ALC Lottery Oversight Subcommittee
August 12, 2025
Representative Justin Gonzales All right, members, it’s 3 o’clock. If y’all will find your seats, we’ll get this meeting started. Co-Chairs and Chair sees a 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 of the members could join us here. Senator Hill, you have any comments to make?
Senator Ricky Hill Appreciate everyone being here. Look forward 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 taken so much time to get everything the way it is.
Representative Justin Gonzales 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.
Sharon Strong 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. We 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 Blake Hudson, who is the Director of Investigations and Enforcement and Kaylee Haywood, who’s our chief legal counsel.
Representative Justin Gonzales Okay, thank you for that. And you are dismissed. Thank you for being here. Our first order of business is review of the Learfield subcontracts. We will need a motion to review. Motion and a second. I have a motion. I have a second. All in favor, aye. All opposed. We’ll consider that reviewed. You may begin the presentation.
University of Arkansas Learfield contract
Sharon Strong Do you all have this in your packet? Okay. So this contract 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 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 says Exhibit A, it shows the detail broken out of what all is included. And the cost is $86,800.
Representative Justin Gonzales Do I have any questions from committee members? Representative Hawk, you’re recognized.
Representative RJ Hawk Thank you, Mr. Chair, are you doing these type of things with the other universities in the state. I would imagine it’s not for this amount of money with the smaller universities, correct?
Sharon Strong 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.
Representative RJ Hawk OK, thank you.
Representative Justin Gonzales Representative Ladyman, you’re recognized.
Representative Jack Ladyman Thank you, Mr. Chairman. I’m over here. So it says they’re a 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 they the sole source?
Sharon Strong 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 source justification letter through the OSE.
Representative Jack Ladyman So they provide services other than the lottery to the University of Arkansas? Is that what you’re saying?
Sharon Strong 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 thing.
Representative Jack Ladyman Right, they’re the sponsor. Okay, thank you.
Representative Justin Gonzales Senator Payton you’re recognized.
Representative John Payton Thank you, Mr. Chair. So it’s peaked my interest. What is the relationship between Learfield and the University of Arkansas? I mean, I would assume they’re separate entities.
Sharon Strong That’s the legal entity that owns the university’s– that’s just the legal entity. When we contract with them, they also own some of–
Representative Justin Gonzales So our contract, the lottery’s contract, is with Learfield, not with the University. Is that correct?
Sharon Strong So, yes, I think the contract is with Learfield.
Representative Justin Gonzales I’m seeing your staff back there behind you shaking their head. If they want to come up and answer that if you don’t mind.
Representative John Payton My question would be is Learfield solely owned by the university or what?
Representative Justin Gonzales If you’ll just introduce yourself for the record.
Jerry Fetzer Jerry Fetzer, Chief fiscal officer of Arkansas Scholarship lottery.
Representative John Payton You can answer the question.
Jerry Fetzer 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.
Representative John Payton Well, but your contract is not with the University of Arkansas. It’s with Learfield.
Jerry Fetzer 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. It also has that same arrangement with almost all the other colleges in Arkansas.
Representative John Payton 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?
Jerry Fetzer To the best of my knowledge, they also provide services to other universities outside of Arkansas.
Representative John Payton And do you know if the University of Arkansas or any other Arkansas universities have an ownership interest in Learfield?
Jerry Fetzer I do not know if they have an ownership interest in Learfield.
Representative John Payton Thank you.
Representative Justin Gonzales 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.
2026 Budget
Sharon Strong Thank you, Mr. Chair. 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 budget. It looks like this. So in review of fiscal 25, we closed out fiscal year 25 about a month ago on a strong note, generating approximately $580 million 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 with only one jackpot prize that exceeded $1 billion, demonstrating that our lottery remains sustainable, even without frequent record jackpots. That said, we are optimistic about the potential for larger jackpats 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 two 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, as 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.
Representative John Payton All right, do we have any questions? Senator Hill.
Senator Ricky Hill Going through here and just looking at your funding sources, your online gaming seems to be down. Is there a reason for that?
Sharon Strong So like I said, we only had one jackpot that was over $1 billion in 25. 24 was an exceedingly great year for the lottery because there were five more than billion dollar jackpots. And so that increased revenue.
Senator Ricky Hill That’s just Powerball that’s in that?
Sharon Strong Powerball and Mega Millions, yes. So in 25, we started to see a downward trend. And then in 26, we’ve kept those projections in line with 25.
Senator Ricky Hill Thank you.
Representative Justin Gonzales Any other questions from members? Seeing none, we will move on down the agenda. You’re recognized for your director’s report.
Director’s Report: July
Sharon Strong 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 in child support set-offs and $269,812 in income taxes withheld.
Pulaski County remains our highest revenue generating county at 9.3 million for the month. 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.
Representative Justin Gonzales Representative Collins, you’re recognized.
Representative Andrew Collins Thank you, Mr. Chair. So I notice on the budget, it refers to instant and online and here it refers the instant and draw. Are they just the same, different words, draw and online?
Sharon Strong That’s correct.
Representative Justin Gonzales Senator Petty, you’re recognized.
Senator Jim Petty 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?
Sharon Strong That’s right.
Senator Jim Petty Because it looks, I guess, those instant games are generating far more revenue than the draw games.
Sharon Strong So Arkansas’ instant ticket sales make up about 82%. Our state has one of the largest instant sales of all lotteries.
Senator Jim Petty But earlier you were talking about being off because of the draws being down. And I see that in the July actual versus budget. The draws, even though they’re a smaller percentage, they can have a disproportionate effect on the budget? Or what would the 18% of your revenue being off–
Sharon Strong I think our margin is greater on those.
Senator Jim Petty The margin is greater? Okay, that’s where I was headed. Thank you.
Representative Justin Gonzales Any other questions? Senator Clark, you’re recognized.
Senator Jamie Scott Thank you, Mr. Chair. Just a quick question. How long have y’all been without a chief legal counsel in that position and who’s handling those responsibilities?
Sharon Strong We have a chief legal counsel. She’s just not here today.
Senator Jamie Scott Okay, so this is, when it shows vacant positions, this doesn’t mean those positions are vacant?
Sharon Strong When we submit the budget, we’re required to submit that in April. And so that was submitted in April, but she started, I believe it was late April.
Senator Jamie Scott Understood. Thank you.
Unclaimed prizes
Representative Justin Gonzales Senator Hill, you’re recognized for questions. This is kind of just for an educational point for me. What happens to your unclaimed prizes?
Sharon Strong At the end of the year, they get transferred over into net proceeds. But during the year they stay in a pot for unclaimed prizes. And then after a certain period of time, they move over to the net proceeds.
Senator Ricky Hill Okay, thank you.
Representative Justin Gonzales Are most of your unclaimed off of the instant games or where does most of that revenue come from?
Sharon Strong I’m not sure.
Representative Justin Gonzales I’m seeing the answer is yes. Okay. Senator Hammer, you’re recognized.
Senator Kim Hammer Thank you, Mr. Chair. Good afternoon. On the subject of unclaimed, what is the cause of them being unclaimed? They’re declared to be winners, they’re just not turning in? Or just give me a quick education why it is that they’re unclaimed.
Sharon Strong So maybe they just didn’t check their ticket. They didn’t know that they won. It was inconvenient to come to the claim center to turn in their ticket. They passed away. It could be various reasons.
Senator Kim Hammer But you have no way of tracing to who it is that purchased the ticket to know who it is that’s not claiming, is that correct?
Sharon Strong No, because we don’t sell online or digitally. So it’s sort of an anonymous purchase.
Senator Kim Hammer Got it. All right, thank you.
Representative Justin Gonzales Representative Hawk, you’re recognized.
Representative RJ Hawk Thank you, Mr. Chairman. Quick question, on the retailer fees and other, when we talk about like third party vendors like Jack Pockets and people like that, do they fall under that category of retailer fees? Is that where that goes, I guess?
Sharon Strong So Couriers, Jack Pocket, and the other two that we have, they are licensed as a retailer. And so they have to pay the same fees as any other retailer.
Representative RJ Hawk Gotcha. OK, thank you.
Representative Justin Gonzales All right, seeing no further questions, I think we’re at the end of our agenda. If nobody else has any other business, this meeting is adjourned.
