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Arkansas Scholarship Lottery

The Arkansas Scholarship Lottery is a system of games of chance, implemented to generate revenue to fund the state’s Academic Challenge Scholarship program for qualified high school graduates. The Arkansas Scholarship Lottery was made possible by the 2008 passage of Proposed Constitutional Amendment No. 3, which amended the state constitution to make a statewide lottery program legal. By fall 2016, more than 200,000 students had received an Academic Challenge Scholarship to attend a two-year or four-year institution of higher education in the state of Arkansas.

Although it was not until 2008 that Arkansas voters passed a constitutional amendment to allow the creation of a lottery, the topic had been debated in the state for a number of years. In 1990, for example, a group of state legislators pushed for such an amendment. The movement failed to gain traction, however, due to allegations that many of the signatures on the ballot petition were forged. Over the next eighteen years, lottery programs were implemented throughout the South, a region that had traditionally opposed gambling of any kind.

Starting with Governor Zell Miller’s campaign for the HOPE Lottery Scholarship in Georgia, southern politicians were able to convince voters that a lottery could be beneficial for a state’s economy if the revenue from the program would be used to fund college scholarships. Not only would these lottery scholarships make college more affordable for lower- and middle-income families, they argued, but the scholarships would also provide a financial incentive for high-achieving students to attend an in-state school. By 2006, several southern states had created a lottery program, including two of Arkansas’s border states, Tennessee and Louisiana.

In 2006, Democrat Bill Halter, a former Rhodes Scholar, was running against Republican Jim Holt for lieutenant governor of Arkansas. As part of his campaign, Halter argued in favor of a lottery program that would fund college scholarships, similar to the models already in place in Georgia and Tennessee. After Halter was elected, he continued his advocacy for a lottery scholarship program, creating the Hope for Arkansas campaign with the help of some of his supporters. Halter succeeded in getting a proposed constitutional amendment on the ballot for the 2008 election.

Even though initial polling indicated strong support for a lottery, the Hope for Arkansas campaign did have opponents, including the Arkansas Faith and Ethics Council (AFEC), a faith-based organization known for its staunch opposition to alcohol, pornography, and gambling. AFEC leaders cited research that showed that lottery scholarship programs in other states often served as regressive forms of taxation, with lower-income people buying tickets that would often fund scholarships for the children of middle- and upper-income families. Hope for Arkansas supporters countered with advertisements that focused on potential benefits of a lottery scholarship program, such as making college more affordable and keeping Arkansans who were already buying lottery tickets from purchasing them in other states. Even with opposition from AFEC and other religious organizations, Proposed Constitutional Amendment No. 3 passed with 62.8 percent of the popular vote.

The Arkansas General Assembly then passed Act 606 of 2009, which is often referred to as the Arkansas Scholarship Lottery Act. The General Assembly decreed that all students who have graduated from an Arkansas high school must have at least a 2.5 high-school grade-point average (GPA) or a 19 ACT score to qualify for a lottery scholarship. Initially, qualifying students were given $5,000 a year to attend a four-year college or $2,500 a year to attend a two-year college. In 2011, this amount decreased to $4,500 a year for a four-year college or $2,250 a year for a two-year college.

That same year, the original director of the Arkansas Scholarship Lottery, Ernie Passailaigue, resigned amid controversy. Although Passailaigue had received some praise for implementing the Arkansas Scholarship Lottery quickly, many were critical of Passailaigue’s annual salary of $324,000, which was very high for an Arkansas state employee. Other critics pointed out that a significant lottery vendor received a favorable contract that allowed it to receive a percentage of lottery revenues rather than being paid a fixed price. Passailaigue submitted his resignation in September 2011. William Bishop Woosley became the director of the program in February 2012.

Even with the 2011 cuts, the lottery continued to face revenue shortfalls that threatened the financial viability of the scholarship program. As had been in the case in other southern states, lottery revenues had been unable to keep pace with the increasing demand for the awards. In response to the shortfalls, in 2013, the General Assembly voted to decrease the initial award to $2,000 for all lottery recipients, a policy change that Senator Johnny Key of Mountain Home (Baxter County) first proposed. The new policy dictated that the award would increase $1,000 each year a scholarship recipient continued his/her education, reaching a maximum of $5,000 for a student’s fourth year of college. Even though Halter denounced the proposal, it was ultimately implemented for the 2013–14 academic year. In 2015, this amount was decreased to $1,000 for freshmen.

On February 26, 2015, Governor Asa Hutchinson signed legislation abolishing the nine-member Arkansas Lottery Commission, placing the operation of the lottery under the Arkansas Department of Finance and Administration.

For additional information:
Arkansas Department of Higher Education scholarships page. http://scholarships.adhe.edu/ (accessed March 18, 2015).

Copeland, Kristopher. “‘There Were High Hopes and High Projections’: Examining the Social Construction of Target Populations in the Policy Design of the Arkansas Lottery Legislation.” PhD diss., University of Arkansas, 2013.

Cornwell, C., D. B. Mustard, and D. J. Sridhar. “The Enrollment Effects of Merit-Based Financial Aid: Evidence from Georgia’s HOPE Program.” Journal of Labor Economics 24, no. 4 (2006): 761–786.

DeMillo, Andrew. “Arkansas Lawmakers Approve Lottery Scholarship Changes.” Arkansas Business, February 25, 2013.

Massey, Kyle. “Down to Numbers.” Arkansas Business, January 23–29, 2017, pp. 1, 12–15. Online at http://www.arkansasbusiness.com/article/115195/as-arkansas-lotterys-luster-fades-numbers-signal-challenges (accessed January 23, 2017).

Nelson, Michael. How the South Joined the Gambling Nation: The Politics of State Policy Innovation. Baton Rouge: Louisiana State University Press, 2007.

Pittman, Noah A. “Evaluating the Effects of the Arkansas Scholarship Lottery on College Participation.” PhD diss., University of Arkansas, 2014.

Warren, Charley. “Arkansas Faces Lottery Battle, Other Moral, Ethical Issues.” The Ethics and Religious Liberty Commission of the Southern Baptist Convention. April 2, 2007. http://erlc.com/article/arkansas-faces-lottery-battle-other-moral-ethical-issues (accessed March 18, 2015).

Noah A. Pittman
University of Arkansas, Fayetteville

Last Updated 1/23/2017

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