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COVID-19 Impacts Arkansas Scholarship Lottery Revenues

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No state lottery has remained untouched by the impact of the continuing coronavirus crisis. However, Arkansas Lottery Director Bishop Woosley recently revealed that the Arkansas Scholarship Lottery has remained a gainful business.

Lotteries have experienced varying degrees of sales reductions due to COVID-19, he said. States with shelter-in-place orders or other restrictions on residents are experiencing greater sales declines because lottery players cannot easily get to retail locations to purchase tickets, said Woosley, who is president of the North American Association of State and Provincial Lotteries.

Latest Arkansas Lottery revenue numbers

The Arkansas Lottery’s March report included a presentation to Gov. Asa Hutchinson and the Legislative Council’s lottery oversight subcommittee. Data included revelations that revenue slipped by $4.1 million from a year ago to $47.8 million. The amount raised for college scholarships dipped by $1.2 million to $7.3 million.

The lottery also reported that scratch-off revenue last month inched up by about $866,000 over the same month a year ago to $41.6 million, while draw-game revenue dropped by about $5 million, to $6.1 million. Draw games include Powerball, Mega Millions, Natural State Jackpot, Cash 3, Cash 4, Fast Play and Lucky for Life.

Woosley said that in March 2019, the Arkansas Lottery benefitted from a $750 million Powerball jackpot, and that’s why draw-game revenue was significantly larger. Draw-game tickets are more profitable to the lottery than scratch-off tickets.

“Otherwise, we had a very good month and actually beat our instant ticket sales last March by around $800,000,” he said in a written statement. Instant tickets are another term for scratch-off tickets.

“It is really amazing considering the turn of events of the last two to three weeks of the month,” Woosley said.

Impact from COVID-19

Arkansas had its first confirmed positive case of coronavirus on March 11. Hutchinson, who has resisted requiring people to stay at home to ride out the pandemic, has touted what he has called his “target approach” to combating the virus.

The state lottery, which started selling tickets Sept. 28, 2009, has helped finance more than 30,000 Arkansas Academic Challenge Scholarships in each of the past nine fiscal years.

March is the ninth month of the fiscal year 2020, which ends June 30.

During the first nine months of fiscal 2020, revenue totaled $368.8 million — a drop from $392.7 million in the same period in 2019.

So far in, scratch-off revenue reached $310.4 million — an increase from $306.3 million in the same period in fiscal 2019.

Draw-game revenue totaled $57.9 million — a drop from $85.7 million in the same period a year ago.

Woosley said that in this fiscal year, the largest jackpot was $400 million, compared with a $1.5 billion Mega Millions jackpot, Powerball jackpots of $750 million and $700 million, and several other jackpots exceeding $500 million in fiscal 2019.

“It is impossible to compete with those type of jackpots when the draw-game jackpot levels are lower,” he said.

College scholarship funding

During the first nine months of fiscal 2020, the lottery has raised $57.5 million for college scholarships, down from $68.3 million in the same period a year ago.

“The drop in draw-game sales is the sole reason for the difference in our proceeds for this fiscal year versus last fiscal year,” Woosley said.

College scholarships receive additional funds from the lottery in the form of all unclaimed prize funds, minus $1 million, at the end of each fiscal year. The fund totaled $8 million as of March 31, after $856,502 in unclaimed funds went to scholarships for the month of March.

For fiscal 2020, Woosley has projected total revenue at $497 million and $89.3 million raised for scholarships.

Woosley said that both nationwide lotteries, Powerball and Mega Millions, have had to change their games. Their starting jackpots are now $20 million instead of $40 million.

“Based on the drop in sales, the jackpot levels in the games could not be funded,” he said. “As a result, the two multistate groups voted to temporarily change the starting jackpot and guaranteed minimum jackpot rolls to ensure that their members’ liability was decreased, and the jackpots were funded.”

Casino closures and Mississippi competition

With the recent casino closures in Hot Springs, Pine Bluff and West Memphis in mid-March, Woosley cautioned it was still too early to estimate their impact on overall Arkansas Lottery sales. However, Chicot and Phillips counties continue to leak activity to the Mississippi Lottery to a small degree.

The Mississippi lottery started selling scratch-off tickets in late November and Powerball and Mega Millions tickets in late January.

The Arkansas Lottery reported having 1,972 retailers on March 31, up from 1,922 a year ago.

SB 343, now known as Act 456, established the creation of the Arkansas Concurrent Challenge Scholarship, a program that would be funded entirely by the lottery. High school juniors and seniors are eligible to receive the scholarship for a semester or academic year in which they are enrolled in an endorsed concurrent enrollment course or certificate program under certain conditions.

Forecast for 2020

According to Division of Higher Education representative Alisha Lewis, the organization has forecast that $94.6 million in Arkansas Academic Challenge Scholarships will be available for distribution to 33,315 students in fiscal year 2020. A total of $88.6 million has gone to these scholarships so far this year.

The total scholarship distribution peaked at $132.9 million in fiscal 2013 to 33,533 students.

The total dropped to $112.7 million for 35,303 students in fiscal 2015 before dropping below $100 million for each fiscal year since. That’s largely the result of the Legislature cutting the amount of the initial scholarships three times in 11 years.

The 2017 Legislature created the Workforce Challenge Scholarship program to use excess lottery proceeds to provide up to $800 a year for students enrolled in higher-education programs that lead to them being qualified to work in high-demand occupations.

The Division of Higher Education has projected awarding 1,945 Workforce Challenge Scholarships totaling $1.6 million — up from 214 students who received about $170,000 in fiscal 2019. So far, the division has spent $300,000 on those scholarships in fiscal 2020, Lewis said.

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