The Arkansas Lottery Commission released a report this week showing the Lottery still only allocates, at best, about 20-cents in scholarship revenue for every dollar it makes selling lottery tickets.
According to Lottery Commission reports for the month of October, the Arkansas Lottery took in $33,271,398.30 in revenue, but only paid out $6,773,936.78 in college scholarships.
Moreover, lottery officials indicated to reporters from the Arkansas Democrat-Gazette that the net proceeds may have actually been bolstered by unclaimed prize money the lottery has on hand (that is, prize money people have won but never picked up) and by the timing of recent lottery payouts. In other words, the $6.8 million may have actually been more than you might expect simply because of when the lottery happened to pay some of its bills and because a lot of people haven’t stopped by to pick up their winnings.
So let’s do the math: $6,773,936.78 / $33,271,398.30 = .2036 or 20.4%.
So for every $1 the Arkansas lottery commission made in October, about 20 cents went to college scholarships. The other 80 cents were spent elsewhere.
At this rate, the Arkansas Lottery won’t meet its scholarship goals for 2014. For Fiscal Year 2014, which began last summer, the Arkansas Lottery projected it would “generate” $89.5 million in college scholarships. However, if the lottery only sets aside $6.8 million each month, it will end up with $81.6 million in college scholarships — a shortfall of nearly $8 million.
What’s more, the past 4 months (i.e. the first 4 months of Fiscal Year 2014), the Arkansas Lottery has produced a grand total of $25.6 million in college scholarships.
That means the lottery allocated an average of $6.4 million per month for college scholarships from July through October. At that rate, the lottery will be doing good to come up with $77 million in college scholarship money for FY2014 — $12.5 million under budget.
If Everything Goes According to Plan…
If everything goes according to plan, the Arkansas Lottery hopes it will sell $459 million worth of tickets by July of 2014, and it will transfer $89.5 million over to the Arkansas Department of Higher Education as college scholarship money. But look at the numbers. $89.5 million is roughly 19.5% of $459 million. In other words, in a best-case scenario — where the Arkansas Lottery sells all the tickets is plans to, doesn’t rack up unforeseen expenses, and puts money aside for college scholarships — only 19-and-a-half-cents of every dollar the Arkansas “Scholarship” Lottery makes actually goes to scholarships. The bulk of the money is spent on salaries, overhead, prizes, advertising, and other expenses.
The lottery’s solution to budget shortfalls and missed scholarship goals has almost always been to roll out more gambling. We’ve proven in the past, however, that if the Arkansas Lottery would raise the percentage it allocates for scholarships to 30%, there would be more scholarship money leftover — even if lottery ticket sales fell by tens of millions of dollars. If you don’t believe me, just read about what happened with Louisiana’s lottery a a couple of years ago, and decide for yourself.
The Real Problem at the Arkansas Lottery Commission
The problem at the Arkansas Lottery Commission isn’t just a budget problem or a sales problem. It’s a priorities problem. Students come in last on the list of the lottery’s concerns. They always have.
Until those priorities change, scholarships will suffer — and it doesn’t seem change is coming anytime soon.