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Tenn. lottery chief outlines goals during Pinnacle forum

Nov 6, 2003, 4:51 am

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Tennessee Lottery

During a Pinnacle Financial Partners forum Nov. 4, Rebecca Paul, CEO of the Tennessee Education Lottery Corp., revealed some of the pressure she has been under to get the lottery up and running by February.

"I've been on the job now a total of 43 days," she said. "It seems like 43 years."

For the next three months, she and her staff expect to be working 16 hours per day, until the first lottery ticket is sold.

Paul said there are three things the lottery must do extraordinarily well. One is to know why it's in business. It's in business to market a consumer product, she said. Competitors are not other lotteries in states such as Georgia, Kentucky and Virginia, which may become partners of Tennessee for certain lottery games, but other consumer products, such as Coca-Cola and Frito-Lay snacks available in convenience stores.

It's also important for the lottery to know who its customer is, which is the retailer. Paul says the lottery must build a good working relationship with its customers in order to be a success with consumers, the retailers' customers.

Finally, the lottery must understand the product it sells and establish integrity in the lottery games so that each consumer realizes they have as much of a chance of winning as anyone else. Initially, four types of lottery games will be launched, with another four within two weeks. Paul will decide what games will be played.

Last week, lottery application packages were sent out to 3,600 retailers. About 1,000 have already been returned. Across the country, 72 percent of lottery tickets are sold in convenience stores.

Paul told Rob McCabe, chairman of Pinnacle Financial Partners, the holding company of Pinnacle National Bank, that she had a lottery application for him. He quickly countered, "I've got an application for you, too."

Paul, who ran the Georgia lottery before coming to Tennessee, says 98 percent of freshmen at the University of Georgia are there on lottery-funded scholarships. She would like to duplicate that same scholarship achievement in Tennessee.

"Our immediate goal is $88 million in profit before July 1," says Paul.

The long-term goal is sustained growth over the next several years. If more money is raised then is needed for scholarships, then prekindergarten and early childhood learning programs can also be funded. Paul says lottery profits will range from $800,000 to $1 million per day, however she has no idea what per capita sales will be in the first year.

Paul could be paid as much as $750,000 per year for heading the lottery, but a lot of that is tied to specific performance goals. Her base salary of $350,000, which has been the target of criticism, is paid through a bank loan. If she meets the performance goals, her salary should be covered in the first four hours of lottery ticket sales, she says.

The two major lottery procurement contracts, for computerized gaming systems and instant tickets, will be awarded on or before Nov. 24. The lottery corporation is also requesting bids on a wide range of goods and services via its Web site at www.tnlottery.gov.

Paul says no money has been budgeted for the new offices in MetroCenter that the lottery staff moved into Nov. 3. She says furniture is among the items that will be bid and approved by the lottery corporation board.

"But we won't hire a decorator," she said with a laugh.

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