According to a story by Mike Wickline in the Arkansas Democrat-Gazette, the Arkansas Lottery Commission “won’t ask the 2013 Legislature to grant it police powers or allow the use of debit cards to buy lottery tickets.” This comes after lottery officials could not find enough support from state legislators or Governor Beebe for the proposals. When these issues first came up, we provided some commentary on them, which you can read here, here, and here. We have opposed the lottery receiving police powers or accepting ticket purchases via debit cards. This news is a very welcome development. There is other lottery news, however, that shows that Arkansas’ lottery still suffers from some entrenched bad habits and misplaced priorities.
Revising a Bad Contract
The news story brings readers up to speed on the lottery’s contractual dispute with ticket vendor Scientific Games. The contract has been revised, even though questions arose about its validity when it was discovered that the lottery’s former director, Ernie Passailaigue, unilaterally altered the contract. The revised contract states that Scientific Games will be paid 1.81% of scratch-off ticket sales, which is down from the previous rate of 1.92%. According to the report, Scientific Games will also “pay the lottery $2 million in cash by June 30 ‘as an incentive for affirming the maintaining of’ some of the terms of the previous contract.”
While the revised contract is an improvement, it is still unacceptable. Scientific Games will still allegedly benefit from the incorrect deal Passailaigue struck with the company, says The Arkansas Times. While we hope to have more on this soon, one thing we can say with certainty is that the lottery is still suffering from a lack of accountability. The Arkansas Lottery Commission should have listened to the lottery’s former auditor, Michael Hyde, and taken seriously his findings on the contract. The original contract Passailaigue made with Scientific Games should have been done away with completely, and a truly new contract should have been put in its place, leaving the Passailaigue-era behind. Instead, it appears that we’ve gone two steps forward and one step back.
New Budget Shows Misplaced Priorities
The lottery’s proposed budget for fiscal year 2013 continues to show misplaced priorities. According the the paper, it “projects that the lottery will raise $98.6 million for college scholarships” and “that lottery revenue will total $480.8 million.” In other words, it plans to allocate about 20.5% of its total revenue for scholarships–which is actually a decrease from the 21%-22% it has historically allocated.
For fiscal year 2012, the Lottery Director “hopes the lottery’s net proceeds for college scholarships will be about $95 million.” This might sound good, but it’s still short of the $100 million lottery proponents promised Arkansas would see every single year. The lottery has not met its original promises. As we’ve said before, the lottery could probably fix this by following Louisiana’s example and allocating a greater percentage of its revenue for its intended purpose, scholarships.
In 2011, we reported that Louisiana’s lottery took in $100 million less in revenue than Arkansas’ did, but paid out almost $30 million more for its intended purpose. The difference? Louisiana’s lottery allocated 35% of its revenue for its intended purpose, while Arkansas only allocated about 21%-22%. Arkansas’ “scholarship lottery” does a pitiful job putting scholarships first. It always has, and these new budget policies do nothing to change that.
Conclusion
The contract revisions and new budget afforded the Arkansas Lottery Commission a real opportunity to show it was focused on improving Arkansas’ lottery. Until the commission is willing to make some serious changes to the way it operates, however, Arkansas’ lottery is going to continue falling short.
