A couple of weeks ago we wrote a blog post about how much money the typical lottery player is spending on lottery tickets in Arkansas. We’ve also written extensively about Rep. Clemmer’s amendment requiring the Arkansas Lottery to allocate at least 35% of its revenue for scholarships—currently the Lottery only pays out about 21.5%. We also told you about Louisiana’s lottery, which brought in about $100 million less in 2010 than Arkansas’ lottery did during its first 12 months, but still paid out almost $30 million more for education than Arkansas did for scholarships. Here are a few follow-up stats on what Arkansas can expect if it follows in Louisiana’s footsteps by enacting Rep. Clemmer’s amendment.
During its first 12 months, Arkansas’ lottery grossed about $485 million. Under its current structure, allocating 21.5% of its gross revenue for scholarships means the Arkansas Lottery was able to set aside approximately $104 to $105 million for scholarships. If that number were raised to 35%, Arkansas would be setting aside over $169 million for scholarships—an increase of about $65 million.
But Lottery Director Passailaigue told legislators yesterday that if Arkansas enacts a minimum percentage of 35%, lottery sales will decrease and the lottery will not be able to pay out as much in scholarship funding. Let’s investigate that claim.
Using a little 9th Grade Algebra, here’s how low lottery revenue would have to sink under Rep. Clemmer’s amendment before it would only allocate as much money for scholarships as it currently does:
35% x Gross Revenue = $105 million
Gross Revenue = $105 million / 35%
Gross Revenue = $300 million
In other words, even if Rep. Clemmer’s amendment did cause lottery revenue to decrease, lottery revenue would have to plummet by more than $185 million in order for it to pay out less than it currently does.
Does the Lottery Director really think the lottery will suffer that kind of loss? Even if it suffered a loss of $100 million, the Lottery would still provide about $134.8 million in scholarship funding under Rep. Clemmer’s amendment. That’s an increase of almost $30 million!
The bottom line: The Arkansas Lottery was enacted to provide the most scholarships possible. Under Rep. Clemmer’s amendment, the Lottery could take in less money than it currently does, and still provide more scholarships than it did last year.
Need we say more?
