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ALC-Lottery Oversight Subcommittee

August 12, 2025 ·3:00 PM ·Room B, MAC ·21:41
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Unknown speaker 0:00
Thank you. Thank you. Thank you. Thank you.
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Gordon Watkins Unverified 2:00
All right, members, it's 3 o'clock. If you all find your seats, we'll get this meeting started. Mr. Co-Chair, Chair sees the quorum, and we're going to begin this meeting. We'll call this meeting to order. I'd like to welcome you all to the first meeting of the ALC Lottery Oversight Subcommittee. I'm glad most members could join us here. Senator Hill, you have any comments to make? Appreciate
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Senator Ricky Hill Unverified 2:57
everyone being here. I look forward to get to understanding the lottery a little bit better than what I do. And I did assure Senator Hickey that we would not mess anything up this year since he's taking so much time to get everything the way it
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Gordon Watkins Unverified 3:09
is. Well, I'm glad he's sitting here to keep us in order. So thank you for being here. We're going to start off by letting Ms. Strong make introductions of the staff of the lotteries. If you don't mind coming up. y'all may begin whenever you're ready
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Chair Unverified 3:38
good afternoon i'm sharon strong executive director of the arkansas scholarship lottery thank you for having us today it's good to see you all i have with me the majority of my executive staff are missing two we have mike smith gaming director brandy ratcliffe treasurer karen reynolds marketing director mark hearn sales director and jerry fetzer cfo and we're missing um blake
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Speaker 11 4:11
hudson who is the director of investigations and enforcement and kaylee haywood who is our chief legal
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Speaker 13 4:17
counsel okay thank you for that and y'all are dismissed thank you thank you for being
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Gordon Watkins Unverified 4:25
here. Our first order of business is review of the Learfield subcontract. We will need a motion to review. Motion and a second. Have a motion. Second. Have a second. All in favor. Aye. All opposed. We'll consider that reviewed. You may begin the presentation. Do you all have this in
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Speaker 11 4:49
your packet okay so this contract is it requires review of the subcommittee because its total cost exceeds the oversight amount and also because it's a sole source contract it is a contract that we procure annually with the University of Arkansas to to advertise what we do as a lottery The University of Arkansas is the largest recipient of all of our scholarships, and under this agreement, the university will allow the Arkansas Scholarship Lottery to promote our business during major sporting events, including football, basketball, and baseball games, through on-field activations, radio interviews, photo opportunities, and social media contests. If you go towards the end of the contract where it
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Chair Unverified 5:48
says Exhibit A, it shows the detail broken out of what all is included, and the cost is $86,800.
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Speaker 18 6:08
I have any questions from committee members? Representative Hawk, you're
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Representative RJ Hawk Unverified 6:15
recognized. Thank you, Mr. Chair. Are you doing these type of things with other universities in the state, or is
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Speaker 21 6:22
this, I mean, I would imagine it's not for this amount of money with the
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Chair Unverified 6:28
smaller universities, correct? We have contracts with UCA, UALR, ASU, UAPB, and the junior colleges as well. They just don't cost as much, and so we don't go through this review process for those. Okay. Thank you. Representative Ladyman, you're recognized. Thank
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Representative Jack Ladyman Unverified 6:47
you, Mr. Chairman. I'm over here. So it says they're sole source for this, and at the bottom it talks about they are the sole source for the University of Arkansas. Is that because they market in other areas? Is that what that means? Or why are
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Chair Unverified 7:08
they the sole source? Because there's only one University of Arkansas, and so that's the way that procurement law requires us to classify this type of contract. So we just have to go through that process where we get a sole
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Representative Jack Ladyman Unverified 7:25
source justification letter through the OSU. So they provide services other than the lottery
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Chair Unverified 7:31
to the University of Arkansas, is that what you're saying? They're not providing services. They're allowing us to advertise. so we're paying the university to allow us to advertise our business it's like a sponsorship type of um contract right
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Representative Jack Ladyman Unverified 7:48
they're they're the sponsor okay thank you
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Speaker 32 7:51
all right senator payton you're recognized thank you mr chair so it's piqued my interest what
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Senator John Payton Unverified 7:58
is the relationship between learfield and university of arkansas i mean i would assume they're
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Chair Unverified 8:06
separate entities that's the legal entity that owns the
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Speaker 11 8:12
university's um um that's that's that's just the legal entity when we when we contract with them right they also our contract the lotteries
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Senator John Payton Unverified 8:21
contract is with learfield not with the university is that correct so I yes I think
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Speaker 17 8:36
the contract is with Learfield I'm seeing your staff back
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Speaker 13 8:43
there behind you shaking her head if they want to come up and answer that
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Senator John Payton Unverified 8:52
if you don't mind. My question would be, is Learfield solely owned by the university or what? If you'll
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Speaker 40 9:00
introduce yourself for the record. Jerry Fetzer, Chief
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Speaker 41 9:08
Fiscal Officer of Arkansas Scholarship lottery you can answer the question Learfield has been contracted by the University of Arkansas as their sole representative for all of their licensing so if we want to contract with the University of Arkansas for our sponsorship promotions we have to go through Learfield
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Senator John Payton Unverified 9:35
well but your contract is not with the University of
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Speaker 41 9:40
Arkansas it's with Learfield It's with Learfield because that's the way anybody who wants to have a relationship with the University of Arkansas and their licensing rights has to go through Learfield. Learfield also has that same arrangement with almost all the other colleges in Arkansas.
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Senator John Payton Unverified 9:57
Well, and I understand. I appreciate that we're not in control of that, and that may be the preferred provider. But does Learfield, you just answered that question kind of for me, They provide services for other universities in Arkansas. What about other universities outside of Arkansas? To
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Speaker 41 10:16
the best of my knowledge, they also provide services to other universities outside of Arkansas. And do you know
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Senator John Payton Unverified 10:24
if the University of Arkansas or any other Arkansas universities have an ownership interest in Learfield? I do
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Speaker 46 10:32
not know if they have an ownership interest in Learfield.
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Gordon Watkins Unverified 10:36
Okay, thank you. Okay, seeing no further questions, we'll consider that that has been reviewed. And we will move on to item D, Arkansas Lottery proposed annual budget. Thank you, Mr. Chair.
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Speaker 11 11:14
So the page that will be of most interest to you all is the one that says DFA Office of the Arkansas Lottery BA0613 at the top. and it is a spreadsheet that compares fiscal year 24, 25, and 26
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Chair Unverified 11:40
budget. It looks like this. So in review of fiscal 25, we closed
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Speaker 11 11:46
out fiscal year 25 about a month ago on a strong note, generating approximately 580 million dollars in revenue and transferring 111 million to the Arkansas Department of Higher Education for scholarships which was the third highest since the lottery's inception. This performance came in a year came in a year with only one jackpot prize that exceeded one billion dollars demonstrating that our lottery remains sustainable even without frequent record jackpots. That said we are optimistic about the potential for larger jackpots in the months ahead, which could provide a welcome boost to revenue. During the 2025 legislative session, the access bill was passed and that increased the lottery's fiscal responsibilities by approximately $22.6 million. We are committed to fulfilling this new obligation responsibly and in a manner that supports the long-term stability of scholarship funding. Our fiscal 26 budget reflects slightly lower revenue projections, which is in line with national trends, particularly in states that do not yet offer sales through digital channels. To counter this, we are working to expand our marketing and advertising presence in several new ways, aimed at increasing engagement and attracting new players. We are also committed to streamlining internal processes and improving operational efficiencies. This year, we were officially accepted into the World Lottery Association. And as part of our membership requirements, we're implementing a Level 2 Responsible Gaming Plan, further reinforcing our commitment to player protection and sustainable growth. So if you look at this chart, you'll be able to see those numbers where we have made our projections, the slight decrease based on fiscal 25 trending. So our budget predicts $463.8 million, and we are budgeting $105.7 million in transfers to ADHE for fiscal 26. I'm happy to answer any questions on this. All right, do we have any questions?
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Senator Ricky Hill Unverified 14:02
Senator Hill. Going through here and just looking at your funding sources, your online gaming seemed to be
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Chair Unverified 14:17
down. Is there a reason for that? So, like I
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Speaker 11 14:23
said, we only had one jackpot that was over $1 billion in 25. 24 was an exceedingly great year for the lottery because they were five billion more than billion dollar jackpots and so that increased revenue it's just powerball then it's called in that powerball and mega millions yes so in 25 we started to see a downward trend and then in 26 that we've kept those projections in line with 25 thank you any other questions
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Gordon Watkins Unverified 14:59
from members seeing none we will move on down the agenda you're recognized for your director
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Speaker 11 15:11
report. So this director's report covers July and for July 2025 our revenue was 1.7% better than what we had budgeted. We fulfilled the largest and earliest transfer request from the Department of Higher Ed at $48 million. We had $6,662 dollars in child support set-offs and two hundred sixty nine thousand eight hundred and twelve in income taxes withheld Pulaski County remains our highest revenue generating County at nine point three million for the month and we had four new instant games that were launched in July including our very popular Jurassic World ticket I'm happy to answer any questions on that
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Representative Andrew Collins Unverified 16:48
representative Collins you recognize thank you mr. chair so I will notice on the budget it refers to instant and online and here it refers to instant and draw are they just the same different words drawn online that's
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Senator Jim Petty Unverified 17:08
correct okay Gotcha. Thank you. Senator Petty, you're recognized. Thank you, Mr. Chair. Over here. So just to piggyback, I thought he was going to ask my question. So I assumed that instant games were those that you scratch off or whatever, and that the draw games were the Mega Millions and our Arkansas jackpot lottery and the Powerball. Is that correct? That's right. Okay. Because it looks, I guess, those instant games are generating far more revenue than the draw games. So
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Speaker 11 17:39
Arkansas instant ticket sales make up about 82%. Our state has one of the largest instant sales of all lotteries. Okay.
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Senator Jim Petty Unverified 17:50
But earlier you were talking about being off because of the draws being down. uh and i see that in the july actual versus budget uh so so the draws even though they're a smaller percentage they they can have a a disproportionate effect on the budget or what what would the 18 18 percent of your revenue being off i don't know i think our margin is greater on those the margins greater okay that's where i was headed thank you Okay any other questions
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Speaker 18 18:31
Senator Clark you're recognized Thank you Mr. Chair
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Senator Jamie Scott Unverified 18:36
Just a quick question How long have y'all been without Chief legal a chief legal counsel In that position and who's handling Those responsibilities We have a chief legal counsel she's just
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Chair Unverified 18:45
not here today Oh okay so this
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Senator Jamie Scott Unverified 18:48
is When it shows vacant positions this doesn't mean those positions are vacant that was when we submit
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Chair Unverified 18:54
the budget we're required to submit that in april and so that was submitted in april
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Speaker 11 18:59
but she started i believe it was late april understood thank you senator hill you recognize
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Senator Ricky Hill Unverified 19:09
for question this is kind of just for an educational point for me what happens to your unclaimed prizes at
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Chair Unverified 19:18
the end of the year they get transferred over into net proceeds but during
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Speaker 11 19:23
this during the year they stay in a pot for unclaimed prizes and then after is it after a certain period of time they move over to the net proceeds okay thank you
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Gordon Watkins Unverified 19:43
are most your unclaimed off of the instant games or where does most of that revenue
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Speaker 12 19:50
come from I'm not sure I'm seeing the answers yes from instant okay
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Chair Unverified 19:56
thank you senator hammer you recognized thank you
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Senator Kim Hammer Unverified 19:58
Mr. Chair good afternoon on the subject of unclaimed what is the cause of them being unclaimed people just I mean they're declared to be winners they're just not turning in or just give me a quick education why it is that
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Speaker 11 20:12
they're unclaimed so maybe they just didn't check their ticket they didn't know that they won they it was inconvenient to come you know to the claim center to to turn in their ticket they passed away could be a you
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Senator Kim Hammer Unverified 20:27
know various reasons but you have no way of tracing to who it is that purchased the ticket to know who it is
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Chair Unverified 20:34
that's not claiming is that correct no because you know we don't sell online so okay or digitally so there's it's sort of an anonymous purchase got it
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Representative RJ Hawk Unverified 20:44
okay all right thank you representative hawk you're recognized thank you mr chairman uh quick question um when on the retailer fees and other when we talk about like third-party vendors like jack pockets and people like that are they are we getting a fee for is that do they fall under that
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Speaker 77 21:02
category of retailer fees is that where that goes i guess so the courier's
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Chair Unverified 21:07
jack pocket and the other two that we have yeah they are licensed as a retailer and
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Speaker 11 21:12
so they have to pay the same fees as any other retailer gotcha okay thank you all right
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Gordon Watkins Unverified 21:24
seeing no further questions i think we're at the end of our agenda nobody else has any other business this meeting is adjourned Thank you.
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Agenda

A. Call to Order

2:38

B. Comment by Co-Chairs

2:40

C. Review of Learfield Sub LLC Contract [Exhibit C]

3:20

D. Arkansas Lottery Proposed FY2026 Annual Budget [Exhibit D]

10:50

E. Arkansas Lottery Director Report [Exhibit E]

15:12

F. Other Business

21:29

G. Adjournment

21:34

Speakers

Gordon Watkins Unverified
10 segments
Senator Ricky Hill Unverified
5 segments
Chair Unverified
18 segments
Speaker 11
21 segments
Speaker 13
2 segments
Speaker 18
2 segments
Representative RJ Hawk Unverified
3 segments
Speaker 21
1 segment
Representative Jack Ladyman Unverified
3 segments
Speaker 32
1 segment
Senator John Payton Unverified
7 segments
Speaker 17
1 segment
Speaker 40
1 segment
Speaker 41
3 segments
Speaker 46
1 segment
Representative Andrew Collins Unverified
2 segments
Senator Jim Petty Unverified
4 segments
Senator Jamie Scott Unverified
2 segments
Speaker 12
1 segment
Senator Kim Hammer Unverified
2 segments
Speaker 77
1 segment