Arkansas’ 6-month lottery revenue hits $309.6M, up $6.6M from same point last fiscal year
January 10, 2024 at 6:27 p.m.
Halfway through the current fiscal year, the Arkansas Scholarship Lottery's revenue has increased by $6.6 million over the same period in the previous fiscal year to $309.6 million, largely as a result of increased scratch-off ticket revenue.
During fiscal 2024 that started July 1, the amount raised for college scholarships has increased by $4.5 million from the same period in fiscal 2023 to $57.8 million.
The lottery's revenue and the amount raised for college scholarships so far in fiscal 2024 are in the lottery's monthly report to Gov. Sarah Huckabee Sanders and the Legislative Council's lottery oversight committee. Fiscal 2024 ends June 30.
"Year to date for the fiscal year, high jackpots have served to create a bit of a net proceeds swell," lottery Director Eric Hagler said Wednesday in a written statement.
All game sales contribute to net proceeds that fund scholarships, but draw games provide a higher return on investment for the lottery, he noted.
"As these jackpots continue to grow, we expect to see a healthy appetite in the category over the next few months," he added.
During the first six months of fiscal 2024, the amount raised for college scholarships is $12.5 million larger than the lottery's projected budget for this period, Hagler said.
So far in fiscal 2024, the lottery's scratch-off ticket revenue increased from $230.7 million in the same period in fiscal 2023 to $236.6 million, while the lottery's draw-game ticket revenue increased from $71.9 million in the same period in fiscal 2023 to $72.6 million, according to the lottery's reports.
Thus far, the lottery's scratch-off ticket revenue is $6.1 million larger than the projected budget for this period, and the draw-game ticket revenue is $25.1 million larger, Hagler said.
As for the increased scratch-off ticket revenue in fiscal 2024, he said, "It's always interesting to see how the market will react to a new game launch.
"Our past two game launches have received an overwhelmingly positive call-to-action by our players, which is reflected in our revenue number."
As for the draw-game ticket revenue increasing slightly in fiscal 2024, Hagler said the "draw category is largely dependent upon high jackpots in the multi-state games, so we always shed a bit of performance when jackpots re-set."
At the end of each fiscal year, the lottery transfers the balance of its unclaimed prize reserve fund, minus $1 million, to scholarships. The lottery's unclaimed prize reserve fund totaled $6.3 million Dec. 31, after receiving $275,498 in unclaimed prizes in December.
The lottery's total revenue of $309.6 million during the first six months of fiscal 2023 and the $57.8 million raised for college scholarships in the same period exceed the previous highs for the lottery for the first half of a fiscal year.
For all of fiscal 2024, the lottery has projected total revenue of $567.9 million, raising $100.7 million for college scholarships.
In fiscal 2023, which ended June 30, the lottery raised $114.7 million for college scholarships, the largest amount it has produced in any fiscal year. The lottery's previous high for scholarships was $106.6 million raised in fiscal 2021, which ended June 30, 2021.
The lottery's revenue in fiscal 2023 totaled $608.2 million, lagging behind the $632.5 million collected in fiscal 2021. In fiscal 2021, lottery officials attributed the performance in part to factors brought on by the covid-19 pandemic, such as people spending more time at home.
Hagler attributed the record amount of money raised for college scholarships in fiscal 2023 to collecting more draw-game ticket revenue in that fiscal year.
DECEMBER RESULTS
December is the sixth month of fiscal 2024.
The lottery's total revenue in December increased from $50.8 million in the same month a year ago to $54 million.
The lottery's scratch-off revenue increased from $40.5 million in the same month a year ago to $43.9 million, while the lottery's draw-game ticket revenue dropped from $10.2 million in the same month a year ago to $10 million, according to the lottery.
Hagler said in his written statement that the increase in December revenue year over year is primarily attributable to "an excellent sell-thru in the instant game category."
In December, the draw category did not see significant support in the form of high jackpots, which is the primary driver for draw game sales, he said.
In December, the amount raised for college scholarships increased from $6.4 million in the same month a year ago to $8.8 million.
"We saw stronger revenue in December year over year which drove healthy net proceeds," he said. "Net income was $10.1 million on $54 million in sales; the accounting adjustment caused a $1.3 million swing to negative."
SCHOLARSHIPS
The Arkansas Academic Challenge scholarships are financed with lottery proceeds, plus $20 million a year in state general revenue.
So far in fiscal 2024, the state Division of Higher Education has disbursed $39.7 million in Arkansas Academic Challenge scholarships to 28,737 students, said state Department of Education spokeswoman Kim Mundell.
In fiscal 2023, the Division of Higher Education disbursed Arkansas Academic Challenge scholarships totaling $74.3 million to 26,109 students. For fiscal 2024, the Division of Higher Education projects it will award 27,000 students Academic Challenge scholarships totaling $75 million.
Fiscal 2023 is the second consecutive fiscal year over the past 13 fiscal years in which Arkansas Academic Challenge scholarships were awarded to fewer than 30,000 students.
The amount handed out for Academic Challenge scholarships peaked at $132.9 million in fiscal 2013, with awards going to 33,353 students. Scholarship totals have dropped largely because the Legislature cut the amount of initial scholarships several times.
The 2017 Legislature created the Workforce Challenge Scholarship to use excess proceeds to provide up to $800 per year for students enrolled in programs that lead to qualifications in high-demand occupations.
So far in fiscal 2024, the division has disbursed $545,859 in Workforce Challenge scholarships, Mundell said. She said 1,047 students have been awarded those scholarships.
In fiscal 2023, the Division of Higher Education disbursed Workforce Challenge scholarships totaling $521,277 to 701 students. For fiscal 2024, the division projects awarding Workforce Challenge scholarships totaling $750,000 to 2,000 students.
The 2019 Legislature created the Concurrent Challenge program that allows high school juniors and seniors to receive scholarships for a semester or an academic year in which they are enrolled in an endorsed concurrent course or certain programs.
So far in fiscal 2024, the division has disbursed $2.1 million in Concurrent Challenge scholarships to 7,405 students, Mundell said.
In fiscal 2023, the division disbursed Concurrent Challenge scholarships totaling $2.6 million to 13,982 students. In fiscal 2024, the division projects distributing Concurrent Challenge scholarships totaling $3 million to 17,000 students.
The Challenge Plus Scholarship will first be awarded to students who qualify in the 2024-25 academic year, according to Mundell.
Act 386 of 2023 created the Arkansas Challenge Plus Scholarship program to provide additional funds for students based on their financial need.
Under Act 386, a student will be eligible for the new program for an academic semester or academic year if the student applies for and maintains eligibility for a scholarship under the Arkansas Academic Challenge Scholarship program and demonstrates financial need as determined by the Free Application for Federal Student Aid (FAFSA).
The scholarship will be awarded in increments of $1,000 for each eligible student in each academic year with a maximum of $4,000, as determined by the Division of Higher Education under Act 386. The scholarship amounts may vary each year depending on the amount of funding available under the law.
The sum of an Arkansas Challenge Plus Scholarship and Arkansas Academic Challenge Scholarship won't exceed $5,000 for each eligible student in an academic year under Act 386.
Under Act 1105 of 2015, the scholarship size for Arkansas Academic Challenge Scholarship recipients is $1,000 for the freshman year at two- and four-year colleges. The scholarship size is $3,000 for recipients for the sophomore year at a two-year college, $4,000 for the sophomore and junior years at four-year colleges and $5,000 for the senior year at four-year colleges.
The Challenge Plus Scholarship is projected by the state to cost about $13.5 million a year, according to an estimate from the Division of Higher Education.
Division of Higher Education Commissioner Ken Warden said in a letter dated Dec. 1 to the Legislative Council lottery oversight subcommittee that he proposed "the review of eligibility and award amounts for potential changes at each level within the Academic Challenge Scholarship Program."
State lawmakers could makes changes to the Arkansas Academic Scholarship Program during the 2025 regular session, starting in January 2025.