ALC - Lottery Oversight Subcommittee
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- October 5, 2026
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0:00
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Senator Ben Gilmore
Unverified
3:30
all right committee if y'all find your way to your seats chair sees a quorum so
we'll get this meeting started we're gonna we've got a couple of contracts to review we'll need a motion to review these as they as they come up so we'll start with we'll start with item c i guess go uh this is a review of cramford company contract
that's stone strong we'll need do i have a motion to review this got a motion i was told that we have to have a motion to review but i'm yeah let's let's let's
Speaker 10
4:26
yeah let's hear this so you're welcome to present good
Speaker 11
4:34
afternoon I'm Sharon strong executive director of the Arkansas
scholarship lottery and as representative Gonzales stated we have a couple of contracts to review the Arkansas scholarship lottery act requires that any contract that we have over $25,000 be reviewed by this subcommittee. So the first one that we have, which is Exhibit C, is a contract
for advertising and marketing. It is to promote the sale of lottery products and the scholarship beneficiary message.
Contracting services include strategic planning, traditional and digital media placement, creative asset development and production, campaign management, content creation, and social media management. The current contract that we have for those services ends on June 30th of 2026, and so we went out to RFP. The RFP was issued on March 9th of 26, and the award was posted on May 29th.
There were no protests, and so that contract is what you have before you. It is for Cranford Company, and the term is July 1st of 26 to June 30th of 2029. The three-year total will be $19,290,000. There are two optional one-year extensions after the three years, and I'll be happy to answer
any questions on that. all right we have a question for
Senator Ben Gilmore
Unverified
6:12
representative lunchroom you're recognized thank you um i'm over
Representative Robin Lundstrum
Unverified
6:18
here sorry is this an increase or
is this a new contract what is what is so the current contract
ends on june 30th this month so this will be a new contract it's a different agency that will be providing our advertising services the prior was the last yes the prior contract was um for three years it was 20 million one hundred and seventy one thousand six hundred and twenty five dollars for three years and this one
Speaker 20
6:47
is 19 so it's about a million dollars less okay that's that's good to
Senator Jimmy Hickey, Jr
Unverified
6:51
hear all right thank you all right senator hickey you recognize thank you mr. chair uh just just one you said you'd put it out you did rfp how many how many responses did we get back we got five bids okay and were any of those disqualified or anything or did all they were not okay and what percentage of this contract was based on price was it 30
40 50 or do you remember i'm not sure how the formula works um i can probably get that information from osp for you
on that there is a committee um that reviews the technical presentations i was not on that committee um they review that and then they also review the price and there's a formula where they're ranked all of those factors are ranked sure and um this this bit the winning bid was derived from that formula right yeah i think i think that we have it
Senator Jimmy Hickey, Jr
Unverified
7:55
so that if i remember correctly 30 percent
is the lowest it can be for cost and i was just wondering if you all would use that but you can get that to me later so it's if it was yeah it's whatever the osp requires okay it's it's not that it's the minimum it can be is 30 percent so in other words you have to have a factor of 30 percent whenever you're bigger in cost but you all could put in 40 or 50 or even a hundred if you wanted to so that sometimes i just want to know because we get in a habit down here sometime
of always just using the minimum that's required by law which i don't know that we should so okay i understand something over you know other contracts and some you know that if we've been using 30 percent but we think we can increase those so that whenever we're factored in that 40 or 50 or 60 it's just something to be cognizant of so thank you for that
Senator Ben Gilmore
Unverified
8:50
thank you all right representative lundstrom you have another question
Representative Robin Lundstrum
Unverified
8:58
you're organized the clarification this might be for the chair or for you the total projected is 32 million and change
Speaker 31
9:05
could you explain that number to me that reflects the amount of if we exercised the two optional one-year extensions that would
be the total amount for the three years plus the two optional one-year extensions okay so would we go to 6.4 million the next year and the next
Representative Robin Lundstrum
Unverified
9:22
year and the next year no I'm sorry because you said this 19 million was for three years so that comes out to about 6.4 oh yes I see what you're saying yes so if you add additional three years that's
what you're going to get so the contract is for three years and then
Speaker 31
9:45
two two optional years so that's 32 million reflects if it was for five years okay all right thank you
Senator Ben Gilmore
Unverified
9:55
all right seeing no more questions without objection we'll consider this reviewed oh I'm sorry if we need
a motion to review have a motion and in a second all in favor say aye I'll oppose I just have it this will can this item has been reviewed now we'll
move on to the Learfield contract you're recognized present the Learfield okay so the next thing is exhibit D this is a contract with the University of Arkansas Learfield is the company that runs their sponsorship agreements we every year annually we work we partner with the university of arkansas to sponsor and promote the arkansas scholarship lottery through events at the university of
arkansas so we will do you've all probably seen us on tv we will do on-field activations
during football commercial breaks um we'll do like a game day or like a someone will receive the game ball at a basketball game um there'll be a baseball involvement um this the these events allow us to promote
the lottery and the university of arkansas is the entity that um has the most
students that benefit from the arkansas scholarship lottery so we so this we usually do this contract annually and um if you those of you who are on this committee i guess around this time last year will probably remember we had this same contract reviewed last year and the annual amount is 86,800 this year we did it as a three-year agreement so that we could lock in that rate for three years, and so we will have the ability to keep that rate and save as much money for
scholarships as possible. So on your summary schedule that you see there, there's a little bit of a correction that needs to be made. The term reflects July 1 of 2026 to June 30th of 2029, and that's correct so we're doing a three-year agreement and then where it says total is 260,400 that is the total for the three years
each year is 86,800 so the part where it says 1,822,800 that is not correct That number was derived from, I believe, a system, I think it's some sort of like, however this form is generated, the system multiplied the 260,400 times seven years, since state contracts can be seven years, and that's how it got the 1.8 figure.
But this contract is not for seven years. It's only for three years and it's at eighty six
thousand eight hundred each year And there are no extensions Senator Gilmore you're recognized for questions Actually, I've taken
Senator Ben Gilmore
Unverified
13:20
over a seat over here to your left.
Senator Kim Hammer
Unverified
13:24
Sorry. I didn't even look over there. I was looking at
the screen So when I grow up when I grow up, this is who I want to be like but anyway My question for
you is it says on the funding state 100% what's the what's the source of the hundred percent of state funding so as
you know lottery does not receive any state funding or any taxpayer dollars we are self-sustaining and we don't receive any appropriations from any any state entity all of our operations are funded by the revenue that we generate it says state 100 because lottery revenue is viewed as state money because it is allocated to ultimately to scholarships and so really that is just lottery
Senator Kim Hammer
Unverified
14:17
funds that's what that means so in reality it says state but it's the source of it is actually out of the lottery
Representative Les D. Eaves
Unverified
14:30
funds correct that's correct thank you representative eaves you're recognized thank you mr. chairman the the amount you're talking about here that says 1.8 million um i think i
understand what you're saying but is that a number that whoever entered this into the system enters
Speaker 53
14:44
or is it automatically generated i think it's i'm not going to um speculate because i would probably just be making something up but
i think what happened was when they entered in the 260,400 it just times to
that multiply that by seven but really what should have been entered was the 86,800 and then this and then i guess the system would have generated 86,000 times 86,800 times seven but even that number still wouldn't be correct because this is only a three-year contract and there's no extensions so
Representative Les D. Eaves
Unverified
15:25
does it always multiply that number i've never liked how this
all looks to be honest with you anyway and so i think that this is a form that um but is it always multiplying it out
Speaker 44
15:37
by the the seven year period i'm not sure
Senator Ben Gilmore
Unverified
15:42
probably um i'll figure it out so our friends over here could answer that maybe can we get somebody to answer that because i think it was my understanding that most of the time these contracts can be extended out to seven years even though it starts off as a three-year you can do extensions up to seven before it has
to be brought back um i think it's her understanding that this does not have any extensions on it so
that number is is not correct but am i hitting that right would you like to come expand on that okay yeah so that's that's where that number comes from okay thanks senator hickey you're recognized right
Senator Jimmy Hickey, Jr
Unverified
16:20
just not to not to keep beating on this but on the big number this is just a summary sheet of course as far as the contract itself y'all reviewed that to make sure that it didn't implant that number anywhere within it correct that's correct i have
it here in front of me and i can send that to um mr smith if
Senator Ben Gilmore
Unverified
16:44
you need me to nope all right thank you okay seeing no further questions without objection we'll consider this
one reviewed we will move on down to the proposed budget All righty.
So let's see here. so under arkansas code annotated 23-115-206 we are required to submit our annual budget to this body by april 30th of each year and there are a few things that i would like to highlight for the fiscal 27 budget one is that we anticipate approximately one million dollars in reduced cost
to our central gaming system and our scratch ticket printing
you'll remember that we renewed those contracts back in the late latter part of calendar year 2025 and those contracts will take effect in um
august so next month will those contracts will take effect and we are looking at around a million dollars in reduced cost on that. Additionally, the advertising contract
that we just reviewed, as I noted, that'll be about a million dollars in reduced cost as well. So the easiest thing to do, I think, is probably go to this sheet in your packet, which is the budget detail schedule and if you look at the fiscal 26 budget compared to the fiscal 27 budget we have a slight decrease on our instant ticket revenue forecasted and then we have a slight
increase forecasted for our draw ticket revenue.
And then correlating to
that, the prize payouts will either be decreased or increased based on the sales of those two items. On the gaming contracts, the decrease is noted at a 4.85% decrease. Those contracts, as I stated, are effective august of 26 and then we have a 1.28 percent decrease on the new advertising agency
contract and that'll be effective july 1 and then down at the bottom when you see kind of that final number for the uh the net proceeds that'll be transferred to the scholarship account we're projecting 108 million 200 000 for that I'm happy to answer
Speaker 61
20:11
right we have any questions seeing none thank
Senator Ben Gilmore
Unverified
20:16
you for presenting the budget. We will move on down to
Speaker 31
20:38
item F. Okay so item F is our monthly disclosure report and we
send that on the 10th of each month and it reports for the prior month so this will be for May of 26 May
the first slide we compare month over month so last May May of 2025 to May of 2026 our instant games were flat and our draw games were increased by about 12 oh sorry do i need to put it on okay the draw games were increased by 12.6 percent so the total revenue was pretty much flat just a 2.2 percent increase our net proceeds from last may to this may are down 8.2 percent that's primarily due to the way that unclaimed prizes
and the end of game gets calculated but if you look at let's see our next slide we've got may of 2026 actual versus our budget so what we forecasted on instant games we fell short of that by 2.6 percent but the draw games we are up 4.5 percent and then our operating expenses
were very favorable um on the on our operate general administrative and gaming and marketing costs and net proceeds are up by two and a half percent are and that's for may actual versus budget. When you look at year to date last May to year to date this
May 2026, we are up considerably
11 almost 11 and a half percent on draw games. I think that that is primarily due to our powerball success this year and then down at the bottom total net proceeds we are up six and a half six point four percent and then year-to-date actual versus budget we are
23.2 percent ahead of what we had forecasted on draw games
total revenue we are three and a half percent ahead of what we had forecasted you can see
down on the marketing and advertising and the general and administrative we are doing a very good job of controlling those costs we are nine percent on marketing and advertising and 14 percent less than what we had budgeted on that and then total net proceeds we are ahead of what
we had forecasted by nine and a half percent total proceeds
analysis is net proceeds plus unclaimed prizes unclaimed prizes get moved over to the net proceeds account at the end of the fiscal year and so right now we are at seven million eight hundred ninety seven thousand sixty six for the month of May and then this is the trust account so last year at
the end of the fiscal year we had three hundred and forty three million four hundred and eighteen thousand one hundred and thirteen in the trust account this year
we're at 336,804,831. We still have one month to go for this fiscal year, so if we, when we meet again next month, I'm thinking that those numbers will be pretty close. And then unclaimed
prizes, this is the balance right now 9,299,167 at the end of the fiscal year this gets moved over
to net proceeds minus a million dollars for debt set off we had zero for the month of may for the month of may we had 900,000 in federal income taxes and 139,431 in state income taxes that were generated from our price payouts there
Speaker 57
25:17
were no requests from the department of higher education during this month on our retail sales
Pulaski County continues to be the highest Washington County is the second highest and Baxter County is the third highest these are the games that began in the month of May
Speaker 57
25:51
dollar a new five dollar and a new ten dollar and then we have two fast play games that were launched on May 4th and that concludes that I'm happy to answer
Senator Ben Gilmore
Unverified
26:06
or questions on any of that all right we're going to
start with senator hill you recognize over on page eight you mentioned would you kind of just walk the
Chair
Unverified
26:27
committee through what happens to the unclaimed balances on the
prizes yes so throughout the year um it's it stays in this reserve account in case there is um a game with a large payout that we can't make or something like that we have this reserve account
and then at the end of the fiscal year we take everything that's in there minus one million so one million stays in the reserve and then everything else goes to the
Senator Ben Gilmore
Unverified
26:58
scholarship account the trust fund okay thank you so how long does somebody have have
Speaker 53
27:03
to claim the unclaimed prize so each game has an end has an
scratch-off games have um 90 days to claim your prize and draw games are 180 days okay thank you
Speaker 39
27:15
uh representative lunchroom you're recognized just to follow up
Representative Robin Lundstrum
Unverified
27:19
on the same vein you said after the 1 million the 8 million or whatever and change goes back into the
lottery scholarship to manage the scholarship or goes back into scholarships it goes to
Speaker 31
27:32
the scholarship trust account and that is
Speaker 20
27:37
this slide here with that shows you the amount that's in
there right now and then when the division of higher education gets their rosters for the year they'll send us a request saying we need x amount of money depending on how many
students they have enrolled and then we fulfill that request okay all right thank you representative rye
Representative Johnny Rye
Unverified
28:05
you're recognized yes sir thank you mr chairman ma'am help me out just a little bit here once
let's just say the total amount for say a 12-month period if it was a certain amount how much would our portion be for the scholarships and everything left over?
Speaker 53
28:26
I don't know that I understand the question. Our
Representative Johnny Rye
Unverified
28:31
portion of what? The portion of our winnings from the lottery. Let's just say that it had a certain amount of money that it generated. how much money would we have for scholarships and yeah um i don't i don't think
i understand the question so so we generate revenue with the sales of our tickets we pay out the prizes
we pay out um you know our vendors and other operating expenses and
everything left over goes to the trust account, which is this amount here, the $336,804,831. Okay, that's after prizes and
Representative Johnny Rye
Unverified
29:23
everything? Yes. And is all of that used for scholarships? Yes. And how much is that figure right there?
Speaker 31
29:33
It's whatever the Division of Higher Ed asks us for.
Okay. So each year they get their rosters from all the schools throughout the state, and freshmen get $2,000, sophomores get $4,000, juniors get $4,000, seniors get, I'm sorry, $5,000, $2,000, $4,000, $4,000, $2,000, $4,000, $4,000, $4,000. $2,000 freshman year, $4,000 sophomore year, $4,000 junior, $5,000 senior. So once they get all of their rosters and they know how much each student gets, then
they send us a request for that total.
Representative Johnny Rye
Unverified
30:10
But did you not give us a total, and maybe I missed that, of how much is left over after the payoff? How much is that
Speaker 53
30:22
figure? Do you know? I'm not sure I'm understanding the question.
Senator Ben Gilmore
Unverified
30:29
We'll get it later. Okay. Thank you, Mr. Chairman. You're welcome. Senator Petty,
Senator Jim Petty
Unverified
30:35
you're recognized. Thank you, Mr. Chair. Maybe I can help. I can't help by myself being the accountant I am here.
So if you look on page five, I just want you to confirm this for me. Reading this like a financial statement, you had revenue coming in of year-to-date $538 million, and that included the sale of the draw prizes, the sale of the instant games, and then other retailer fees. and then you paid out $312 million in game prizes and $61 million in draw prizes.
And so at the end of the day, after all the revenue is in and all the payouts and the administrative expenses are out, the lottery has netted, before any transfers, $105 million. Yes, on the actual money. On the actual year to date. Yes. Okay, so to Representative Rye's question, in the instant games, there was $425 million in revenue in, and then there was $312 million in paid out to winners, and so that net is added with the net from the draw games, and then from there you pay out contract fees, admin fees, salaries, etc.
and then the net net is 105 million yes okay thank you
thank you for your help senator penny okay
Senator Ben Gilmore
Unverified
32:12
seeing no further questions thank you for that presentation i think uh senator hill has something else he would like to say before
we end this meeting it's strong i just want to say a good job to you and your staff uh for the advertisement marketing promotion of the uh 1.8 billion dollar winner in capital the day with
murphy's oil y'all did a great job with that and i think it brought some uh enthusiasm to the area so i want to tell you and your staff y'all did a heck
of a job thank you sir we appreciate that it's been
Senator Ben Gilmore
Unverified
32:45
a good year for the lottery all right thank you for that senator hill seeing no other business
Speaker 6
32:49
nobody has any other questions we are adjourned Thank you.
Agenda
A. Call to Order
B. Comment by Co-Chairs
C. Review of Cranford Company Contract [Exhibit C] - Ms. Sharon Strong, Director, Department of Finance and Administration (DFA), Office of Arkansas Lottery (OAL)
D. Review of Learfield Inc. Contract [Exhibit D] - Ms. Sharon Strong, Director, DFA, OAL
E. Arkansas Lottery Proposed FY2027 Annual Budget [Exhibit E] - Ms. Sharon Strong, Director, DFA, OAL
F. Arkansas Lottery Director Report [Exhibit F] - Ms. Sharon Strong, Director, DFA, OAL
G. Other Business
H. Adjournment
Documents
No documents posted.
Speakers
Senator Ben Gilmore
Unverified
Speaker 10
Speaker 11
Senator Ricky Hill Chair
Unverified
Representative Robin Lundstrum
Unverified
Speaker 20
Senator Jimmy Hickey, Jr
Unverified
Speaker 31
Senator Kim Hammer
Unverified
Representative Les D. Eaves
Unverified
Speaker 53
Speaker 57
Speaker 44
Speaker 61
Chair
Unverified
Speaker 39
Representative Johnny Rye
Unverified
Senator Jim Petty
Unverified
Speaker 6