Down to business | Arkansas Blog

Friday, June 12, 2009

Down to business

Posted By on Fri, Jun 12, 2009 at 4:45 PM

The Arkansas Lottery Commission met today and welcomed new lottery director Ernie Passailaigue.  The commission did not take any action today although they did discuss important challenges now facing the commission including promulgating procurement rules and finding suitable office space.  The big attraction at today's meeting, however, was the director's report.  In it, Passailaigue offered his thoughts on how the lottery should be organized, suggesting a vertical organization led by two vice presidents with lottery experience who would be paid around $200,000 per year.  He also defended his salary, which has drawn some criticism, saying that starting a lottery from scratch, and running an existing one, are two completely different things.  Passailaigue said he expects to be selling tickets by early November.      

Get all the details on the jump.

Passailaigue said that he would take a conservative approach to advertising, both financially (advertising only made up 0.9 percent of lottery spending from January of 2002 to March of 2009 in South Carolina), and socially (don't expect to see images of cards and dice on scratch tickets). "We don't want to promise things that aren't there," Passailaigue said. "Hopefully you'll win a prize but chances are you won't." He also said he did not want to annoy Arkansans by over-advertising.

[Ad men take a deep breath. The South Carolina lottery will gross about $1 billion this year, meaning ad expenditures will be in the range of $10 million for the year. Arkansas is about 60 percent the size of South Carolina, but it's not yet known how playing here will match rates elsewhere.]
The new director also talked about how he might staff the organization, given commission approval. Passailaigue said he would recommend hiring two vice presidents (at around $200,000 each), one for gaming and the other for administration, as opposed to hiring approximately eight director positions. He said that by getting two VPs with lottery experience, the lottery could get up and running sooner and future consulting fees could be saved. This is the same model used by the Tennessee lottery. Commissioners were eager to support Passailaigue and defer to his experience, although they did ask for more information including a cost comparison of the two models. 

Passailaigue said his first, second and third priorities as director would be to make sure the requests for proposals (or RFPs) for contracts are issued quickly, including vending contracts.  Many retailers have expressed interest in selling tickets.   A representative from the Bureau of Legislative Research said that 123 owners have submitted applications so far, representing over 500 locations in 55 cities across the state.  One hundred wanna-be-retailers submitted applications this week alone. 

In terms of finding office space, Passailaigue said it might be worth it to procure some type of temporary space for 30 to 60 days, to allow the commission to work while looking for a more permanent location.  Diane Lamberth said the commission was looking at a number of locations and trying to make cost comparisons.  The commission was supposed to take a tour of three locations after today's meeting but decided to postpone the tour due to the weather.  Those locations were the Bank of America building, Union Plaza and the Comcast buildings in downtown Little Rock.  Passailaigue said it was important to find a place well-suited to the lottery's needs including space with broadcast capabilities for when the lottery starts broadcasting the draw each night. 

Passailaigue concluded his presentation by saying that he understood the commission had taken a leap of faith in hiring him, but that he was staking his reputation on this lottery.  "I'm all in," he said.  "Whatever happens we're going to make this thing work.  I'm an Arkansan now." 

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