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Wyoming lottery board sets January 2014 as target start date

Jul 9, 2013, 7:33 am

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Wyoming Lottery

The nine-member Wyoming Lottery Board, meeting on Monday for the first time, set its sights on a January 2014 launch date for its games of chance.

But six months leaves the group little time. Members began quick work on its corporate structure and the framework for equipping retail stores for a lottery in less than six months.

"We will launch when we know we have the right product for Wyoming," said Brian Scott, board chairman and a radio host in Casper. "For some states, it has been four, six or eight months."

The board wasn't allowed to convene until after July 1, so it has a lot of work to do before it can get the Wyoming Lottery Corporation running. The corporation is still without a CEO, lottery vendor and the funds to start the company.

"With the right CEO and the right vendor, we can be up and running in less than six months," said Mike Moser, the executive director of the Wyoming State Liquor Association.

Moser represents the state's retailers who will eventually sell the tickets. There is no set cap on how many machines will be distributed through the state, but Moser expects there to be 400 or 500 machines when the lottery launches. Storeowners will be required to pass and pay for background checks and pay up to $300 for lottery vendors to install machines at their businesses.

The Wyoming lottery is a quasi-government organization. Wyoming is one of nine lottery states not using tax dollars to fund any aspect of its operations. The board is hunting for lenders who can meet the needs of an organization that has yet to acquire collateral and has no guarantor that could be held liable in the unlikely event that the new corporation fails.

Board members have been combing the state for lenders who are willing to take a $3 million to $5 million risk on the Wyoming lottery.

To be in a position without collateral and other financial backers is unusual, but there are several banks in Wyoming willing to offer a loan, said board member and Torrington rancher Ross Newman.

"Most banks were receptive to the idea because you don't see lotteries fail," said board member and Cheyenne attorney Mark Macy. "But the situation is foreign to most lending procedures."

Amid the lingering questions, one thing is certain for board members.

"We will be in debt for a very short period of time," said Scott.

When Tennessee started its lottery, the state was in debt for 10 days, he said.

Before the board can get a loan, it will need to outline a budget to show banks what it intends to do with the capital, Newman said. The board has to provide the governor's office a 2014 budget proposal by Sept. 1, but it will have to move faster in determining its finances to get the lottery off the ground by the end of 2013.

Some of the largest costs factors — choosing a vendor, securing office space and picking the CEO — have yet to be determined.

The board will have a plan to acquire the capital, hire the CEO and choose the real estate property by the end of its meeting Tuesday, Scott said.

The board wants a CEO with lottery industry experience.

Hopeful candidates have contacted the governor's office and lottery trade groups expressing interest. An in-state candidate is unlikely unless he or she has had other experience in gaming in other states.

The biggest factor in securing a top-notch leader of the corporation will be salary, Moser said. He told the board that choosing the CEO is the most important decision it will make.

There had been rumors that the CEO would earn $175,000 per year. Moser said that figure wouldn't attract a pool of high-caliber candidates.

"We don't have the luxury of a learning curve," he said. "Every day, we don't have a lottery it is costing us money."

Moser and board members estimate that the lottery will generate $24 million per year. The first $6 million generated by the lottery will head to the state's general fund and will be distributed to cities, towns and counties. The rest will be used for payouts and operational costs.

"$175,000 is chicken feed for a lottery that is going to make $2 million a month," Moser said. "The salary will end up paying for itself."

The board also needs to secure legal counsel so it can execute contracts for the CEO, real estate and vendors. Like any board in Wyoming, the Wyoming Attorney General's office provides legal counsel on legislative matters but won't go beyond that. The board is preparing requests to send to law firms in the state that may be able to deal with legal matters.

The Wyoming Lottery Corporation and its board is largely based off of the Georgia lottery. The southern state is known as one of the most successful in the nation, and Wyoming has had the luxury of modeling its legislation and the corporate structure of the lottery on the Peach State's model.

"We're not trying to reinvent the wheel," Scott said.

Ever since the board members were announced earlier this month, there's been question as to how much they will earn. They make the same rate as legislators, $150 per day, every time they meet. Board members have been paying out of pocket for traveling and other expenses and will not be repaid until the lottery starts making money.

"Nobody is doing this to get rich," Scott said.

At the meeting, the board also voted in favor of joining the North American Association of State and Provincial lotteries and discussed the very likely possibility of joining multistate lotteries like Powerball and Mega Millions. It also elected its corporate officers; in addition to Scott, the chairman, Barry Simms, former Taco Johns CEO, is vice chairman; Riverton certified public accountant Gerry Marburger is treasurer; and Erin Taylor, executive director of the Wyoming Taxpayers Association, is secretary.

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