MEMO OUTLINES LOTTERY DECISIONS FOR LAWMAKERS

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Wednesday, December 03, 2008 - 1:06:50 PM

MEMO OUTLINES LOTTERY DECISIONS FOR LAWMAKERS

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Talk Business has obtained a copy of a memo sent to legislators from Speaker of the House-elect Robbie Wills.

The 6-page memo, which you can read at this link, summarizes many of the decisions that Arkansas lawmakers will deal with in establishing the entity to oversee a statewide lottery for college scholarships recently approved by voters.

According to the memo, Wills anticipates lawmakers debating whether or not to put the lottery under the purview of a state agency or to create a public lottery corporation, which many states have done. He expects to prepare a separate document for members related to issues involving the scholarship qualifications and distribution that the lottery would provide.

The current memo outlines the following:

The break-out of how lottery proceeds are spent:

58.7 percent given back to players as prizes
30.7 percent returned to government as profit
6.7 percent paid to lottery retailers (Commission)
3.9 percent for operating expenses (Administration)

There would be four cost centers for lawmakers to establish laws and regulations. They include: retailer commissions, direct costs to support lottery operations, advertising, and payments to vendors.

The Wills memo also lists seven best practices that the Speaker-elect contends will make for a successful lottery. According to the memo, those best practices are:

Flexibility to carefully manage prize payouts – Lotteries that have tried to impose a strict rate of return to the government have seen lottery ticket sales fall, resulting in disappointing funding for the designated programs. Lotteries that have allowed flexibility to increase prize payouts when conditions require have seen increases in lottery ticket sales resulting in greater returns.

Developing a cohesive retail strategy with optimal distribution – Successful lotteries have developed marketing plans that maximize the number of retail sales points to offer convenient access for the public.

Ensuring efficient allocation of advertising dollars – Allowing flexibility for the use of advertising to promote the lottery and the programs provided by the lottery has been essential to the success of state lotteries.

Implementing an ongoing promotions and winner awareness plan - Participants play the lottery to win. Awareness of previous winning participants has shown effective in promoting future participation.

Implementing a comprehensive instant ticket program/management system – Successful lotteries incorporate instant “scratch off” tickets in the overall sales strategy. The games are varied by design, with constant innovation to ensure game novelty. They include many levels of prize payout and purchase prices.

Building and maintaining a positive brand image – The most successful lotteries are those that have been properly structured to maximize public good will and trust. Security, legislative oversight, accountability, dependability, and responsible financial management are all elements of a positive brand image.

Concentrating on growing same store sales with existing retailers – the lottery depends upon retailers – owners of convenience stores, groceries, etc. – to sell the tickets to the public. Accordingly, it is in the best interest of the lottery and the retailers to promote growth in sales over time through advertising, promotions and retailer incentives.

Wills ends the memo by stating that “the conclusions that can be drawn from the research concerning structure indicate that to ensure success, the Arkansas Scholarship Lottery should be set up as an independent entity with the flexibility to operate the lottery as a business, and with flexible guidelines on prize payout, marketing and promotions, vendor contracting and retailer recruitment and retention.”

Certainly, this will be one of the more debated issues in the upcoming legislative session. Click here to read the memo in its entirety.

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