A numbers game

24Jul09

We’re starting to get press calls about the open letter I released yesterday to the new Arkansas lottery director. One reporter asked about the $38.5 million revenue difference we cited in the letter. That’s based on the $100 million estimate that Mr. Passailaigue had often given in public forums (AACF’s original estimate was $61.5 million). But according to this AP story I ran across this morning, the Commission’s number has apparently ratcheted upwards:

“Passailaigue has said the games could raise $125 million annually for scholarships after prizes and administrative costs are paid.”

In that case, AACF’s estimate is now off from the Commission’s by $63.5 million. We don’t know how the Commission arrived at either the $100 or $125 million estimates [Update 7/25: they're from a cocktail napkin]. We do remember that Lt. Governor and lottery champion Bill Halter’s original estimate was $250 million, which he later lowered to $120 million and finally to $100 million.

As I mentioned in the open letter and is further explained in the study we conducted last year, our estimate did not compare Arkansas to other states with VLTs (video lottery terminals), because: 1) lottery proponents explicitly omitted video games from the ballot initiative, and 2) lottery states that allow VLTs generate significantly more revenue than those without them, which skews the national average (and would be an inappropriate comparison to Arkansas). You might want to take a look at what’s happened in West Virginia.

So, if Arkansas is now going to allow video terminals (either now or in the next couple of years), the lottery will probably generate much more than our original estimate. That being said, in other states, ticket sales have tended to peter off over time, so states have had to spend more and more on marketing, prizes, and creating new, more lucrative games to keep up with the original level of revenue (e.g., see Georgia, Texas, Massachusetts, Oklahoma, South Dakota, etc., etc.).

All of this is really beside the point, as revenue estimates are secondary to all of our major concerns, but I still wanted to make the clarification.

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Tags: advocates, Arkansas, education, lottery, research