Lottery Officials Tout Scholarships, Revenue to Rotarians

In an apparent effort to boost the Arkansas Lottery’s image, lottery officials recently have spoken to Rotary groups about the supposed benefits of the Arkansas Lottery.

Among other things, lottery officials highlight the number of scholarships awarded to students.

Frankly, we’ve heard all of this from lottery officials before. Here are some of the problems with the Arkansas Lottery’s talking points–and with the Arkansas Lottery in general.

1. Nearly 1/4 of “Lottery Scholarship” Money Actually Comes from the Legislature

Lottery officials often talk about how much money Arkansas’ students have received in scholarship funds. What they don’t always talk about is where that money actually came from.

Not all “lottery scholarship” money comes from the Arkansas Lottery. The Arkansas Lottery helps fund Arkansas’ Academic Challenge Scholarship. So does the Arkansas Legislature with tax money collected from Arkansans.

When lottery officials talk about how much money Arkansas’ students have received in scholarship funds, they sometimes include money the Arkansas Legislature provided.

Altogether, from July 2009 – June 2016, the Arkansas Legislature provided $187 million in Academic Challenge Scholarship funding. The Arkansas Lottery provided about $603.6 million in scholarship funding.

In other words, nearly one-fourth of the funding for the “lottery scholarship” program (i.e. the Academic Challenge Scholarship) did not come from the Lottery at all. It came from the Arkansas Legislature.

To illustrate it another way, of the 202,000 scholarships lottery officials say have been awarded through Academic Challenge since the Lottery started, approximately 48,000 of those scholarships were actually paid for by the Arkansas Legislature–not the Arkansas Lottery.

Here is a table breaking down the numbers for each complete fiscal year since the Arkansas Lottery started:

Does the Arkansas Lottery provide most of the money for the state’s Academic Challenge Scholarship fund? Sure.

Does it provide all of the money for that fund? Not even close.

2. The Arkansas Lottery Does Not Give Full Rides to College

Under Act 234 of 2013, the most a freshman at a four-year college or university in Arkansas can receive from the Academic Challenge Scholarship is $2,000. A senior at a 4-year college or university can receive $5,000.

To put these numbers in perspective, the University of Arkansas at Fort Smith’s website estimates students will pay at least $6,700 per year in tuition and related fees. No lottery scholarship can cover that.

Lottery officials like to talk about the number of students the Lottery sends to college. The truth is a lottery scholarship will not really “send” anyone to college. It will cover some of the costs of going to school, but certainly not all of them.

3. The Arkansas Lottery Does Not “Generate” Money for Scholarships

Lottery officials often say the Arkansas Lottery “generates” money for scholarships. The truth is the Arkansas Lottery does not “generate” any money. It pulls money out of the economy. It entices people to gamble–and lose–money on lottery tickets, and then it spends most of that money on government bureaucracy and contracts with companies in other states.

Since the Arkansas Lottery first set up shop in 2009, the Arkansas Lottery has taken in more than $3.1 billion. Less than 20% of that money was spent on college scholarships. The Arkansas Lottery has spent nearly $2.5 billion on salaries, overhead costs, contracts with lottery vendors, and other expenses.

For a full breakdown of the Arkansas Lottery’s revenue and its scholarship allocations, check out this table:

4. The Arkansas Lottery is Well Below-Average on Education Spending

The typical state lottery allocates about 30% of its revenue for state education, scholarships, or similar programs. Louisiana’s lottery allocates 35% of its revenue. However, the Arkansas Lottery typically allocates less than 20% of its revenue for scholarships. We have written repeatedly about how easily the Arkansas Lottery could bolster scholarship funding if it would simply budget an “average” portion of its revenue for scholarships.

5. The Arkansas Lottery Has Failed to Live Up to Its Promised $100 Million in Scholarship Funding

When then-Lt. Gov. Bill Halter campaigned for the Arkansas Lottery in 2008, he said repeatedly that a state-run lottery would provide at least $100 million per yer in scholarship funds. To date the Arkansas Lottery has failed to provide $100 million in scholarship funding even one year, let alone every year.

Conclusion

The Arkansas Lottery is a drain on the economy. At best it’s an inefficient way to fund scholarships. At worst, it preys on our poorest citizens who gamble out of desperation rather than for fun.

No matter how you look at it, the Arkansas Lottery simply is not all it is cracked up to be.

Related posts:

Lottery Officials ‘Generally Satisfied’ as Revenue, Scholarships Drop Lottery Commission Gives Raises as Revenue, Scholarships Languish Arkansas Lottery: Revenue, Scholarships Decline in 2013 Arkansas Lottery Spends 17% of Revenue on College Scholarships: January Report