We keep saying it over and over again: There is one simple way the Arkansas Lottery can pay out more in scholarship money. All Lottery officials have to do is increase the percentage of lottery revenue budgeted for scholarships.
As we wrote earlier this week, the Arkansas Lottery only paid 18% of its revenue last month toward college scholarships.
And for Fiscal Year 2015–which ended last June–the Arkansas Lottery paid a paltry 17.7% of its gross revenue toward scholarships.
To put these numbers in perspective, the State of Louisiana has a law on the books requiring its lottery to pay 35% of its gross revenue toward education. That’s why Louisiana’s lottery is able to make less money in lottery ticket sales than the Arkansas Lottery, but still pay out more in education funding.
Lottery officials continue to insist that if they set aside a larger percentage of gross revenue for scholarship funding, then the Lottery will have less money for prizes, marketing, and so forth; this, they say, would cause lottery ticket sales to go down, and fewer ticket sales would mean less money for scholarships.
The argument, essentially, is that by keeping the percentage of gross revenue allocated for scholarships lower than most states, Arkansas is somehow able to sell more lottery tickets and make more money for education as a result.
To show how flawed this argument is, here is a breakdown of the numbers:
| Percentage of Gross Revenue Allocated for Scholarships | |||||
| Gross Revenue | 17.7% | 20% | 25% | 30% | 35% |
| $409,234,675.56 | $72,434,537.57 | $81,846,935.11 | $102,308,668.89 | $122,770,402.67 | $143,232,136.45 |
In Fiscal Year 2015 the Arkansas Lottery made approximately $409 million in gross revenue. It budgeted 17.7% of that revenue for scholarships. If it had budgeted just a slightly larger percentage–20% instead of 17.7%–the Lottery could have paid out nearly $10 million more to college students.
But Lottery proponents claim doing so would have caused lottery ticket sales to drop. Let’s examine that claim.
| Percentage of Gross Revenue Allocated for Scholarships | ||||
| Gross Revenue | 20% | 25% | 30% | 35% |
| $409,234,675.56 | $81,846,935.11 | $102,308,668.89 | $122,770,402.67 | $143,232,136.45 |
| 399,234,675.56 | 79,846,935.11 | 99,808,668.89 | 119,770,402.67 | 139,732,136.45 |
| 389,234,675.56 | 77,846,935.11 | 97,308,668.89 | 116,770,402.67 | 136,232,136.45 |
| 379,234,675.56 | 75,846,935.11 | 94,808,668.89 | 113,770,402.67 | 132,732,136.45 |
| 369,234,675.56 | 73,846,935.11 | 92,308,668.89 | 110,770,402.67 | 129,232,136.45 |
| 359,234,675.56 | 71,846,935.11 | 89,808,668.89 | 107,770,402.67 | 125,732,136.45 |
| 349,234,675.56 | 69,846,935.11 | 87,308,668.89 | 104,770,402.67 | 122,232,136.45 |
| 339,234,675.56 | 67,846,935.11 | 84,808,668.89 | 101,770,402.67 | 118,732,136.45 |
| 329,234,675.56 | 65,846,935.11 | 82,308,668.89 | 98,770,402.67 | 115,232,136.45 |
| 319,234,675.56 | 63,846,935.11 | 79,808,668.89 | 95,770,402.67 | 111,732,136.45 |
| 309,234,675.56 | 61,846,935.11 | 77,308,668.89 | 92,770,402.67 | 108,232,136.45 |
| 299,234,675.56 | 59,846,935.11 | 74,808,668.89 | 89,770,402.67 | 104,732,136.45 |
| 289,234,675.56 | 57,846,935.11 | 72,308,668.89 | 86,770,402.67 | 101,232,136.45 |
| 279,234,675.56 | 55,846,935.11 | 69,808,668.89 | 83,770,402.67 | 97,732,136.45 |
| 269,234,675.56 | 53,846,935.11 | 67,308,668.89 | 80,770,402.67 | 94,232,136.45 |
| 259,234,675.56 | 51,846,935.11 | 64,808,668.89 | 77,770,402.67 | 90,732,136.45 |
| 249,234,675.56 | 49,846,935.11 | 62,308,668.89 | 74,770,402.67 | 87,232,136.45 |
| 239,234,675.56 | 47,846,935.11 | 59,808,668.89 | 71,770,402.67 | 83,732,136.45 |
| 229,234,675.56 | 45,846,935.11 | 57,308,668.89 | 68,770,402.67 | 80,232,136.45 |
| 219,234,675.56 | 43,846,935.11 | 54,808,668.89 | 65,770,402.67 | 76,732,136.45 |
| 209,234,675.56 | 41,846,935.11 | 52,308,668.89 | 62,770,402.67 | 73,232,136.45 |
| $199,234,675.56 | $39,846,935.11 | $49,808,668.89 | $59,770,402.67 | $69,732,136.45 |
Looking at the table above, we see that if the Arkansas Lottery raised the percentage of gross revenue it awards to college scholarships from 17.7% to 20%, lottery revenue would have to drop by over $40 million before the Lottery would start paying fewer dollars to scholarships than it did last fiscal year.
If the Arkansas Lottery raised the percentage to 25%, lottery revenue would have to drop by nearly $120 million before the Lottery would start paying fewer dollars to scholarships.
If the Arkansas Lottery raised the percentage to 30%, the Arkansas Lottery would pay more for scholarships than it did last fiscal year–even if lottery revenue plummeted more than $160 million.
Finally, if the Arkansas Lottery raised the percentage to 35%–like Louisiana–college scholarships would receive more funding than they did last year, even if lottery revenue were cut nearly in half, dropping by $200 million.
Does anyone actually believe lottery ticket sales will drop $100 million if the Arkansas Lottery increases the percentage of its revenue it allocates for scholarships–much less $200 million?
The fact of the matter is the Arkansas Lottery could easily pay out more money for scholarships than it does right now. All Lottery Officials–or Arkansas’ legislators–have to do is raise the minimum percentage of gross revenue set aside for students.
Lynn Smith