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Tennessee retailers reluctant to pay lottery prizes in cash

Apr 29, 2004, 7:30 am

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Tennessee Lottery

Rebecca Paul, CEO of the Tennessee Education Lottery Corp., said she is concerned because retailers do not want to pay out lottery prizes in cash.

Retailers do not have to pay cash for prizes over $20, Lottery spokesperson Kym Gerlock said. The Lottery Corp. encourages them to pay prizes in cash but they can also pay by check or money order.

Paul is concerned paying by check or money order will discourage participation in the lottery.

"The statute gave our retailers 6.5 percent base [pay] with no cashing bonuses written into the laws. So we're having trouble getting retailers to pay [cash] prizes," Paul said in testimony to the Senate Finance Committee Tuesday. "Many of our corporate retailers have chosen to pay in checks or money orders as opposed to cash because there is no incentive for them to pay in cash."

Sen. Steve Cohen (D-Memphis), who questioned Paul after her budget presentation to the Senate Finance Committee Tuesday, asked whether Paul would like legislators to look at changing the retailer compensation in the statute.

"I think it's difficult once you've given retailers 6.5 percent to take it away from them. But I do have some concern about retailers not paying cash," Paul said. "The law requires them to pay prizes, but that's a very difficult thing to monitor and control."

She said she had no recommendation to improve the situation.

Cohen also questioned the Lottery Corp.'s revenue estimates for next fiscal year.

Paul said it is difficult to make projections after only three months and a week of sales.

"But we're confident that by the end of this fiscal year we will transfer over $100 million [to the scholarship fund], our projections are $105 million," she said. "And for next fiscal year we're estimating very conservatively $200 million in transfers."

She said the first semester of scholarships would be covered.

Cohen said he was disappointed by the projected figures for next year. Compared to South Carolina, he said, projections should be higher.

"South Carolina did about twice what you're projecting, so what's wrong with our game?" Cohen asked.

Paul said nothing is wrong with Tennessee's lottery games, but the Lottery Corp. did very conservative estimates because it is impossible to predict Powerball.

Comparing Tennessee Lottery's first three months with South Carolina's first three months, Tennessee had a better per capita income, Paul said.

State Comptroller John Morgan said the state's Funding Board felt the lottery estimates are conservative but reasonable.

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