The Arkansas Scholarship Lottery set a July record in revenue collections, but the amount raised for college scholarships was the third-lowest for a July in its nine years of operations.
That's mostly because the lottery socked away nearly $1.5 million that will be used to pay a bonus to lottery vendor Scientific Games International, as set out in a contract extension in 2015; and paid a $1 million Play It Again prize, lottery Director Bishop Woosley said Friday.
The lottery's revenue in July totaled $42.4 million -- up from $36.8 million a year ago -- and exceeded the previous record for the month in 2016 of $38.2 million.
Scratch-off ticket revenue for the month soared to $34.4 million from $29.5 million a year ago, and draw game revenue inched up to $7.8 million from $7.2 million a year ago, the lottery reported Friday in its monthly report to Gov. Asa Hutchinson and the Legislature's lottery oversight subcommittee.
The lottery also received revenue from ticket-selling retailers that totaled $60,050 -- slightly up from $59,008 from a year ago. The lottery had 1,931 ticket-selling retailers on July 31, compared with 1,934 a year ago.
Woosley said the scratch-off ticket sales last month were helped by "an excellent launch of games in July, including the second iteration of the Willy Wonka instant ticket game.
"From an instant ticket standpoint we are up in every single price point with the exception of the $10 instant tickets," he said in a written statement. Scratch-off tickets are also called instant tickets.
Draw game revenue last month was fueled by a Mega Millions jackpot that grew to more than $500 million, Woosley said.
The lottery's other draw games include Powerball, Natural State Jackpot, Cash 3, Cash 4, Fast Play and Lucky for Life.
In August, the lottery raised $5 million for college scholarships, and that's a drop from $6.6 million a year ago, the lottery reported. The largest amount of money that the lottery has raised for scholarships in a July was the $8.7 million in 2016.
Woosley said the amount raised for college scholarships dropped from a year ago because "we had a $1 million Play It Again prize awarded in the month along with a few larger instant ticket prizes.
"We also had to accrue a vendor bonus in July, which impacted the amount we raised in proceeds. Even with those issues, we still finished the month almost $900,000 up versus budget for proceeds," he said.
Woosley said the bonus hasn't been paid to vendor Scientific Games International yet. So far, the accrual is $1,475,301.66.
Under the lottery's 10-year contract extension with Scientific Games International that was signed in November 2015, the parties agreed that the vendor would be paid 1.30 percent of scratch-off ticket sales, he said. That's a drop from the previous rate of 1.81 percent.
But the contract also included "a bonus provision to incentivize the vendor to make efforts to increase instant ticket sales," Woosley said. Instant ticket sales had lagged in years before the extension, he said.
"The bonus states that if instant ticket sales exceed $360,000,000 during a contract year, which will run from August 18 to August 17 of the next year, the vendor will receive a bonus payment of 4.5% of any incremental instant ticket sales exceeding that stated sales number," he said in an email.
"Because our sales hit $360,000,000 during that period, we are accruing the bonus payment monthly until such time as it is due. The period for the accrual is not complete so we do not have a final total," he said.
The lottery has been selling tickets since Aug. 29, 2009, and helped finance more than 30,000 Arkansas Academic Challenge Scholarships during the past eight fiscal years. The scholarships also are financed by $20 million a year in state general revenue and a $20 million reserve fund that covers temporary cash shortages.
The Legislature cut the size of future Arkansas Academic Challenge Scholarships three times over the first several years of operation because more students than initially projected were being awarded scholarships and net proceeds were falling short of initial forecasts.
The total amount awarded in Arkansas Challenge Scholarships peaked in fiscal 2013 at $132.9 million, according to the state Department of Higher Education.
But a rebound in revenue led the 2017 Legislature to create a new scholarship program called the Arkansas Workforce Challenge Scholarship program to be financed with the lottery's excess proceeds.
For the first time this fall, the program will provide aid of up to $800 a year for students enrolled in higher education programs that lead them to being qualified to work in high-demand occupations.
In fiscal 2018, which ended June 30, the lottery raised $91.9 million for college scholarships. That's the third-largest amount raised in nine years of operation. It fell short of the $94.2 million and $97.5 million raised in fiscal 2011 and 2012, respectively.
Also in fiscal 2018, the lottery collected the most revenue it's ever collected in nine years -- $500.4 million, exceeding the previous peak of $473.6 million in fiscal 2012.
For fiscal 2019, Woosley has projected revenue of $482.9 million and net proceeds for college scholarships at $85.9 million.
Retailers have had the option of accepting debit cards on lottery ticket purchases under a state law that took effect Aug. 1, 2017. State law previously limited retailers to accepting cash only on ticket purchases.
Based on the lottery's survey completed last month on its more than 1,900 retailers, 697 retailers accept debit cards, Woosley said, and that's "actually about right where I anticipated after a year.
"I think debit has certainly had an impact on sales for the past 12 months," he said.
"Now that we know how many are taking debit cards we can begin the process of determining what the range of lift in sales was from them over the past 12 months and going forward. Once we have that information, we will begin the process of selling our retailers on the benefits of allowing debit cards for lottery purchases," Woosley said.
A Section on 08/11/2018