Lottery Structure in Arkansas

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Summary of issues to consider before organizing the new Arkansas Scholarship Lottery.

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Lottery Structure in Arkansas

  1. 1. Arkansas Scholarship Lottery
  2. 2. Two primary components to consider for implementation of the Arkansas Scholarship Lottery Act of 2009 <ul><li>Organizational Structure </li></ul><ul><li>- How the lottery is organized? </li></ul><ul><li>- How does it function? </li></ul><ul><li>- How it is governed? </li></ul><ul><li>Scholarship Programs </li></ul><ul><li>How are proceeds generated by the lottery distributed in the form of scholarships? </li></ul>
  3. 3. Lotteries in the United States Overview
  4. 4. OVERVIEW <ul><li>42 states and the District of Columbia operate lotteries </li></ul><ul><li>In 2007, lottery sales topped $52 billion in the United States, </li></ul><ul><li>Lotteries returned more than $31.5 billion in prizes </li></ul><ul><li>State governments generated a profit of more than $17 billion in 2007 </li></ul>
  5. 5. Management considerations for establishing a well-run lottery <ul><li>Cost </li></ul><ul><li>Technology </li></ul><ul><li>Efficiency of operations </li></ul><ul><li>Oversight </li></ul><ul><li>Retailer Satisfaction </li></ul><ul><li>Return on Investment as it relates to stated purpose (scholarships) </li></ul>
  6. 6. How will the lottery operate? <ul><li>TWO OPTIONS </li></ul><ul><li>1. Lotteries operates under the direct auspices of a government agency </li></ul><ul><li>2. Lotteries operates as a state-owned Lottery Corporation </li></ul>
  7. 7. Lotteries Operated by Government Agency <ul><li>organized as government agency or within existing government agency </li></ul><ul><li>required to follow same civil service rules dictating issues such as salary levels, procurement rules and other restrictions that apply to government agencies </li></ul><ul><li>these requirements limit the lottery's ability to start-up quickly and hire and retain the quality personnel required for the business-like operation of the lottery </li></ul>
  8. 8. Lotteries operated by Public Lottery Corporation <ul><li>Recently lotteries have been organized and operated as a state-owned Lottery Corporation </li></ul><ul><li>Lottery is organized, owned, and regulated by the government. The public's lottery is created and operated much like a private business </li></ul><ul><li>Better able to respond to the changing needs of the state’s lottery business </li></ul>
  9. 9. Best Practices: What makes a lottery successful? <ul><li>Flexibility to manage prize payouts </li></ul><ul><li>Cohesive retail strategy with optimal distribution </li></ul><ul><li>Efficient allocation of advertising dollars </li></ul><ul><li>Promotions and winner awareness plan </li></ul><ul><li>Implementing a comprehensive instant ticket program/management system </li></ul><ul><li>Building and maintaining a positive brand image </li></ul><ul><li>Concentrating on growing same store sales with existing retailers </li></ul>
  10. 10. Where does the money go?
  11. 11. Lottery Proceeds <ul><li>58.7 percent given back to players as prizes </li></ul><ul><li>30.7 percent returned to government as profit </li></ul><ul><li>6.7 percent paid to lottery retailers (Commission) </li></ul><ul><li>3.9 percent for operating expenses (Administration) </li></ul>
  12. 13. What are the Lottery’s operating expenses?
  13. 14. FOUR COST CENTERS <ul><li>Retailer Commissions </li></ul><ul><li>Direct Costs to Lottery </li></ul><ul><li>Advertising </li></ul><ul><li>Payments to Vendors </li></ul>
  14. 15. Who sells the lottery tickets? <ul><li>Lotteries license local retail businesses to sell their lottery tickets </li></ul><ul><li>Legislation will determine requirements of licensure for the lottery retailers </li></ul><ul><li>Nationwide, more than 70% of the lottery retailers are comprised of convenience stores and supermarkets </li></ul><ul><li>Shopping patterns have changed as more consumers shop at drug stores, dollar stores, and big box retailers </li></ul><ul><li>As a new lottery, Arkansas has the opportunity to set flexible rules from day one thus attracting these new retail categories </li></ul>
  15. 16. Necessary Components of Lottery Enabling Legislation <ul><li>Organizational model of the lottery (agency or corporation) </li></ul><ul><li>Regulatory and oversight requirements </li></ul><ul><li>Guidelines for the ongoing management of the lottery </li></ul><ul><li>Management of prize payout is the decision that most significantly impacts the profitability of a lottery. </li></ul>
  16. 17. When can Arkansas begin selling lottery tickets? <ul><li>Typically after a state’s lottery enabling legislation is approved, ticket sales have begun in four to seven months. </li></ul><ul><li>Arkansas Scholarship Lottery ticket sales could begin in early 2010 . </li></ul>
  17. 18. Arkansas Scholarship Lottery

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