Published: February 13, 2022

The Arkansas Scholarship Lottery's reports revenue

The Arkansas Scholarship Lottery's revenue and the amount raised for college scholarships slipped in January compared with the same month last year, when the lottery's fortunes were bolstered by ticket sales fueled by a $1 billion Mega Millions jackpot and a $730 million Powerball jackpot.

The lottery's January revenue dropped from $62.9 million a year ago to $47.2 million, the agency reported Thursday in its monthly report to Gov. Asa Hutchinson and the Legislative Council's lottery oversight committee.

Scratch-off ticket revenue in January dropped from $42.6 million a year ago to $36.9 million, while draw game ticket revenue fell from $20.2 million a year ago to $10.2 million, according to the report.

The draw games include Powerball, Mega Millions, Natural State Jackpot, Cash 3, Cash 4, Fast Play and Lucky for Life.

A year ago, the lottery's Powerball and Mega Millions sales totaled $15.3 million in January. Last month, they totaled $5.7 million.

Asked about the decline in revenue, Lottery Director Eric Hagler said the lottery was one of the few entertainment forums available at the outset of the covid-19 pandemic.

"Similarly, during the post-pandemic period, options remained somewhat limited," he said in a written statement. "As we now enter the endemic period, consumers are enjoying a return to a full panoply of entertainment options and venues."

Hagler said the budget for January forecast sales at $44 million; the lottery had $47 million.

Last month, he warned lawmakers that the next few months will be challenging because the lottery had "absolutely record-setting months" during the same months last year.

"We do believe that we will see some cooling," he said. "We are hopeful that sales will remain strong, but I have to be completely transparent with you, the next 90 days will tell the tale."

In January, the amount raised for college scholarships fell from $10.9 million a year ago to $7.7 million, according to the lottery.

Asked about that decline, Hagler pointed out, "We paid out approximately $32 million in prizes in January and $2.64 million in commissions to our lottery retail partners.

"Prizes and sales-related expenses reduce net proceeds, and these are metrics that we cannot completely control," he said. "Importantly, unclaimed prizes amounted to $1.1 million, which can be added to net proceeds at year end. In this instance, net proceeds appear to be compressed, but the reality is the intra-year accounting adjustment swung to the negative for January. We expect to see a bounce back during the next adjustment."

The Arkansas Scholarship Lottery has helped finance Arkansas Academic Challenge Scholarships for more than 30,000 college students during each of the past 11 fiscal years.

January is the seventh month of fiscal 2022 that ends June 30.

During the first seven months of the fiscal year, the lottery's revenue totaled $337.3 million, a decline from $346 million in the same period in fiscal 2021.

Hagler said the current performance is generally in line with the agency's forecast for fiscal 2022, "and in fact, we are ahead of budget in sales by approximately $47 million.

"This downdraft was not unanticipated, as reflected by the [fiscal 2022] budget," he said. "The early tailwinds were a halo-effect from post-pandemic demand; the current headwinds are exactly what we expected to incur. Our peer lotteries report informally that they are performing in similar fashion."

During the first seven months of fiscal 2022, the lottery raised $54.4 million for college scholarships, a decline from $57.6 million during the same period in fiscal 2021.

But the amount raised for scholarships is $9.6 million above the forecast budget, Hagler noted.

The lottery's unclaimed prize reserve fund totaled $5.9 million on Jan. 31, after getting $1.13 million in unclaimed prizes in January.

The balance of the lottery's unclaimed prize reserve fund minus $1 million is transferred to college scholarships at the end of the fiscal year under state law.

For fiscal 2022, Hagler had projected total revenue of $509.2 million, which would be a drop from the record of $632.5 million in fiscal 2021, and the amount to be raised for college scholarships at $88.6 million, a decline from $106.6 million a year ago.

Lottery officials attributed the records set in fiscal 2021 in part to factors brought on by the covid-19 pandemic, such as people spending more time at home.

The Arkansas Academic Challenge scholarships are financed with lottery proceeds plus $20 million a year in state general revenue.

The state Division of Higher Education has awarded those scholarships to 27,876 students and disbursed $39.9 million, Nick Fuller, an assistant director of finance at the Department of Education, said last month.

The state Division of Higher Education forecast that it will hand out $90 million in these scholarships to 31,000 students in fiscal 2022, after awarding about $86 million a year ago.

The amount handed out for Academic Challenge Scholarships peaked at $132.9 million in fiscal 2013, going to 33,353 students. Scholarship totals have dropped largely because the Legislature has cut the amount of the initial awards several times.

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