A day after the Arkansas Lottery Legislative Oversight Committee passed a motion against the lottery adding video monitor games, the Arkansas Lottery Commission today approved adding the games, which Lottery Director Bishop Woosley pitched as a way to aim to boost revenues for the flagging lottery. Proceeds were down 25 percent in March.
The monitor games, which might include keno, bingo or other wagering, require players to buy a ticket from a clerk. Woosley said the lottery would try to have the games in place by the fall.
I notice that the AP quotes Former House Speaker Robbie Wills telling the Commission that the legislature intended for the lottery to offer keno. He should know; he’s as responsible as anyone for the creation of the lottery. He’s also got a dog in the hunt. He wasted no time after leaving the legislature to sign up Intralot, the lottery’s largest vendor, as a client. he still represents the Greece-based firm. Intralot will install and administer the monitor games.
Who knows whether keno and such will turn around the lottery, but we do know that it’ll mean more money for Intralot.
As I’ve written before, the Arkansas Lottery does what it is designed to do — raise scholarship funds — more inefficiently than all but three state lotteries, according to the latest figures provided by the North American Association of State and Provincial Lotteries. There are all sorts of reasons the lottery is raising less money than hoped for — the economy’s been bad, maturing lotteries always underperform — but that doesn’t have any bearing on how efficiently the lottery turns what it earns into scholarship dollars. At least part of the reason we lag behind other lotteries in efficiency is because of our vendor contracts, especially the one with Intralot.
The lottery commission does not pay its commissioners. Many live away from Little Rock, where the commission typically meets. Because of the money involved, the lottery is always in the news. When the news is negative, the commission sometimes bears the blame. That said, there is some indication that the commission has not always acted thoughtfully or thoroughly.
Take for instance the lottery’s other major vendor contract with Intralot, a Greek company that provides and services the lottery with the technological infrastructure to administer both instant ticket and so-called draw games, like Mega-Millions and Powerball, where winners are selected after players purchase their tickets. Arkansas pays 2.45 percent of its total sales to Intralot. In the minutes to a legislative oversight committee hearing on Aug. 11, 2009, then Lottery Commission Chair Ray Thornton notes that Intralot’s rate is “extremely low and beneficial to Arkansans.” He cited the 2008 La Fleur’s World Lottery Almanac listings of the rates paid by all of Arkansas’s neighbors as higher — aside from the rate Tennessee pays — than Intralot’s bid to the Arkansas Lottery. But apparently Thornton — and the lottery commission and legislative oversight committee — failed to read the fine print. Arkansas Lottery staff doesn’t still have a copy of the 2008 almanac, but Freedom of Information requests and the 2011 edition of the almanac show that Arkansas, by virtue of paying a percentage of total sales, pays far more than its neighbors, which largely pay a percentage of only online draw game sales. For example, last year Louisiana had online sales of $236.38 million and paid Intralot a total of $10.65 million. Meanwhile, Arkansas had online sales of $73.9 million and paid Intralot $11.4 million. That’s the cost difference of 4.5 percent and 15.43 percent of online sales, respectively.
That Louisiana runs one of the most successful lotteries in the country, when its net is considered as a percentage of sales, owes to its success in selling draw games, which cost less to run. The Arkansas Lottery, in its rush to start selling tickets as quickly as possible, didn’t introduce online draw games until six weeks after the lottery began. Sales of online games have since greatly lagged those of instant games, though the lottery did enjoy record sales of draw games in March, following the excitement surrounding the record Mega-Millions jackpot. Woosley thinks that all the first-time players who were inspired to buy Mega-Millions tickets could now easily become regular players, providing a significant boon to sales.
But until 2016, when the contracts with SGI and Intralot expire, the Arkansas Lottery will be laden with high fees that will cost Arkansas students scholarships. Until then, there are questions not likely to be answered. Like, why Arkansas couldn’t negotiate a flat-rate with Intralot as South Carolina did? Or why Arkansas couldn’t structure contingencies into its vendor contracts, where certain sales figures trigger percentage reductions in the cost, as Louisiana did? Or why Arkansas signed seven-year contracts when many states signed much shorter terms?