Monday, December 10, 2012

Arkansas Lottery trumpets $300 million in scholarship money

Posted By on Mon, Dec 10, 2012 at 5:22 PM

Arkansas Lottery Director Bishop Woosley image
The Arkansas Scholarship Lottery sent out a news release today celebrating an eye-popping number: $300 million contributed to scholarships in a little more than three years.

That $300 million has funded more than 90,000 scholarships, Lottery Director Bishop Woosley said in the release.

Not included in the release: In the last fiscal year, Arkansas's lottery did what it was designed to do — raise scholarship funds — more inefficiently than all but three state lotteries, according to figures provided by the North American Association of State and Provincial Lotteries. In other words, last fiscal year Arkansas netted a lower percentage of its total sales than all but the lotteries in Rhode Island, South Dakota and Massachusetts. Around 20 percent of the Arkansas Lottery's $473 million in sales went to scholarships last year. The most efficient lotteries — Oregon and West Virigina — netted 50 and 45 percent of their total sales, respectively.

What's the problem? At least in part, early lottery brass, Ernie Passailaigue and co., made inexplicably bad deals with vendors. The lottery's contract with Scientific Games got a lot of scrutiny last year, but as we reported earlier this year, its deal with Intralot, a Greek company that provides and services the lottery with the technological infrastructure to administer both instant ticket and so-called draw games like Powerball, is even worse.

Rather than getting a percentage of draw games only — terms Passailaigue negotiated for the South Carolina Lottery before heading Arkansas's — Intralot gets a percentage of total sales. It's a contractual difference that costs the lottery millions every year, and one that then Lottery Commission chairman Ray Thornton didn't seem to grasp when it was being reviewed by the legislative oversight committee. Intralot is currently the lottery's largest vendor, according to the lottery website's financial summary section. The Intralot contract doesn't expire until 2016.

Better terms alone wouldn't make the lottery efficient, keep it from maturing or address the funding shortfall on the horizon, but it's a clear example that legislators, as they're considering how to preserve scholarship funding in the upcoming session, need to pay careful attention to the numbers.

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