The Arkansas Scholarship Lottery’s proposed one-year contract with lottery consultant Camelot Global Services has been approved by a legislative panel, according to the Arkansas Online.
The local news outlet reported that endorsement was given on Wednesday for the $1.5m deal which will see the lottery launch its new draw game ‘Arkansas Lotto’ later this year, with a release date of September previously mooted.
Under the terms of the contract, which would begin on July 1 and expire on June 30, 2023, the Chicago-based firm Camelot will also analyse the game’s performance and provide advice to aid the lottery’s development.
Camelot would be paid base compensation of $500,000 by the lottery in FY2023 under the proposed contract that cleared the Legislative Council’s Lottery Oversight subcommittee on Wednesday, though it must still be approved by the Legislative Council, which meets on Friday.
Under the proposals, Camelot has the potential to receive up to $1m more from the lottery in FY2023 based on a formula under which Camelot would receive 5% of the “total operating income before transfers” to college scholarships that exceed $90m in FY2023.
Camelot also would receive a $500,000 achievement bonus if the combined sales of the Natural State Jackpot and Arkansas Lotto tickets reach $18.2m in FY2023.
The lottery has sold around $8.5m in Natural State Jackpot tickets so far in FY2022, according to the lottery’s Gaming Director Mike Smith.
However, if the launch of the Arkansas Lotto draw game extends beyond the week starting October 3, this target would be reduced by $312,820 per week under the proposed contract.
Addressing the Arkansas Lotto game, lottery Director Eric Hagler declared that more “balance” is required in the lottery’s portfolio, as about 82% of its sales are from scratch-off tickets.
Sales of draw-game tickets have proved to be more profitable than sales of scratch-off tickets as the former’s margin of 45% outperforms the latter’s 12% margin.
“It’s not the perfect time to launch the game,” Hagler conceded, however, acknowledging current economic issues in the state.
The lottery’s ticket sales have suffered a decline over recent months as a rise in fuel prices have hit the pockets of residents.
The lottery recorded revenues of $48.1m in May, a fall of $9.5m year-on-year, while its revenue dropped from $65.5m in April 2021 to $51.8m in April this year.
Nonetheless, Hagler suggests potential lottery players may be more enticed to participate if there is a new game available to them.