Posted 4/25/2013 08:08 am
Updated 1 year ago
LITTLE ROCK - No changes were made to the structure of the Arkansas Lottery this legislative session, but one is in store for college students, as lottery-funded scholarship amounts are moving to a tiered structure.
Lottery Director Bishop Woosley successfully lobbied against a bill by Rep. Ann Clemmer, R-Benton, that would have required the lottery to have a minimum profit margin of 25 percent. Woosley argued that the lottery would have to reduce its prize amounts, which would drive away customers and ultimately make less money available for scholarships.
The Legislature did pass a bill by Sen. Johnny Key, R-Mountain Home, that changed the scholarship award format to a tiered structure. Under the new plan, students will receive $2,000 as freshmen, and the amount will grow by $1,000 per successfully completed year, topping out at $5,000 for seniors.
The lottery wasn't bringing in enough money to sustain the current structure, in which university students were awarded $4,500 per year and community college students $2,250. Prior to that, university students received $5,000 per year and those at two-year schools got $2,500.
"We had to stop the leak. This is going to stop the leak," Key said.
Legislators also wanted to address low retention rates for scholarships, and the new formula rewards students who maintain their grades and sustain full-time status. Key said legislators also wanted to avoid altering the formula again in the near future.
"Given the forecast of lottery revenues, this will be stable," he said. "Hopefully, we can look at raising (scholarship awards) instead of lowering them again."
Interim Higher Education Department Director Shane Broadway said about 15,000 students have already applied for scholarships. Students will be told of the new amounts in reminders to apply before the June 1 deadline and those who already applied will be notified when they get their awards.
"The hope is to begin notification of awards next week," Broadway said.
Woosley said the lottery has been working with modest success to improve profit margins, which have hovered around 20 percent. The difficulty lies in the lottery wanting about $100 million per year from gamblers who vastly prefer scratch tickets to multi-state draw games, such as Powerball and Mega Millions.
Lottery ads have focused on promoting the numbers games, and players have responded. Revenue from draw games rose from 16 percent to 18 percent over the last year.
"If we could move that in to the 20s, I'd feel pretty good about that," Woosley said.
But that still leaves 82 percent of revenue coming from scratch tickets, which have a profit margin of between 20 percent and 30 percent, compared to about 45 percent for draw games.
"You can't make people buy what they don't want," Woosley said.
Since the lottery started about four years ago, the organization has had a stagnant number of retail vendors in northwest Arkansas, Woosley said.
"We're trying to get some more jackpot billboards up there to try to tweak our approach to see how that impacts sales. One of the things we need up there is more retailers," he said. Several communities have recently approved alcohol sales, including booming Benton County, which Woosley said could help attract new lottery outlets.
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