How do you define a “successful” state lottery?
Is it the lottery that sells the most tickets? The lottery that has the highest gross revenue? What about the lottery that awards the most scholarships? Or the lottery that does the least amount of harm to the local economy?
I would argue there really is no such thing as a “successful” state lottery, because lotteries pull money out of the local community and drag the economy down. That said, however, I really don’t think lottery proponents have a clear understanding of what a “successful” state lottery is, even under their own terms.
When the Arkansas Lottery was pitched to voters, proponents promised it would be a “world class” lottery “for education.” It would “generate” money for college scholarships and help more Arkansans go to college.
They even named it the Arkansas Scholarship Lottery. So in theory, the way you measure the Arkansas Lottery’s success is by the amount of scholarship money it pays out, right?
But that’s not the way lottery officials seem to measure its success at all. They are focused almost exclusively on gross ticket sales. This was underscored by a lottery consultant from Philadelphia who told the Arkansas Democrat-Gazette, yesterday, “Our objective … is to think about how we can get as many people to play the lottery as possible and spending really small amounts of money. We believe there is an opportunity for strong long-term sustainable, responsible growth.”
So, again, it’s all about selling lottery tickets–not about awarding scholarships. Now, lottery proponents will say you can’t pay for scholarships without ticket sales, but the problem is Arkansas’ lottery is not required to allocate a minimum percentage of its gross ticket sales for scholarships. This year, the Arkansas Lottery plans to spend less than 19 cents of every dollar it makes in sales on scholarships. Compare that with Louisiana, where state law requires their lottery to spend at least 35 cents of every dollar on education.
In fact, all the state lotteries that border Arkansas pay out a higher percentage of gross revenue than Arkansas’ lottery does. The Oklahoma Lottery allocates 35% of its revenue for education; Texas allocates 27% – 28%; Tennessee allocates 26% – 27%; Missouri allocates about 25%; and, as we said, Louisiana allocates 35%; Mississippi does not have a state lottery.
As long as Arkansas lets its lottery set aside such a pitiful percentage of its revenue for scholarships, it really doesn’t matter how much money the Arkansas Lottery makes. The Lottery only has to turn over as many dollars for students as it wants. It’s free to spend the rest on salaries, games, prizes, new contracts, retailers, and so on.
We’ve demonstrated before that a very simple change down at the Lottery Commission could yield millions of dollars more in scholarship funding even if lottery ticket sales plummeted by 20% – 30%! If the Arkansas Scholarship Lottery is actually about providing scholarships for students, then the measure of success ought to be the amount of money the Lottery actually turns over to education–not the number of tickets it sells. As it stands right now, however, scholarships seem to be the last bill the Lottery Commission pays.
