Consultants' report says Arkansas lottery offers too many games, suffers from public mistrust

Arkansas' lottery offers too many games, pays more to its vendors than comparable states and suffers from mistrust from the public dating back to its launch five years ago, a consultant hired to review the games told lawmakers on Friday.

Camelot Global Services, the firm legislators hired to review the lottery and recommend ways to boost its lagging sales, said the lottery can make changes that would increase its annual sales from $76 million to $122 million by 2019.

"The issues facing this lottery go way beyond expenses," Sam DePhillipo, Camelot's executive consultant, told the lottery's legislative oversight committee. "It has to do a lot more with product offering, the mix of games offered, how it's marketed and promoted, how we service our retailers and how we service our players."

Arkansas voters approved a constitutional amendment in 2008 establishing the lottery to fund college scholarships, and the state began selling tickets the following year. The amount of money raised for those scholarships, however, has declined over the past two fiscal years.

The report criticized the lottery for offering too many instant and draw games, a problem the consultants said dated to the lottery's launch.

"The lottery launch was on steroids," said Richard Bateson, Camelot's senior vice president of sales and marketing. "Many, many games were launched at low price points."

The report also said Arkansas' vendor costs were higher than other states with lotteries, such as neighboring Oklahoma and South Carolina. It also said the Arkansas lottery's average prize payout of 67 percent was eight percentage points higher than the national average.

It also called for the lottery to "reboot" its image, saying negative publicity about the lottery has led to mistrust among the public that has hampered sales. The lottery's original director, Ernie Passailaigue, resigned in 2011 after facing criticism over a legislative audit about the games' management and his $324,000 salary. His two top deputies left soon afterward, with one resigning and one being fired.

Bishop Woosley, the lottery's director, said though there were some parts of the report he disagreed with he believed it raised issues he's been trying to address since taking the helm of the lottery in 2012.

"We are continuing to be hindered by the fast rollout of the lottery," Woosley said. "A lot of decisions were made before any of us had any type of say in them, which we're still dealing with."

Sen. Jimmy Hickey, who had proposed the review of the lottery, said the report would help guide the Legislature as it looks at potential changes to make. The report proposed giving the governor the majority of the appointments to the lottery commission, rather than dividing them equally among the governor, House speaker and Senate president.

Hickey, R-Texarkana, also filed legislation Friday that would require a higher grade point average and ACT score for students to receive lottery-funded scholarships before the school year begins. Under Hickey's proposal, students who have at least a 3.25 GPA and 22 on the ACT would receive their scholarship before the start of the school year. Students with at least a 2.5 GPA and an ACT of 19 wouldn't receive the scholarship funds until they successfully complete their freshman year.


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