UNEVEN: South Carolina vs. Arkansas — sales vs. contract costs for 2011 (amounts in millions) ONLINE GAMES CONTRACT Total Lottery Sales Revenue
INSTANT TICKET GAMES CONTRACT Instant Ticket Sales Revenue
Vendor Cost $11.4
$698.2
$12.7
$7.9
$387.5
$7.4
includes online games like Cash 3 and Cash 4, along with instant scratch-off tickets). Scientific Games is paid 1.75 percent of instant ticket sales. However, the lottery paid Scientific Games 3.27 percent of instant ticket sales in 2011, a total of $12.7 million. A payment of 1.75 percent would have been $6.8 million. That’s a difference of $5.9 million. We did not get a clear answer from the lottery as to why a higher payment was made. Engstrom says he hasn’t either. Each state handles vendor contracts differently. For example, South Carolina,
where Passailaigue headed the lottery before moving to Arkansas, pays a flat fee to their vendors, not a percentage. As a result, South Carolina’s Lottery pays much less. In 2011, total sales for the Arkansas Lottery reached $464,019,351 million. As a result, payments to Intralot totaled $11,370,557. By comparison, South Carolina had total sales of $1.05 billion and paid only $7,898,208 to their vendor. So South Carolina paid less money to their vendors and had more than twice the sales. In terms of instant tickets, the numbers
don’t look any better. The Arkansas Lottery sold $387,478,608 in instant tickets and paid $12,658,623 for the contract that enabled them to do so. South Carolina again had much higher sales, at $698,258,816, and paid only $7,410,860 for their contract. When you consider South Carolina’s contract costs as a percentage of sales and apply that same percentage to Arkansas’s total sales, Arkansas pays over $16 million more per year than South Carolina. Each Arkansas contract is set for seven years, which comes to a total of more than $112
$1,047.1
$464.0
S.C.
Vendor Cost
Ark.
where the lottery stores data on retailers to the qualifications of the chief financial officer. He recently began looking into a decision that happened before the lottery even started: the decision to award gaming contracts to Intralot and Scientific Games. Under the contracts, which were approved by the Lottery Commission and reviewed by a legislative oversight committee, the lottery pays both companies a dollar amount based on a percentage of ticket sales, not a fixed amount. Intralot is paid 2.45 percent of total lottery ticket sales (that
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