In 2008, a lot of folks tried to predict what would happen if Arkansas legalized state-run lotteries for college scholarships. Sadly, most of the negative predictions have come true while the positive ones have yet to materialize.
Below are ten fulfilled predictions we made about the lottery.
1. It would lead to corruption.
If you want a recipe for fraud and corruption, it probably begins with gambling, politicians, and money. The first lottery director was paid more than $300,000 per year; authorized contracts that were, at best, questionable; and left during a very contentious period. The lottery’s auditor resigned during that turmoil. Add to that the local news reports you often hear about lottery-related theft and allegations of fraud, and the fact that most of the lottery’s actual oversight is internal—not from an objective third-party—and you begin to see the Arkansas Lottery has brought a lot of new troubles to Arkansas.
2. There would be more than one lottery.
It seems laughable now, but when the lottery amendment passed in 2008, lottery proponents talked about “a lottery,” or playing “the lottery.” We countered there was nothing in the amendment limiting Arkansas to just one lottery game. Our arguments were largely dismissed, but look at what has happened since then. Arkansas has rolled out new lottery games left and right since Day One. We have dozens of instant lottery games; two multi-state lotteries; draw games; raffles; and others. I don’t know of any other state that has worked so hard to expand its lottery games so quickly.
3. It would pull roughly $300 – $400 million out of the economy annually.
To be honest, we didn’t nail this one exactly. Lottery proponents predicted the lottery would “generate” $100 million annually for scholarships. We assumed the scholarship money would represent 25% – 30% of the lottery’s gross revenue, because that’s about how much most states allocate. In order to allocate $100 million for scholarships, the lottery would need to gross about $300 – $400 million every year. Instead, the lottery has allocated a paltry 20% – 22% of its gross revenue for scholarships; it pulls an estimated $465 – $470 million out of the economy every year; and it pays out less than $100 million annually for scholarships.
In other words, we were wrong; the lottery has been worse than we predicted.
4. It would be played disproportionately by the poor.
Lottery proponents like to dispute this. Look at the facts. Arkansas’ top counties for lottery ticket sales are also some of Arkansas’ poorest counties. Our poorest communities are leading the state in lottery ticket sales per capita. These communities do not benefit from the lottery; very few of their students receive college scholarships. Most of the money they spend on the lottery goes to Little Rock, never to be seen again.
5. It would fail to meet scholarship expectations.
In 2007, then-Lt. Gov. Bill Halter told lawmakers a state-run lottery would “generate” $200 million a year for college scholarships. When he campaigned for the lottery amendment the following year, his estimate was lowered to $100 million per year. The truth is the Arkansas “Scholarship” Lottery has not produced $100 million for scholarships even one year, let alone every year—and scholarships continue to decline.
6. It would not be sustainable.
Every state that has instituted a lottery has faced the dilemma of sustainability. As soon as the newness of the lottery wears off, ticket sales drop. When it happened in Arkansas, lottery officials rolled out new games to keep people coming back. The trouble with this model is at some point rolling out new lottery games simply isn’t enough. When that happens, scholarships suffer.
7. Lottery officials would be able to earmark as little as they wanted for college scholarships.
The constitutional amendment authorizing the lottery did not specify how much the lottery would have to earmark for scholarships. The enabling legislation the legislature passed in 2009 didn’t specify, either. As a result the Arkansas Lottery Commission has allocated a paltry 20% – 22% of its revenue for scholarships—one of the lowest rates in the nation. Rep. Ann Clemmer has twice proposed measures to establish a minimum scholarship allocation, but the legislature rejected both proposals.
8. “Lottery machines” could be authorized.
In 2008 we argued gambling machines could be authorized under the auspices of a lottery. Lottery proponents countered that it was “doubtful” machines like that would be approved by the Legislature. Then in 2010 the Arkansas Lottery made a hard-sell for lottery ticket vending machines. They spent tens of thousands of dollars on 100 lottery machines, and then decided to ask for permission to roll the machines out. These aren’t the full-blown slot machines some had hoped for, but they are a step in that direction—and they are proof the Lottery Commission has a lot of leeway in determining how Arkansans can “play” the lottery.
9. Problem-gambling and gambling addiction would increase.
No question about this one. If you look at the reports, our gambling hotline routinely receives calls from people suffering from gambling problems due to the lottery. How many of us have seen someone walk into a gas station and drop a handful of cash on a wad of losing scratch-off tickets? One person told me about something they witnessed: A child in a gas station asked her mother for money to buy food. The child looked hungry, and the family looked poor. The parent—who had just lost a considerable amount of money on lottery tickets—told the child, “We don’t have money for that.” They left the gas station with less than they entered because of the lottery. That’s a problem, and we have the Arkansas Lottery to thank for it.
10. It would not significantly increase the number of students attending college.
Lottery proponents like to say college enrollment has never been higher in Arkansas. Well, that’s been true virtually every year, with or without a lottery. Higher education enrollment has gone nowhere but up over the past few decades. Before the Arkansas Lottery launched a few years ago, we crunched some numbers: Georgia, which has a state-run lottery for college scholarships, saw college graduation increase by 8% from one year to the next; during that same time, Arkansas’ college graduation increased by 5% without a lottery. At best, Georgia’ lottery might have given it a slight edge over Arkansas—but it’s likely other factors contributed as well.
Student retention is a better way to measure the lottery’s overall impact rather than college enrollment; it doesn’t do much good to send someone to college if they leave after one semester. The second year of the Arkansas lottery, almost half the students who previously received lottery scholarship money failed to retain their scholarships.
All in all, the lottery has done very little extra for college-bound students.