March 28, 2012 | Posted in Arkansas Lottery | By

A contractual dispute between the Arkansas Lottery and Scientific Games—the corporation that handles the state’s scratch-off tickets—has put the two entities at odds with each other.

It appears that the root problem goes back to lottery management under former director, Ernie Passailaigue. According to the Associated Press, at a Lottery Commission meeting on Tuesday, March 19, Lottery Auditor Michael Hyde “raised questions about the contract’s validity, and estimates an amendment by the former lottery director in 2009 has cost Arkansas more than $7 million.”

KARK-4 reports that when the Lottery Commission approved the contract with Scientific Games in 2009, Passailaigue unilaterally “amended that contract without the approval of the commission and the Legislative Oversight Committee.” That’s why, on Tuesday, the Lottery Commission chose to postpone negotiations and not reaffirm the contract with Scientific Games, “citing the need to review documents provided by both Director Woosley and Hyde.”

Scientific Games offered $2.2 million to the state as a “gesture of goodwill,” and warned that if their contract wasn’t reaffirmed, the corporation might rescind the gift. At this point, there’s no telling how this dispute will end, but an even larger issue has presented itself—the lack of lottery accountability under Passailaigue that continues to plague the agency.

I applaud the Lottery Commission for taking some more time to sort out the details of this contractual issue with Scientific Games. It appears that the commissioners are listening to Lottery Auditor Michael Hyde’s reports, and that’s a positive thing. This is a step in the right direction. However, the lottery itself still needs to be reigned in. The legislature will have a golden opportunity in 2013 to bring the lottery—a state agency allowed to operate far too independently—under tighter legislative oversight and control. It’s time for some checks and balances to be put in place that will hold the lottery accountable to the people of Arkansas.

I’m also concerned about the old and tired line that current lottery management is using to sweep the lottery’s problems under the rug. Lottery Director Bishop Woosley was quoted in the Arkansas Democrat-Gazette as implying that if Scientific Games doesn’t have the impression that the contract is valid, the lottery could suffer. He could very well be correct. Where he goes wrong is with the next line, which echos Passailaigue: “Who do we answer to? The momma’s and daddy’s and students of Arkansas. If I was a student or a mother or father with a child in school, and we lost 84 percent of the lottery’s revenue, I’d be pretty angry. We have to consider that, we have to consider the impact on sales and the ramifications of what you are doing.”

As I’ve said many times before, if the Arkansas Lottery was all about providing scholarships, the lottery would be allocating far more than the measly 21.5% of its revenue to scholarships. Truth is, it’s never been about scholarships. As a matter of fact, the lottery hasn’t met its scholarship payout goals yet, and has even lowered scholarship amounts, despite continuing to reap major profits. A large majority of the profits have not gone to students, but to the lottery and companies like Scientific Games.

And that’s what it’s always been about—making as much money as possible and hiding behind the facade of scholarships. Director Woosley and the Lottery Commission need to understand that everyone has had enough. If the lottery doesn’t change this behavior, the Arkansas Legislature will have even greater incentive to take more control.

Jerry is the founder and president of Family Council. He began Family Council in 1989 after a successful effort to amend the Arkansas Constitution to prevent the use of public funds for abortions. He and his wife reside in Little Rock. They have four sons.