Lottery sales down | Arkansas Blog

Monday, June 18, 2012

Lottery sales down

Posted By on Mon, Jun 18, 2012 at 11:21 AM

Bishop Woosley Arkansas Lottery image
The Arkansas Lottery Commission is meeting today.

News includes a sharp decline in ticket sales in May compared with the same month a year earlier.

Scientific Games, a major lottery vendor, has also proposed a drop in its percentage rake on ticket sales, but it's only about a tenth of a percent, from 1.9 to 1.8 percent. It will continue to get fat off the sweetheart deal struck in the Ernie P. era.

More details to come later.

UPDATE from Cheree Franco, who attended the meeting: Today's lottery commission meeting had the element of a tragi-comedy. Six commissioners were physically present. George Hammons, John "Smokey" Campbell and Bruce Engstrom were physically absent but present via conference phone, which meant nearly everything had to be repeated into the hissing, ET-channelling communications device. There was a briefing on financials. There are 13 days left in the lottery's fiscal year, and across the board, figures are down from this time last year. In May 2012, there was $6.6 million less in instant ticket sales than in May 2011, although Director Bishop Woosley said this could partially be explained because a new game was launched last May.

Total revenues are down 14.9 percent from last May, with net proceeds down about a million dollars, or 11.1 percent. Revenues for May 2012 were down 14 percent from what they were predicted to be, but operating expenses are also three million under budget. Total revenue year to date (up to May 31 2012) is $13 million over what it was this time last year, but this increase is nullified by $12 million increase in 2012 operating expenses (which include increased awards, retail commissions and gaming contracts), and lower interest rates. Consequently, this year's transfers to the Department of High Education (money for scholarships) is a million less than it was last year.

The commission voted to approve a proposed trade-in of 400 unused gaming monitors for 600 Player Advertising Displays (PADS), which are 17-inch TV's mounted near clerks in retail outlets. The TV's would broadcast lottery-created content, such as advertisements about games, notifications about winners and admonitions to "play wisely." Last meeting, the commission approved a $250,000 promotional budget that will go towards PAD content creation.

Then there was an hour of intra-commission bickering about a contract renegotiation with Scientific Games, the lottery's largest vendor. In April's meeting, the commission voted, 7 to 2, to reaffirm its contract with Scientific Games, after former internal auditor Michael Hyde called the contract's validity under question, and authorized Woosley to work with Scientific Games on better percentage terms on instant tickets. Commissoners Engstrom and Hammons voted against reaffirming the deal.

At today's meeting Woosley reported that after many discussions, Scientific Games agreed to reduce their percentage from 1.92 to 1.81. Woosley said it was urgent that he have this contract approved before the fiscal year ended June 30. There is also a chance that, should the contract not be approved immediately, Scientific Games might renege on the changes. The present commissioners seemed to believe that they had already authorized Woosley to sign the renegotiated contract. There was an hour of intense discussion, with Engstrom in particular maintaining that the commission had to vote on the contractual changes. The meeting was recessed while outside legal counsel was consulted. Ultimately, the commission voted on the actual contractual changes. The motion passed, with only Engstrom and Hammons voting against it. (The Legislative Oversight Committee may still override the changes at tomorrow's meeting).

The commissioners adjourned into executive session to discuss procedures for hiring an internal auditor. The Lottery has received 19 applications, but according to Julie Baldridge, director of public affairs, only three applicants meet the minimum qualifications.

We'll have an update on the Lottery's request for limited police powers after tomorrow's Legislative Oversight Committee meeting.

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