seen from the Lottery in years past.

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$10 million Budget Shortfall Looming for 2015 Lottery Scholarships

Arkansas Lottery

During the first six months of Fiscal Year 2015 (which began last summer) at the Arkansas Lottery the percentage of gross lottery revenue allocated for scholarships dropped to record lows.

Month Gross Lottery Revenue Paid to Scholarships % Gross Revenue
July $30,925,067.43 $5,928,447.99 19.2%
August 31,571,412.10 5,296,965.80 16.8%
September 30,710,493.31 4,317,227.10 14.1%
October 32,959,739.29 5,939,625.59 18.0%
November 30,617,278.28 5,577,035.16 18.2%
 December 34,507,731.54 5,474,318.77 15.9%
Total $191,291,721.95 $32,533,620.41 17.0%

 

Based on these figures, the Arkansas Lottery is on track to pay out roughly $65 – $70 million in scholarship money. That’s about $10 – $15 million less than projected for Fiscal Year 2015.

Last summer the Lottery Director told the Arkansas Lottery Commission that “the very conservative budget anticipated $81.2 million net proceeds to [college scholarships] for [Fiscal Year] 2015.”

The average state lottery allocates about 30% of its gross revenue for its intended purpose (e.g. education, college scholarships, etc.). However, the Arkansas Lottery is allocating, on average, 17% of its revenue for college scholarships. That’s the lowest percentage in its history, and one of the lowest in the nation.

This comes as the Arkansas Legislature considers bills that would overhaul the Arkansas Lottery–including legislation to change the way scholarships are allocated and abolish the Arkansas Lottery Commission by making the Lottery part of the Department of Finance and Administration.

According to the Arkansas Democrat-Gazette, the state is also considering eliminating eight lottery staff positions to reduce costs. The savings to the Lottery would total somewhere over $400,000 per year–about 1/25 of the money lottery officials need in order to make up for the estimated budget shortfall shaping up for the year.

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