Last Sunday, the Arkansas Democrat-Gazette featured a news story about the Arkansas Lottery’s decision to only allocate approximately 21.5% of its revenue for college scholarships.
The fact is, as we’ve pointed out before, Arkansas’ lottery—whose foundational purpose is supposed to be providing college scholarships—is paying less than 22-cents on the dollar toward scholarships. That puts Arkansas’ lottery at the 4th lowest in the nation when it comes to revenue allocated for education.
Arkansas Lottery Director Ernie Passailaigue defends Arkansas’ position by stating that allocating a larger percentage of revenue for scholarships would require them to pay out less money in prizes, and that paying out prizes is what makes people play the lottery. So ensuring there are plenty of prizes is the key to scholarship revenue. But there are two huge problems with his logic.
First, there is no lottery law that says you have to spend less on prizes if you want to increase revenue for college scholarships. The Arkansas Lottery could take that money from anywhere they want. They could have paid Passailaigue less—he is, after all, the third-highest-paid lottery director in the nation at $324,000 per year; they could have chosen not to buy the lottery ticket vending machines we’ve been talking about; they could reduce or eliminate their advertising budget; or they could tighten their belt in all these areas, and provide more scholarships for students who need them. His argument just doesn’t work.
Second, the Arkansas Lottery is pinning their hopes on selling large volumes of lottery tickets. They believe if they sell enough tickets, they can get enough money to make up for only paying out 21.5% in scholarships. There are some serious implications here, though.
First, Passailaigue has told members of the press that he expects lottery ticket sales to decline after the lottery’s novelty has worn off (he and I agree here). That means there’s really no way anyone can say for certain that the lottery will ever be able sell enough tickets to make up for the anemic scholarship budget they’ve set aside.
On top of that, if the Arkansas Lottery is going to provide the amount of scholarship money everyone expects—roughly $100 million—by only giving 21.5% of its revenue to the students, they will have to sell between $400 and $500 million worth of tickets every year.
That’s nearly half a million dollars taken out of our already struggling economy—money that would have been spent on groceries, gasoline, housing, or any number of other products. Instead of being spent in a way that would boost Arkansas’ economy, this money is going straight into the Lottery Commission’s pocket, and less than 22% of will ever get to a student.
The bottom line is that the Arkansas Lottery has been disingenuous with the People of Arkansas, and now they’re answering for it. People expect a group called the “Arkansas Scholarship Lottery” to actually put scholarships first. As it is, Lottery Officials seem to indicate the scholarships are what they pay for after everything else is covered.
They promised Arkansas a “world-class” lottery, but instead they’ve given us a lottery that won’t even pay out an average percentage of its revenue for education.
