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N.C. lottery commission has full plate, rapid timeline ahead

Sep 26, 2005, 6:54 am

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North Carolina Lottery

Denny Bottorff said he'll never forget Jan. 20, 2004 - the day the Tennessee Lottery sold its first scratch-off tickets.

"It was like when your first child was born," Bottorff said. "You get the same elation and satisfaction."

The first and only chairman of the quasi-governmental corporation that runs the Tennessee Lottery, said North Carolina's new lottery board also will feel the same labor pains his panel felt as new games are delivered to players in North Carolina as soon as possible.

Gov. Mike Easley and legislative leaders last week appointed nine members to the North Carolina State Lottery Commission. At least 35 percent of lottery sales will go toward education initiatives - a projected $420 million next year.

The panel's job will be to lay out how the lottery will operate, including what games and prizes to offer and how game cards and tickets will be distributed. The panel also will approve advertising that meets restrictions in the law.

Led by former Glaxo Inc. chairman Charles Sanders, the board will have to walk a fine line starting games as fast as it can without mistakes that may cost its coffers millions of dollars.

"You don't have the time to be very deliberate about all the decisions that are to be made," Bottorff said. "Start up a lottery that has integrity, and then you go back and alter some of the decisions that had to be made to be able to get started up earlier."

Lottery opponents will be closely monitoring how the commission assembles the games and follows the letter of the law.

"The manner in which they go about making those decisions will dictate a tremendous amount about the manner in which the lottery is operated," said John Rustin with the North Carolina Family Policy Council.

The commission members were appointed by Easley, House Speaker Jim Black and Senate leader Marc Basnight - all Democrats who pushed hard for the lottery's passage this year.

Seven of the nine appointees and their family members have combined to give more than $253,683 in political contributions since 1995, nearly all of them for Democrats, according to campaign finance records reviewed by Democracy North Carolina. At least $70,500 went to Easley's gubernatorial campaign, said Bob Hall, the group's research director.

Two of the appointees made no donations to statewide or legislative candidates since at least 1990, according to data Hall provided The Associated Press.

Hall said the level of campaign contributions raises questions whether political considerations played too great a role in choosing the panel, and in turn will affect the panel's decisions. Choosing an advocate for low-income citizens, for example, could have better served the public interest, he said.

"I don't think it's a good sign that it's so politically connected," Hall said. "I think it would have been better to have a wider range of personalities."

One of the commission's first jobs is to hire a director to run the lottery's day-to-day operations.

The director likely will receive a base salary that will make the person one of the highest paid employees in state government. Add to that incentives for meeting a target launch date and revenue goals and the director's annual salary could easily surpass $500,000.

Tennessee Lottery chief executive Rebecca Paul earned $700,000 in her first year on the job - about half coming from incentives. Paul managed to get the lottery rolling three weeks ahead of schedule.

For every day Tennessee delayed in getting a lottery started, it stood to lose more than $700,000 in education revenues, Bottorff said. In a larger state like North Carolina, the amount is more than $1 million a day.

"You want to set aggressive targets, because time is worth so much money in this case," he said. "You want to set realistic targets ... and create incentives to exceed that target."

Kevin Geddings of Charlotte, the only North Carolina lottery commissioner with lottery experience, said the state shouldn't get too caught up in meeting deadlines if it could lead to errors on that first day and delays at lottery outlets.

"It's so critically important ... those things go very flawlessly and that customers don't have to wait in line," said Geddings, a consultant to South Carolina Gov. Jim Hodges, who helped bring the lottery to that state in 2000.

After a director is chosen, the commission will have to decide which lottery vendor or vendors will receive lucrative lottery contracts for providing the instant tickets and setting up the online, or automated network of terminals at convenience stores where numbers games are played.

The nation's largest lottery contractors - GTECH Corp. and Scientific Games Corp. - both hired lobbyists this year to monitor lottery legislation or support the lottery's creation. Other gambling operations also may bid for the contract.

Scientific Games spokesman Ed Fury in New York declined to comment on the North Carolina lottery, saying the company prefers not to discuss potential pending contracts. GTECH is very interested, depending on the details.

"We've had our eye on North Carolina for a while," said Angela Wiczek with Rhode Island-based GTECH.

In Tennessee, GTECH won the contract for online games estimated to generate corporate revenues up to $130 million over seven years. Scientific Games landed that state's instant ticket contract, valued at $80 million.

Bottorff said the very divisive nature of the lottery - the game was approved in North Carolina by two votes in the House and one vote in the Senate - will bring with it criticism at first.

"Nobody's going to jump up and down and say what a wonderful thing you're doing," he said.

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