LITTLE ROCK — The legislative committee that oversees the state lottery heard testimony Friday from consultants who said the lottery needs a new business strategy and an image "reboot."

LITTLE ROCK — The legislative committee that oversees the state lottery heard testimony Friday from consultants who said the lottery needs a new business strategy and an image "reboot."


The oversight committee also heard from the lottery’s director, who said he agreed with some of the consultants’ criticisms but disagreed with others, and from a state senator who is sponsoring a bill to change the way lottery-funded scholarships are awarded.


The Legislative Council hired Camelot Global Services of Philadelphia in September to study the lottery and make recommendations for improving it and turning around a slump in sales. Since the lottery launched in 2009, the Legislature has twice reduced the amounts of lottery-funded college scholarships to keep the program solvent.


Representatives of the consulting firm testified Friday that the lottery has lower per-capita sales than similar lotteries in other states, pays more to vendors than its peers do, has too many games and suffers from a lack of public trust.


The lottery was launched "on steroids," Richard Bateson, senior vice president of sales and marketing for Camelot, told the oversight committee. He said "many, many games" were introduced sooner than they should have been, including a $20 game that would have been better to release when the lottery was at least five years old.


Vendor costs have risen while player participation has dropped, Bateson said. He said 16 percent of players believe the lottery is dishonest, the highest percentage he has seen.


"It’s been the second-worst launch of any recent lottery in the United States," he told the committee.


Only Oklahoma’s lottery has fared worse, Bateson said, noting that only 52 percent of Oklahoma’s lottery tickets sales go to prizes, one of the lowest payout rates in the country, whereas Arkansas’ payout rate is 67 percent, which is higher than most states’ rates.


The consultants recommended that the Lottery Commission, the Legislature and the governor’s office develop a five-year business plan that takes a more strategic approach to the mix of games offered, how the lottery is promoted and how the lottery does business with retailers and vendors.


"It’s important that the commission, the governor’s office and the Legislature are on the same page and that they have a financial plan that goes out for more than a year," said Sam DePhillippo, executive consultant with Camelot.


The consultants said the governor should make a majority of the appointments to the Lottery Commission, which now has equal numbers of members appointed by the governor, the House Speaker and the Senate president pro tem.


They estimated that if their recommendations were followed, the lottery’s annual net proceeds for scholarships could be increased from $76 million to $122 million by 2019.


Ernie Passailaigue, former director of South Carolina’s lottery, ran Arkansas’ lottery until he resigned in September 2011 following audit reports that criticized his management practices. Bishop Woosley, whom the Lottery Commission hired to replace Passailaigue, told the commission Friday he disagreed with some parts of Camelot’s report but also agreed with a number of its points.


"We continue to be hindered by the fast rollout of the lottery," Woosley said. "A lot of decisions were made before any of us had any type of say in them, which we are still dealing with. … We essentially rolled out every game that we could have possibly rolled out in the first 2 1/2 years."


Sen. Jimmy Hickey, R-Texarkana, who proposed hiring Camelot to study the lottery, said he expected the report to inspire legislation in the session that begins next month, though he did not know what that legislation would be.


Hickey filed a bill Friday that would require a student to have at least a 3.25 grade point average and score at least a 22 on the ACT to be eligible to receive a lottery-funded scholarship at the start of the school year. A student who did not meet those requirements but had at least a 2.5 GPA and an ACT score of 19 would not receive the scholarship until after successfully completing the freshman year, as a reimbursement.