Leader Blues

Friday, July 03, 2009

EDITORIAL >> Lottery scam will cost us

The most dangerous thing about state-sponsored gambling is that its underlying attitude of ďeasy come, easy goĒ is infectious.

The Arkansas Lottery Commission and its supervising lawmakers proved that again this week when they authorized the state lottery director to hire two friends from South Carolina at a combined salary of $450,000 a year.
Lottery proceeds, they reasoned, are free money and there will be plenty of it, so why not?

Ernie Passailaigue, the director whom Arkansas hired away from the South Carolina lottery last month, advised lawmakers who were hearing complaints from voters and some of the media about the high salaries for lottery officials that they should pay no attention to their constituents. The average Arkansan just does not know enough facts about the lottery to understand why the high salaries are necessary, he said. When people are buying scratch-off and Powerball tickets, all the criticism and suspicion will subside, he assured them. The Legislative Oversight Committee, with only one member voting no, gave Passailaigue authority to hire the two South Carolinians at the pay he suggested, which is far more than the handsome salaries they are getting back in the Palmetto state, and to authorize him to hire a staff of 75.

Passailaigue is probably right that four or five months from now people caught up in the euphoria of striking it rich will not care much about his $324,000 salary and the $225,000 he plans to pay the assistant directors for internal operations and for marketing, who have been doing those jobs for him in South Carolina.

That is why we should consider it now in the unfiltered light of reason. It smells to the heavens.

Let us recapitulate how we got here. After Gov. Beebe signed the lottery enabling legislation this spring and the governor and the presiding lawmakers appointed the nine commissioners to run it, everyone got to talking about speeding the process so that people could be betting as soon as possible. Every day lottery that tickets are not being sold scores of students will be missing out on going to college, they said.

Since Passailaigue, a longtime South Carolina politician, had advised them on writing the lottery law, why not hire him? He had lost out on getting the lottery job in North Carolina in 2006 and he was looking. He said he could hit the ground running and would come for a $100,000 raise. So Arkansas has the third highest paid lottery director in America, behind Tennessee and

Georgia. California, New York, Illinois, Florida? Their lottery chiefs donít come close.

But the new director said if he was going to start the lottery quickly he would need the most knowledgeable people, so he suggested his two top assistants in South Carolina. The Lottery Commission considered them a steal at $225,000 each.

Passailaigue had already hired Arkansas Lottery Commission Chairman Ray Thorntonís former public relations aide for $105,000. So the lottery now has, or soon will have, a staff of four at a payroll of nearly $900,000 plus health and pension benefits, and it has 71 to go.

Are they worth it? We canít say for sure, but running a lottery requires no genius. You donít have to understand the curved space-time continuum or even be able to solve a quadratic equation. Scientific Games Corp., which will get one or both game contracts after the bids are in, will do all the product development and the other hard stuff. Scientific Games and G-Tech Corp. run virtually all the lotteries in America.

Arkansasí top three lottery officials will each earn more than all but six lottery officials in the western hemisphere. All the high salaries are in the South. The big rich states keep it in perspective and put lottery officials in the same pay ranges as other government administrators.

Whoever runs them, lotteries tend to get up and running in four to six months, which is when Passailaigue says he will get it done. North Carolina did it in three months and two days, and they didnít have Ernie Passailaigue.

Thornton, Passailaigue and Rep. Robbie Wills of Conway, the speaker of the House and chief sponsor of the lottery law, all said it was important to get key officials and pay them well so that the state will not be losing millions of dollars a day that could be spent on scholarships.

But what is the rush? Arkansas has tens of millions of dollars in unspent scholarship funds already because the money has gone unclaimed. The legislature lowered the grade-point requirements for getting and keeping scholarships starting this fall, but no one who qualifies for and needs a scholarship will have to stay home during the next year because lottery tickets arenít for sale by Oct. 29.

The commission and the lawmakers also approved Passailaigueís request that Arkansas immediately join Powerball, the big multi-state game with the huge jackpots. States always have to join the big multi-state games, either Powerball or Mega Millions, because the promise of unearthly wealth is what gets people, especially the poor, coming back every payday to invest in kingdom on earth.

That is what people want to bet on, true, but they made it sound like an economic boon to the state. In truth, however much Arkansas people bet on Powerball half of it will be sucked out of the state for national prizes. Arkansas will get to keep half of it, which will be distributed, part for scholarships and the rest to the vendors, administration and the state treasury to help defray the costs of state government.

Economic bonanza? Hardly.