Consulting Group Says Arkansas Scholarship Lottery Confusing, Mistrusted

TB&P blogger Jason Tolbert notes that one key recommendation from a consultant hired to study the Arkansas Scholarship Lottery recommended more gubernatorial control over the independent agency. Read his take here.

Chris Hickey with our content partner, KUAR FM 89.1 News, reports on other aspects from a legislative hearing regarding a study of the state lottery at the capitol on Friday (Dec. 5):

A consulting group says the Arkansas Scholarship Lottery is experiencing declining revenue because it offers too many games and is negatively perceived by potential customers. UK-based Camelot Global Services presented the analysis to a legislative committee Friday. Richard Bateson,Senior Vice President of Sales and Marketing for Camelot says Arkansas should reduce prize payout and better promote the lottery.

“One of the reasons the majority of adults aren’t playing, when you take out religious belief and you take out cultural values, is because it is confusing. They don’t trust and they don’t really understand and comprehend what is being offered by the lottery. Add in to that negative publicity and you have a very difficult consumer buy for players,” said Bateson.

The consultants told the legislature’s Scholarship Lottery Commission Oversight Committee that the Lottery has a much higher average prize payout compared to other states. Arkansas’ average payout rate is 67 percent, the consultants said, compared to a national average of 59 percent.

“I think one of the big issues that does need to be addressed is how you attract more players to online games…because not only do you need to reduce prize payout, you need to get more people playing. And they want to play,” said Bateson.

Camelot’s report shows 16 percent of potential players say they mistrust the lottery.

The consultants from Camelot said only Oklahoma has had a worse lottery roll out. Bateson said Arkansas should reduce prize payout and market the lottery in a less confusing way.

Earlier in the legislative hearing, Lottery Commission director Bishop Woosley said he agreed that the lottery implemented too many games too early. He also said the most recent revenue reports show an increase in sales for instant games and a decline in sales for online games, with total sales still slightly below expectations.

The Arkansas Scholarship Lottery was established in 2009. In fiscal year 2014, it had produced $411 million in sales compared to $473 million for fiscal year 2012.

Meanwhile, State Senator Jimmy Hickey, R-Texarkana, filed legislation that would require some scholarship applicants to successfully complete their first year of college before receiving money.

“That means they would basically be getting a reimbursement after successful completion. And then they would also begin receiving the future award amounts at the beginning [of their second year], the same way it is now,” he said.

Hickey presented data showing high percentages of scholarship students with GPA’s in the 2.5 to 3.25 range who drop their scholarships by their second year. His bill would divide scholarship recipients into level 1 and level 2 students. Level 2 students would have to have at least a 2.5 GPA and 19 ACT score. Level 1 students would have to have a 3.25 GPA and a 22 ACT score.

Level 2 students would be the ones who have to complete their first year before receiving the scholarship. Level 1 students would continue to be eligible for the scholarship money at the beginning of their first year.

Hickey says the requirements would help the lottery stay solvent, with the hopes of eliminating what he says is a small deficit between available lottery revenue and scholarship award amounts.

Read the full report from KUAR here. Also, Elicia Dover with our content partner, KATV Ch. 7, reports on the meeting. You can access her report at this link.