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Indiana Lottery banking on fairness, cuts

Aug 9, 2005, 9:27 am

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Indiana Lottery

The Hoosier Lottery has run into some rough times lately — whether it is sagging profits or employees leaking the location of a winning ticket.

But the new head of the quasi-governmental agency is focused on running things more efficiently with an emphasis on integrity.

"It is our absolute focus," said Esther Schneider — a 40-year-old native of Las Vegas. "We have a moral obligation to make sure our games are fair."

When she arrived, Schneider said there was a lot of "loosey-goosey" activity, including rules that were ignored.

For instance, Schneider said 20 percent of lottery employees whose jobs included handling money were found to have financial or legal concerns in their background.

One employee with a state car had a drunken-driving conviction. Another returned his state car infested with mice and with three flat tires. A third state employee fondled a woman. And another almost successfully submitted a fake grant.

All still had their jobs under the previous administration — "there was zero accountability for bad behavior" — but have been fired or moved to more appropriate positions since, she said.

In addition to integrity, Schneider has identified a number of efficiencies and savings. The biggest likely came from staff cuts, including a statistician, director of administration, prize payment manager and others for a savings of $500,000.

She added five positions to the security department and has reduced gas costs for her field representatives by making routes more fuel-efficient.

"We also don't buy Post-it Notes anymore," Schneider said. "They are too expensive and we have all these pads of white paper so, there is no point in buying them."

She has several brightly colored Post-it Note pads on her desk, though. She purchased them personally, along with her own chair and computer monitor.

In other areas, she has renegotiated contracts for banking, pensions and liability insurance – saving at least $40,000.

And every time Schneider cuts administrative costs, it means more cash for the state. That's because her job is to return as much money to the state after prizes as possible.

Last year, the lottery returned $199 million to state coffers and this year that amount is expected to drop to about $190 million, she said.

Schneider attributes that loss to low Powerball payouts. She said when the jackpots for the multistate lottery drawing are high, Hoosiers buy tickets and buy Hoosier Lotto tickets. But when Powerball is down they don't buy at all — or they head across state lines to surrounding states with the similar multistate game Mega Millions.

This year, the agency will work to improve the sales of online games such as Hoosier Lotto, Daily 3, Daily 4 or Lucky 5 as opposed to scratch-off tickets, which have a lower profit margin for the agency.

As for the state's longest-running and most popular game — Hoosier Millionaire — the lottery just requested proposals for a redesign of the accompanying TV show.

"We want to make it more exciting to watch and easier to have an opportunity to win," she said.

After just seven months on the job, Schneider seems to have a good grasp on the lottery even though she has never bought a ticket before. She originally sought a job as head of the Indiana Gaming Commission, but Gov. Mitch Daniels tapped her for the lottery instead.

Schneider grew up in Las Vegas — a miniature of the famous welcome sign even sits on her desk — and she has worked in and around the gaming industry her whole life with stints in media relations and marketing as well.

She moved to Indiana to marry her husband and ran Senate Republican campaigns in the most recent election cycle.

One issue that still stumps Schneider is whether the lottery could or should expand to offer other types of gaming, such as the fast-paced Keno or video gaming. That's why she asked Attorney General Steve Carter for legal opinions on what she calls her legal boundaries.

But only one request made news.

Schneider inquired about illegal video gaming devices, which she believes are eating into lottery profits, and whether the lottery has the legal authority to put forward similar gambling opportunities. She acknowledges that many of the lottery's 4,100 retailers have illegal machines — including Cherry Masters — and that retailers would choose the machines over their lottery licenses.

In addition, many bars and taverns have illegal machines, estimated at 20,000 to 25,000 statewide.

But she says the ultimate decision on whether to regulate and tax the machines is not hers.

"I'm going to present my problem and it's up to the legislature and the governor to tell me what to do," Schneider said.

She notes that other states have done so — "It restricts. It reduces. It regulates."

But the Magic 8-ball on Schneider's desk — and her personal opinion — is pretty clear about the future of legalized video gaming in retail or restaurant establishments around the state — "Outlook not so good."

Capital Changes for The Hoosier Lottery

Leader: Esther Schneider

Annual budget: Last year returned $199 million to state coffers after expenses

Major changes: Eliminated a handful of positions saving $500,000; renegotiated key contracts; is redesigning the Hoosier Millionaire show and investigating alternative gaming such as video devices.

Interesting fact: Of each dollar received from lottery sales, 57 cents goes to prizes; 29 cents goes to the state; 10 cents to retailers; 2 cents to salaries and administrative expenses and 2 cents to promotion and advertising.

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