Jason Tolbert: Skin In The Lottery Game

Last December, an outside consulting group took an in-depth assessment of the Arkansas Scholarship Lottery.

Camelot Global prepared the report  for the Arkansas Lottery Commission Legislative Oversight Committee pointing out many issues with the way the state’s lottery is conducted, particularly the marketing of the games and vendor contracts.

But perhaps the biggest takeaway from the report were observations regarding the structuring of the lottery. One of the consultants explained to me that the problem was no individual had “skin in the game” and was held responsible for the failures or successes of the lottery.

This could change in a major way with a bill signed into law last week, but first let’s look briefly at how we got here.

You have to go back to the 2006 campaign for governor. The ever ambitious Bill Halter was advised by the powers that be that he would be better of running for the state’s number two position rather than attempting to take on the Democratic Party’s pick for Governor, Mike Beebe, in a primary.

He listened and won the office, but quickly found presiding over the State Senate and filling in for Gov. Beebe was not enough to occupy his time or talents. So he turned the office into a full-time promoter of a state lottery. His proposal was not the first lottery issue on the Arkansas ballot, but it was the cleanest – meaning it did not have any casinos or other such endeavors attached to it that would make billions for the sponsor. The gamble paid off and voters went all in approving it in 2008.

The proposal left the details for the creation of the lottery up to the state legislature, with which Halter did not have the best relationship. Then House Speaker Robbie Wills took the bull by the horns making the lottery set up one of his top priorities. The result was the creation of an independent lottery commission with appointments shared equally by the Governor, House Speaker, and Senate President Pro Tempore. The lottery’s grandfather, Halter, was essentially left out in the cold.

Once set up, the new commission kicked off its first year by driving the new car straight into the ditch.  They brought in South Carolina’s former lottery director Ernie Passailaigue who brought in several of his friends with big salaries and focused on a quick-as-possible start up while seeming to ignore long-range planning. While Passailaigue eventually parted ways with Arkansas, his ghost still lives on but no other politician seemed to suffer any negative consequence. As you see, no one had any skin in the game.

Enter Sen. Jimmy Hickey’s Senate Bill 7, which was signed into law last week by Gov. Asa Hutchinson and is now Act 218 of 2015. Under the new law, the Arkansas Lottery Commission is abolished and its powers and duties are transferred to the Office of the Arkansas Lottery within the Management Services Division of the Department of Finance and Administration.

The new law creates a 12-member Arkansas Legislative Oversight Committee made up of 6 House members appointed by the Speaker and 6 Senators appointed by the Senate Pro Temp, but the real operation of the lottery will now be the responsibility of DF&A. As such, the success or failure of the lottery operation will now fall squarely within a department headed by a person appointed by the governor.

For better or worse, by signing this bill into law Gov. Hutchinson now has skin in the game. For the next four or likely eight years, its fate will be tied to him.