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Arkansas Lottery fails to meet expected revenue forecasts

Arkansas Lottery loses revenue every year
Arkansas Lottery loses revenue every yearSergey Galushko/PhotoXpress

The Arkansas Lottery uses its net proceeds to give merit based scholarships to college students. Each year since its inception, the lottery has lost money. 2014 is no exception. Arkansas News reported on June 25, 2014, that the Arkansas Lottery will fall short of the lowered forecast by about $2 million. The same report states that Lottery Commissioner, Bishop Woosley, received a bonus and cost of living increase although lottery’s yearly revenue continues to decline.

Problems from the start

Why the lottery continues to lose money and fall short of revenue forecasts is a multifaceted problem. It was destined to fail from the get go, when Ernie Passailaigue was hired as lottery commissioner. He was paid the second highest salary in the U.S. for a lottery commissioner. During his reign, the lottery faced fines, fraud, and a continual loss of revenue, resulting in the reduction of scholarship money for students.

Lindsay Miller, states the following in her report “The Ghost of Ernie Passailaigue:”

“…That, broadly speaking, Passailaigue screwed the lottery — that his decisions cost the state money that otherwise could have gone to gamblers and scholarships — has been well documented. He paid exorbitant salaries to people who were later demonstrated to be unqualified. (His successor makes half what he made; there have been no direct replacements for two $225,000 assistants Passailaigue brought with him, now departed.) He cost the lottery thousands in undocumented travel reimbursement (a case Pulaski County Prosecutor Larry Jegley is still investigating). Under his watch, the IRS fined the lottery $100,000 for non-payment of taxes…”

Revenue problems

The revenue forecast for the Arkansas Lottery was lowered from $89.5 million to $82.8 million in February. The fiscal year ends on Monday, June 30, 2014. A new forecast revision lowers projected revenue from the $82.8 million to $80.5 million. Comparing net proceeds of $81.3 million in May 2013 to $69.5 million in May 2014, reveals an almost $20 million drop year over year.

Still, the lottery feels that it can increase advertising and look to bring in monitor games. This type of game is where winning tickets are announced every few minutes and the results are shown on a monitor. To implement monitor games, the lottery will have to purchase equipment and enter into a contract to sell the new game. This would require approval from the state before it can happen. Every year there are new games and new gimmicks without the benefit of increased revenue. A recent lottery raffle game sold every ticket and still lost money.

Positive spins

Lottery Commissioner, Bishop Woosley, said that he is excited that a new Walmart convenience store in Bentonville, Ark. started selling lottery tickets. Woosley also stated that there might be pending lottery promotional deals with the University of Arkansas at Pine Bluffs, University of Central Arkansas, and Arkansas State University. The Lottery Commission met in an executive session for performance reviews of Bishop Woosley and internal auditor, Matt Brown. Both men received yearly bonuses and cost of living increases that were in line with what other lottery employees receive.