Tag: Arkansas Lottery

Lottery Officials Tout Scholarships, Revenue to Rotarians

In an apparent effort to boost the Arkansas Lottery’s image, lottery officials recently have spoken to Rotary groups about the supposed benefits of the Arkansas Lottery.

Among other things, lottery officials highlight the number of scholarships awarded to students.

Frankly, we’ve heard all of this from lottery officials before. Here are some of the problems with the Arkansas Lottery’s talking points–and with the Arkansas Lottery in general.

1. Nearly 1/4 of “Lottery Scholarship” Money Actually Comes from the Legislature

Lottery officials often talk about how much money Arkansas’ students have received in scholarship funds. What they don’t always talk about is where that money actually came from.

Not all “lottery scholarship” money comes from the Arkansas Lottery. The Arkansas Lottery helps fund Arkansas’ Academic Challenge Scholarship. So does the Arkansas Legislature with tax money collected from Arkansans.

When lottery officials talk about how much money Arkansas’ students have received in scholarship funds, they sometimes include money the Arkansas Legislature provided.

Altogether, from July 2009 – June 2016, the Arkansas Legislature provided $187 million in Academic Challenge Scholarship funding. The Arkansas Lottery provided about $603.6 million in scholarship funding.

In other words, nearly one-fourth of the funding for the “lottery scholarship” program (i.e. the Academic Challenge Scholarship) did not come from the Lottery at all. It came from the Arkansas Legislature.

To illustrate it another way, of the 202,000 scholarships lottery officials say have been awarded through Academic Challenge since the Lottery started, approximately 48,000 of those scholarships were actually paid for by the Arkansas Legislature–not the Arkansas Lottery.

Here is a table breaking down the numbers for each complete fiscal year since the Arkansas Lottery started:

Fiscal Year	Legislature’s Scholarship Funding	Lottery’s Scholarship Funding	% Legislature Provided	% Lottery Provided
2010	$28,000,000.00	$82,551,784.52	25.33%	74.67%
2011	28,000,000.00	94,243,817.32	22.91%	77.09%
2012	28,000,000.00	97,582,527.66	22.30%	77.70%
2013	28,000,000.00	89,912,449.13	23.75%	76.25%
2014	25,000,000.00	81,457,955.22	23.48%	76.52%
2015	25,000,000.00	72,450,245.62	25.65%	74.35%
2016	25,000,000.00	85,384,111.23	22.65%	77.35%
Total	$187,000,000.00	$603,582,890.70	23.65%	76.35%

Does the Arkansas Lottery provide most of the money for the state’s Academic Challenge Scholarship fund? Sure.

Does it provide all of the money for that fund? Not even close.

2. The Arkansas Lottery Does Not Give Full Rides to College

Under Act 234 of 2013, the most a freshman at a four-year college or university in Arkansas can receive from the Academic Challenge Scholarship is $2,000. A senior at a 4-year college or university can receive $5,000.

To put these numbers in perspective, the University of Arkansas at Fort Smith’s website estimates students will pay at least $6,700 per year in tuition and related fees. No lottery scholarship can cover that.

Lottery officials like to talk about the number of students the Lottery sends to college. The truth is a lottery scholarship will not really “send” anyone to college. It will cover some of the costs of going to school, but certainly not all of them.

3. The Arkansas Lottery Does Not “Generate” Money for Scholarships

Lottery officials often say the Arkansas Lottery “generates” money for scholarships. The truth is the Arkansas Lottery does not “generate” any money. It pulls money out of the economy. It entices people to gamble–and lose–money on lottery tickets, and then it spends most of that money on government bureaucracy and contracts with companies in other states.

Since the Arkansas Lottery first set up shop in 2009, the Arkansas Lottery has taken in more than $3.1 billion. Less than 20% of that money was spent on college scholarships. The Arkansas Lottery has spent nearly $2.5 billion on salaries, overhead costs, contracts with lottery vendors, and other expenses.

For a full breakdown of the Arkansas Lottery’s revenue and its scholarship allocations, check out this table:

Month	Gross Lottery Revenue	Paid to Scholarships	% Gross Revenue
September 2009 – December 2009	$140,663,596.38	$29,257,495.48	20.8%
January, 2010	40,732,059.10	8,213,311.32	20.2%
February	46,006,517.45	9,713,297.81	21.1%
March	43,305,930.90	9,677,617.03	22.3%
April	38,182,470.50	8,270,655.49	21.7%
May	39,933,085.50	11,129,450.15	27.9%
June	35,728,633.85	6,289,957.24	17.6%
July	35,031,491.82	7,520,120.34	21.5%
August	35,320,546.96	7,338,723.82	20.8%
September	34,254,979.66	6,549,850.89	19.1%
October	36,656,481.26	9,719,358.08	26.5%
November	35,438,274.50	8,256,268.77	23.3%
December	40,240,809.78	6,696,764.84	16.6%
January, 2011	39,271,538.50	9,033,775.08	23.0%
February	41,429,186.01	8,229,741.60	19.9%
March	46,497,918.23	10,289,409.67	22.1%
April	38,206,042.00	8,397,457.57	22.0%
May	43,330,165.29	8,521,784.66	19.7%
June	39,402,904.75	3,690,562.00	9.4%
July	36,012,930.08	7,152,902.98	19.9%
August	38,111,003.00	7,543,553.59	19.8%
September	39,003,945.00	6,973,179.71	17.9%
October	37,702,362.62	8,133,705.83	21.6%
November	36,549,852.82	7,994,126.51	21.9%
December	39,660,751.64	7,888,279.14	19.9%
January, 2012	35,166,516.65	5,522,746.82	15.7%
February	49,160,394.76	9,729,593.58	19.8%
March	51,432,631.61	12,827,373.05	24.9%
April	39,433,610.80	7,066,187.76	17.9%
May	36,887,158.00	7,571,654.04	20.5%
June	34,504,440.30	9,179,224.65	26.6%
July	33,799,768.89	4,752,501.51	14.1%
August	35,021,798.75	7,193,285.93	20.5%
September	29,774,378.22	6,584,956.76	22.1%
October	33,905,873.06	6,632,866.03	19.6%
November	39,432,474.86	8,443,935.59	21.4%
December	34,257,289.75	6,914,260.68	20.2%
January, 2013	32,503,601.13	6,538,953.09	20.1%
February	41,886,865.34	6,447,118.77	15.4%
March	47,059,333.27	9,775,272.83	20.8%
April	31,319,563.49	8,143,467.33	26.0%
May	42,281,984.15	9,894,347.85	23.4%
June	32,002,883.35	8,591,482.76	26.8%
July	33,078,775.30	4,891,371.69	14.8%
August	34,471,323.18	6,401,829.10	18.6%
September	31,857,565.72	6,023,766.10	18.9%
October	33,271,398.30	6,773,936.78	20.4%
November	31,243,008.93	6,768,352.72	21.7%
December	35,496,013.02	5,831,218.66	16.4%
January, 2014	31,078,390.22	5,616,281.40	18.1%
February	38,985,852.63	5,909,955.50	15.2%
March	41,258,315.52	7,324,233.06	17.8%
April	36,626,908.39	7,476,150.84	20.4%
May	33,323,318.34	6,513,245.39	19.5%
June	29,947,098.30	11,927,613.98	39.8%
July	30,925,067.43	5,928,447.99	19.2%
August	31,571,412.10	5,296,965.80	16.8%
September	30,710,493.31	4,317,227.10	14.1%
October	32,959,739.29	5,939,625.59	18.0%
November	30,617,278.28	5,577,035.16	18.2%
December	34,507,731.54	5,474,318.77	15.9%
January, 2015	35,433,619.67	7,287,773.28	20.6%
February	41,770,314.46	6,161,343.01	14.8%
March	37,367,453.25	6,898,524.35	18.5%
April	33,866,970.54	5,881,005.95	17.4%
May	35,689,036.10	5,409,050.48	15.2%
June	33,815,559.59	8,278,928.14	24.5%
July	31,665,651.14	5,784,683.09	18.3%
August	31,265,177.55	5,490,094.00	17.6%
September	36,134,389.63	6,624,967.11	18.3%
October	35,261,533.80	6,020,642.32	17.1%
November	32,226,599.28	5,725,139.09	17.8%
December	38,670,746.09	6,425,754.66	16.6%
January, 2016	58,746,249.00	13,831,359.75	23.5%
February	40,790,144.05	4,474,356.06	11.0%
March	40,579,421.05	5,758,892.84	14.2%
April	37,516,802.47	7,392,837.00	19.7%
May	38,485,146.05	6,606,164.94	17.2%
June	34,983,951.24	11,249,220.37	32.2%
July	38,237,293.92	8,714,386.39	22.8%
August	35,091,022.09	5,498,714.86	15.7%
Total	$3,106,030,814.75	$617,795,991.95	19.9%

4. The Arkansas Lottery is Well Below-Average on Education Spending

The typical state lottery allocates about 30% of its revenue for state education, scholarships, or similar programs. Louisiana’s lottery allocates 35% of its revenue. However, the Arkansas Lottery typically allocates less than 20% of its revenue for scholarships. We have written repeatedly about how easily the Arkansas Lottery could bolster scholarship funding if it would simply budget an “average” portion of its revenue for scholarships.

5. The Arkansas Lottery Has Failed to Live Up to Its Promised $100 Million in Scholarship Funding

When then-Lt. Gov. Bill Halter campaigned for the Arkansas Lottery in 2008, he said repeatedly that a state-run lottery would provide at least $100 million per yer in scholarship funds. To date the Arkansas Lottery has failed to provide $100 million in scholarship funding even one year, let alone every year.

Conclusion

The Arkansas Lottery is a drain on the economy. At best it’s an inefficient way to fund scholarships. At worst, it preys on our poorest citizens who gamble out of desperation rather than for fun.

No matter how you look at it, the Arkansas Lottery simply is not all it is cracked up to be.

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August a Dismal Month for Scholarship Funds at the Arkansas Lottery

Yesterday the Arkansas Lottery released its monthly financial report for August.

According to the report, the Arkansas Lottery took in nearly $35.1 million in August, but paid out less than $5.5 million in scholarship funds; that’s about 15.7% of the Lottery’s revenue.

For reference, the Arkansas Lottery paid 18.6% of its revenue to scholarships in August of 2013; 16.8% in August of 2014; and 17.6% in August of 2015. That makes August of 2016 one of the more dismal months for scholarships at the Arkansas Lottery.

Below is a breakdown of lottery funds for Fiscal Year 2017, which began in July.

Month	Gross Lottery Revenue	Paid to Scholarships	% Gross Revenue
July	38,237,293.92	8,714,386.39	22.8%
August	35,091,022.09	5,498,714.86	15.7%
Total	$73,328,316.01	$14,213,101.25	19.4%

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AR Lottery Could Pay $100 Million for Scholarships Even if Ticket Sales Plummeted

Month after month we have written about how the Arkansas Lottery budgets roughly 18% – 22% of its gross revenue for college scholarships. Some months the Arkansas Lottery gives the scholarship fund as little as 14% of the money it makes.

To put it bluntly, these numbers are pathetic.

When then-Lt. Gov. Bill Halter campaigned to legalize state-run lotteries in 2008, he said the Arkansas Lottery could “generate” $100,000,000 for the state’s college scholarship fund every year.

Many people–ourselves included–countered that this number likely was unrealistic, and that to achieve it, the Arkansas Lottery would have to entice people to lose hundreds of millions of dollars per year on lottery tickets.

As it turns out, Arkansans probably are buying enough lottery tickets to fund $100 million per year in scholarships, but the Arkansas Lottery is so poorly managed that it consistently falls tens of millions of dollars short of this goal every year.

How Much of Gross Revenue Goes to Scholarships?

In Fiscal Year 2016–which wrapped up at the end of last June–the Arkansas Lottery allocated 18.7% of its gross revenue for scholarships; the Lottery made $456.3 million, and gave scholarships nearly $85.4 million.

In Fiscal Year 2015 the Arkansas Lottery allocated 17.7% of its gross revenue for scholarships, which amounted to nearly $72.5 million.

To put those numbers in perspective, the typical state-run lottery allocates roughly 30% of its gross revenue for its intended purpose. Our neighbors to the south of us in Louisiana allocate 35%.

What Lottery Proponents Say

Lottery officials and their proponents have consistently told us that by budgeting a smaller percentage of gross revenue for scholarships, the Lottery has more money to spend on things like advertising and prizes, which they say in turn boosts ticket sales, which in turn boosts scholarship funding.

It’s a lot of fuzzy math that simply does not make sense when you look at the actual lottery numbers, but supposedly if the Arkansas Lottery had to allocate more than 20% or so of its gross revenue for scholarships, gross revenue would plummet and scholarship funds would plummet as well.

How the Arkansas Lottery Might Pay $100 Million for Scholarships

The one simple thing the Arkansas Lottery could do to provide millions of dollars more for college scholarships: Allocate 30% of the Lottery’s gross revenue for scholarships.

Below are the numbers for Fiscal Year 2016, which wrapped up at the end of last June.

Gross Revenue	Percentage Budgeted for Scholarships	Scholarship Funding
$456,325,811.35	18.7%	$85,384,111.23

The Arkansas Lottery took in more than $456 million in Fiscal Year 206, and it paid 18.7% of that money to the state’s scholarship fund.

If the Arkansas Lottery had allocated 30% of its gross revenue for scholarships instead of 18.7%, the Arkansas Lottery would have paid nearly $137 million for scholarships.

But lottery officials insist if they have to set aside 30% of their gross revenue on the front end, they won’t have as much money to spend on prizes and marketing, which will cause gross revenue to fall, and scholarship funds will fall, as well. In other words, they effectively claim that had the Arkansas Lottery been forced to pay 30% of its revenue to scholarships in Fiscal Year 2016, the Arkansas Lottery would not have made $456.3 million; it would have made far less money.

Well, let’s take that claim to task. Below is a breakdown of different examples of gross revenue figures and scholarship dollars.

Gross Revenue	Percentage Budgeted for Scholarships	Scholarship Funding
$456,325,811.35	30%	$136,897,743.41
$433,509,520.78	30%	$130,052,856.23
$411,834,044.74	30%	$123,550,213.42
$391,242,342.51	30%	$117,372,702.75
$371,680,225.38	30%	$111,504,067.61
$353,096,214.11	30%	$105,928,864.23
$335,441,403.41	30%	$100,632,421.02
$318,669,333.24	30%	$95,600,799.97
$302,735,866.57	30%	$90,820,759.97
$287,599,073.25	30%	$86,279,721.97
$273,219,119.58	30%	$81,965,735.87

Looking at actual numbers, if the Lottery’s gross revenue had been $100 million less in Fiscal Year 2016, the Arkansas Lottery still would have paid at least $100 million for college scholarships by allocating 30% of its gross revenue for scholarships instead of 18.7%.

Lottery proponents claim if they have to allocate 30% of their gross revenue for scholarships, gross revenue will fall. The truth is, if the Arkansas Lottery allocated 30% of gross revenue for scholarships, the Arkansas Lottery would pay more money to scholarships than it currently does–even if gross revenue fell by $168.7 million.

We have written about this before. If the Arkansas Lottery were forced by law to budget 30% of its gross revenue for scholarships no matter what, scholarship funding would increase even if ticket sales plummeted by tens of millions of dollars.

Louisiana Proves This Can Be Done

Louisiana law requires the state lottery to budget at least 35% of its gross revenue for education. That means 35 cents of every dollar the Louisiana Lottery makes automatically gets spent on education funding.

Shortly after the Arkansas Lottery first started, we wrote how the Louisiana Lottery paid roughly $30 million more for education despite making $100 million less in lottery ticket sales than Arkansas did. That trend has continued.

• In Fiscal Year 2011 the Louisiana Lottery brought in about $80 million less in gross revenue than Arkansas did, but it put roughly $42 million dollars more toward education.
• In Fiscal Year 2012 Arkansas’ gross revenue climbed to $473.6 million. It outpaced Louisiana’s lottery by $41 million in sales. Even so, the Louisiana Lottery paid out $59.4 million more for education than Arkansas did.
• In Fiscal Year 2013 Louisiana’s lottery made about $7 million more in gross lottery revenue than Arkansas did; that’s a very narrow margin. However, Louisiana paid out nearly $70 million more to the state for education funding than Arkansas did.
• In Fiscal Year 2014 Louisiana’s lottery made roughly $39.9 million than Arkansas’ lottery, but paid $89.2 million more to education than Arkansas’ lottery.
• In Fiscal Year 2015 Louisiana’s lottery made roughly $44.6 million than Arkansas’ lottery, but paid $112.3 million more to education than Arkansas’ lottery.

The numbers simply cannot be denied. When the Louisiana Lottery takes in millions of dollars less than the Arkansas Lottery, it still pays out more money for state education funds than the Arkansas Lottery does for college scholarships. When the Louisiana Lottery makes a few million dollars more than the Arkansas Lottery, it still pays out tens of millions of dollars more than Arkansas Lottery does–all because Louisiana allocates 35% of its gross revenue for education instead of 18% – 22%.

For years lottery officials have used scholarships to justify every decision they make, but we can see they are not putting scholarships first.

If Arkansas would allocate at least 30%–or even 25%–of its lottery sales for college scholarships the same way other states do, scholarship funding would actually increase–even if lottery ticket sales plummeted by tens of millions of dollars.

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