Arkansas Lottery Commission Legislative Oversight Committee – July 2, 2009
Posted on July 2nd, 2009
Date & Time: Tuesday, July 02, 2009 at 10:00 AM
Location: Room 151, State Capitol
Agenda: http://tr.im/qCGk
Attachments: none
10:06 am – Today will be the first time that the new Arkansas Lottery Commission Executive Director will be appearing before this committee. There is alot of people and activity in the committee room this morning.
10:11 am – Senator David Johnson has introduced the Chairman of the Arkanasas Lottery Commission, Ray Thornton.
10:12 am – Mr. Thornton says that this is the fasting moving lottery effort ever. Says that we already have RFPs for scratch off items published performed by Ernie Passailaigue, the Arkansas Lottery Commission Legislative Oversight Committee’s Executive Director. Apparently Mr. Passailaigue has been involved in the Arkansas Lottery since even the legislation was being drafted.
10:16 am – Mr. Passailaigue is now speaking. Says that everyday that the lottery is not operating, that is a loss of $250,000 in scholarships lost. Says that the idea of a lottery can expect to take a beating in the media and public opinion until it gets launched.
10:20 am – Mr. Passailaigue says that some in South Carolina compared the lottery to pornography when it was starting up.
10:22 am – Mr. Passailaigue says that he wants to see this lottery to be the best and most ethical lottery in the history of lotteries.
10:23 am – Says that what he is doing is “launching a half billion dollar business” in six months. He says he is attempting to build out an organization with about 90% of the staff to be Arkansans, but that he needs to get experienced people from out of state. Says that the people hired “will look like the people of Arkansas.”
10:27 am – They said that they will even be conducting interviews on the Fourth of July. He said that those being hired will be devoting 6 months of their life with hardcore work with no holidays. The goal date is October 29, 2009.
10:30 am – He wants to bring with him from South Carolina the director of internal operations and also a sales and product development attorney.
10:34 am – Mr. Passailaigue profusely praising legislators and staff. Says he understands the press in Arkansas, they are like those in South Carolina… they only want to print the negative.
10:36 am – Mr. Passailaigue claims to be a fiscally and socially conservative individual who only thinks the lottery “should be played by those with discretionary dollars for the purposes of entertainment.” [I wonder what steps he will take to make sure those ideals are met.]
10:40 am – Mr. Passailaigue says he want to be very careful with the spending by the lottery commission because every $5000 wasted is a lost scholarship. Mr. Passailaigue ‘s presentation is complete.
10:42 am – We are now reviewing the Lottery Commission Operating Budget. The total salary schedule totals to $5,129,043. The Lottery Commission Budget Requests total to $3,000,000. Rep. Lovell is asking for clarification on why those numbers are different. The explaination is that the Budget Request is only for 5 months.
10:45 am – Rep. Pennartz is asking a follow-up question, since the total budget request is for $7,370,600 for only five months then what is the total annualized budget. Mr. Passailaigue said that the administrative costs in South Carolina is about 1.8% of sales, which was about a billion or about $18 million. Rep. Pennartz asked for further clarification and Mr. Passailaigue agreed that the cost of administration would be about $14 million.
10:50 am – Speaker Wills is asking about the lottery pie chart. Mr. Passailaigue says that it will be about 60% will go to prizes, 2% to administration, 2% to gaming contracts, 2% to advertising, which seems that about 34% will remain to scholarships. He is explaining that we don’t want a restriction in the law that requires a certain percent put into prizes because that has caused problems with others.
10:57 am – Speaker Wills is speaking about managing peoples expectations with “4 to 5 percent for adminstration, gaming contracts, and advertising.” Mr. Passailaigue agreed.
11:00 am – Mr. Passailaigue is re-iterating the importance of getting the lottery going quickly. He said you can not worry about the press static and “monday morning quarterbacking” to do the best thing for the lottery. He says, “This is not a vote that you can go back and talk to the average person about because they won’t understand it.”
11:04 am – Speaker Wills is asking follow up questions about cost of “vendor” contracts. I am not sure that Mr. Passailaigue understood what exactly he was asking. I am not sure I do either.
11:05 am – Speaker Wills asked for a timeline. Apparently the first items began on June 19th. There will be a time for questions from bidders, followed by the bidding processes. Next contract evaluation and selections. There will be a banking contract next week and an advertising contract the week after. Mr. Passailaigue is expecting that the point of sale contracts and licenses need to be taken care of as well.
11:10 am – Rep. Lovell is asking about the job requirements on select positions who require experience. He insists that he is going to hire people with experience. Rep. Lovell is asking follow up questions. It seemed that Mr. Passailaigue said that the V.P. Admin/COO position had been rolled into his dutes, but upon questioning about it by Rep. Lovell that is not exactly the plan. The there will still be a V.P. Admin position hired.
11:16 am – Mr. Passailaigue’s responses have become somewhat disjoined and I am not sure what he was trying to say. He has gone back to re-emphasising how necessary it is to hire experienced people.
11:19 am – The ten positions that absolutely require lottery experience are the 1) Advertising and Marketing Director for $130,279 2) Banking and Claims Director for $138,279 3) Executive Director/CEO for $324,000 4) IT Gaming Director for $156,836 5) Product Developer for $76,819 6) Sales Director for $104,080 7) Sales Training Coordinator for $53,109 
Security Deputy for $92,526 9) VP Admin/COO for $225,000 and 10) VP Gaming Operations for $225,000.
11:26 am – Apparently folks got tired of discussing this topic even though a lot of people were asking question because a move for immediate consideration to approve the report and budget as reviewed. This move terminates discussion and prevents legislators from being able to ask questions that others may not be comfortable with.
11:30 am – Mr. Stovall with the Bureau of Legislative Research is currently presenting the Requests for Pool Positions. Senator Key is currently asking about descrepancies between the position requests versus the statute.
11:38 am – Senator Thompson is asking if Mr. Passailaigue has people in mind for the positions marked as requiring experience or if he thought that he could get some of the lower salary positions fill with people with experience. Mr. Passailaigue’s response was again disjoined but seemed to be saying that he would need some flexiblity and that he would be doing the best job he could of getting the positions filled within the salary grades listed.
11:43 am – Senator Key said that there is a several month delay on background checks, and wants to know how the positions will need to be filled in the time frame needed to get the lottery going quickly. Mr. Thornton says that contact has already made arrangements with the State Police but that he could not disclose the plan right now.
11:48 am – Senator Key stated that he is having difficulty supporting the current Request for Pool Positions due to apparent conflicts between requests and statute. Mr. Stovall seemed to agree that the document probably needs to have some additional work but that it is sufficient. Review approval was approved.
11:52 am – COMMENTARY: The “million dollars a day lost for every day the lottery is not operating” is driving this committee and the legislature in general to ignore potential problems and rushing things more than seems to be prudent.
11:54 am – Meeting is adjourned.
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One Response to “Arkansas Lottery Commission Legislative Oversight Committee – July 2, 2009”
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The Statesman Says:
July 5th, 2009 at 2:12 pm“The “million dollars a day lost for every day the lottery is not operating” is driving this committee and the legislature in general to ignore potential problems and rushing things more than seems to be prudent.”
Perhaps they need to be re-assured that the money is not really “lost”, it simply remains in the pockets of those who earned it for them to spend as they see fit. No money is actually “lost” by the delay, it is just not in the government’s hands.
