Published: May 12, 2022

Arkansas lottery revenue slips with rise in gas prices

With the average price of gasoline in Arkansas rising, the Arkansas Scholarship Lottery's revenue and the amount raised for college scholarships in April slipped from a year ago.

"Record fuel prices, a higher ring in the grocery lane, and rising interest rates have all combined to create unusual headwinds," lottery Director Eric Hagler said Wednesday.

In April 2021, the lottery's revenue reached $65.5 million and the net proceeds for scholarships hit $12.2 million, with $1,400 federal stimulus payments boosting incomes for many Arkansans last spring.

Last month, the lottery's revenue dropped to $51.8 million and the amount for scholarships declined to $8 million, the lottery reported this week in its monthly report to Gov. Asa Hutchinson and the Legislative Council's lottery oversight committee co-chairmen Sen. Ron Caldwell, R-Wynne, and Rep. Gary Deffenbaugh, R-Van Buren.

The lottery started selling tickets Sept. 28, 2009. It's helped raise money for Arkansas Academic Challenge Scholarships for more than 30,000 students during each of the past 11 fiscal years.

But the number of students receiving the scholarship hasn't reached 30,000 yet in fiscal year 2022 that ends June 30 and may not exceed that level, according to a spokeswoman for the state Division of Higher Education.

In April, the lottery's scratch-off tickets declined from $56.6 million a year ago to $43.6 million and the lottery's draw-game revenue slid from $8.8 million to $8.1 million. The lottery's draw games include Mega Millions, Powerball, Natural State Jackpot, Fast Play, Lucky for Life, Cash 3 and Cash 4.

Hagler said reports show that gas prices were up an astounding 8.3% in April.

"Rising gas prices has assuredly caused a reallocation in consumer discretionary spending," he said in a written statement. "Record fuel costs necessarily trickle-down to all consumer spending -- for both discretionary goods and necessities."

It's noteworthy that consumers are reporting more and more reliance on credit cards to meet their monthly household budgets, Hagler said. Living on credit is unsustainable in the long run and means consumers will shed certain discretionary expenses, he said.

The average price of regular unleaded gas in Arkansas reached $3.99 a gallon Wednesday to set a record, eclipsing the record of $3.97 a gallon in July 2008, AAA reported. That's up by about 17 cents a gallon from a week prior to Wednesday, by about 28 cents a gallon a month prior to Wednesday, and by about $1.25 a gallon a year prior to Wednesday.

Vicki Skaggs of Benton said Wednesday she has dramatically trimmed her lottery ticket buying from $20 a day to $6 to $8 over the course of four days because the price of gasoline has been going up in the past few weeks.

"You have got to pinch those pennies," she said.

Two months ago, Skaggs said she was considering adjusting her lottery ticket-buying habit with the rising cost of gasoline and she expected gas prices to rise to over $5 per gallon. But gas prices haven't reached that level.

As for the impact on the lottery of many Arkansans not receiving $1,400 federal stimulus payments this spring like they did last spring, Hagler said "We have always believed that performance was being benefited by federal stimulus payments," although the exact impact is unknown.

He said draw-game ticket sales are uniquely tied to the jackpot amount.

Fiscal year 2022 has not produced a series of high-rolling jackpots in the multistate games, which has compressed revenue for the draw games, Hagler said.

The lottery's revenue of $51.8 million in April was better than the budgeted amount of $47 million, and the lottery's net proceeds of $8 million was better than the budgeted amount of $7.5 million, Hagler said.

April is the 10th month of fiscal year 2022.

During the first 10 months of fiscal 2022, the lottery's revenue totaled $486.4 million compared with $521.6 million in the same period in fiscal 2021.

So far in fiscal 2022, the lottery reported $402.4 million in scratch-off ticket revenue -- a decline from $434.7 million in the same period in fiscal 2021 -- and $83.4 million in draw-game ticket revenue -- a drop from $86.3 million in the same period in fiscal 2021.

During the first 10 months of fiscal 2022, the amount raised for scholarships reached $77.3 million, a dip from $83.9 million in the same period in fiscal 2021.

At the end of the fiscal year, the lottery transfers the balance of its unclaimed prize reserve fund minus $1 million to college scholarships. The lottery reported a balance of $8.3 million in its unclaimed reserve fund at the end of April, after receiving $1.05 million in unclaimed prizes in April.

Hagler said the lottery has beat its budget for net proceeds for scholarships so far in fiscal 2022 by $9.2 million.

For fiscal 2022, Hagler 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 raised for scholarships at $88.6 million -- which would a decline from the record of $106.9 million in fiscal 2021.

Fiscal year 2023 begins July 1.

For fiscal 2023, the lottery has projected $535.9 million in total revenue in fiscal 2023 and $91.4 million raised for scholarships, Hagler said.

SCHOLARSHIPS

The Arkansas Academic Challenge Scholarship is financed with the lottery's net proceeds along with $20 million a year in state general revenue.

The state Division of Higher Education has awarded those scholarships to 27,918 students and disbursed $73.4 million so far in fiscal 2022, said division spokeswoman Alisha Lewis.

"I suspect the numbers should increase but ... I am not sure it will increase beyond the thirty thousand threshold for ACS," she said.

The division forecast that it would hand out $90 million in these scholarships to 31,200 students in fiscal 2022, after awarding about $86 million a year ago.

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

The 2017 Legislature created the Workforce Challenge Scholarship to use excess proceeds to provide up to $800 a year for students enrolled in programs that lead to qualifications in high-demand occupations.

So far in fiscal 2022, the division has awarded these scholarships to 2,769 students and disbursed $452,844, Lewis said.

The division has forecast it would distribute $450,000 for these scholarships in fiscal 2022, compared with $487,865 a year ago.

The 2019 Legislature created the Concurrent Challenge program. High school juniors and seniors are eligible to receive the scholarships for a semester or an academic year in which they are enrolled in an endorsed concurrent course or certain programs.

For the Concurrent Challenge program, the division has awarded scholarships to 13,899 students and disbursed $2.3 million so far in fiscal 2022, Lewis said. For fiscal 2022, the division projects distributing $2.7 million in these scholarships to 13,000 students, compared with $2.4 million to 14,091 students in fiscal 2021.

https://www.nwaonline.com/news/2022/may/12/arkansas-lottery-revenue-slips-with-rise-in-gas/

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