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Travel by Missouri Lottery employees under scrutiny

Missouri LotteryMissouri Lottery: Travel by Missouri Lottery employees under scrutiny
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JEFFERSON CITY, Mo. — Nine Missouri Lottery employees took a state-paid trip to Orlando, Fla., in July 2012 to attend a "professional development" seminar.

It wasn't the only time lottery employees traveled to the Sunshine State. During the last three years, officials have logged a total of 20 trips to central Florida. Other popular destinations included New York, San Diego, Chicago, Washington, Atlanta, Las Vegas, New Orleans and Providence, R.I.

The out-of-state travel — which has cost the lottery $129,881 and a private vendor $21,885 since July 2011 — is drawing attention as the agency faces questions about whether its administrative costs are eating into gambling profits that flow to schools.

The share of lottery revenue going to education has gradually declined, dropping to about 23 percent of sales in the budget year that ended June 30. Calling that the lowest level in at least a decade, Gov. Jay Nixon this summer ordered a review of the lottery's operations. A report may be released as soon as this week.

The controversy is playing out against a high-stakes backdrop: the state Office of Administration is evaluating bids to see which company should get a multimillion-dollar contract to handle lottery draw games such as Powerball.

The governor's review of lottery expenses has slowed the awarding of that contract, so bid details remain under wraps. All that's known is that three companies submitted bids, all employ lobbyists in Jefferson City and the competition is intense.

"Absolutely, we're trying to get the contract," said Richard McIntosh, who lobbies for Intralot Inc., one of the firms hoping to wrest the business from the longtime contractor, GTECH Corp. of Providence, R.I. "We're trying to bring more value to the state."

The lottery had record sales last year of more than $1.1 billion. But the amount it generated for education — $267.3 million — was about $21 million lower than in 2013. That put a spotlight on where the rest of the money goes: prize payouts, vendor fees and administrative costs.

Defending the current practices is lottery executive director May Scheve Reardon, a former state representative from Affton and a former Missouri Democratic Party chairwoman. She has held the $113,924-a-year director's job since 2009.

Reardon told a Missouri House committee last week that the lottery's payment to education wasn't as high as expected because of factors beyond the agency's control. For example, the most profitable game is Powerball, which had fewer large jackpots last year, depressing sales.

Reardon assured legislators that administrative expenses aren't out of line. They equal 4.6 percent of revenue, a level that she called "one of the lowest in the country."

Tennessee is the only surrounding state that spends a lower percentage on administrative costs, according to a chart her staff provided. The Illinois Lottery's administrative cost was pegged at 5.6 percent. The chart was compiled by LaFleur's World Lottery Almanac.

Reardon said Friday that she could not be interviewed about the lottery's travel costs before the governor's review comes out. But in a footnote attached to travel information provided in response to a Sunshine Law request by the Post-Dispatch, the lottery said it is "a specialized industry and training is not offered in-state."

According to an agenda provided by the lottery, the July 2012 professional development sessions for public relations employees in Orlando included a kickoff speech titled: "When is the Best Time of Day/Best Day of Week to Issue News Releases?"

At sessions geared to lottery lawyers and product managers, issues ranged from privatizing lotteries to developing games for social media. Participants also could tour the nearby GTECH printing plant and enjoy "vendor hospitality" events.

The lottery sent 13 employees to similar confabs in San Diego and Providence in July and September of 2013.

Reardon was the lottery's most frequent flier. The lottery says her travel stems from her prominent role in national groups. She serves on the executive committee of the North American Association of State and Provincial Lotteries and is a past officer and a member of the development committee for the Multi-State Lottery Association. She often makes speeches and participates in panels at their conferences.

Her out-of-state travel cost the lottery $24,359 over the last three years. In addition, a lottery contractor paid $5,841 for her travel, covering plane tickets on 15 trips.

The contractor, Scientific Games International Inc. of Alpharetta, Ga., produces Missouri's scratch-off games and is bidding for the contract to handle the draw games. Under its current contract, the firm is required "to pay the reasonable and necessary expenses, including travel and lodging" for lottery employees' educational seminars and trips to observe the printing of tickets.

In all, the company paid $21,885 to cover 54 airline tickets for lottery employees over the last three years.

For example, Scientific Games covered the plane tickets, at $668 a pop, when three of Reardon's employees accompanied her to Washington in June for LaFleur's Lottery Symposium. Topics included crisis management, lottery innovations and consumer targeting.

Lottery Commission Chairman Kevin Roberts of Hillsboro, who was a law school classmate and former law partner of Nixon's, defended the travel tab.

"Frankly, one of the ways you ensure best practices are being employed in your own operation is to compare yourself with other states' programs and the way things are done on the national scale, and the best way to do that is to avail yourself of those opportunities when those organizations meet," he said.

Reardon and other high-ranking lottery employees are supposed to report the privately funded trips when they file their annual personal financial disclosure forms with the Missouri Ethics Commission. But none of them did.

"If out-of-state travel is being paid by a third party on behalf of someone who is required to file the form, yes, that's required to be reported," said James Klahr, executive director of the Missouri Ethics Commission. "Typically we have not spent resources auditing the personal financial disclosure reports. We appreciate you making us aware of this."

St. Louis Post-Dispatch

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10 comments. Last comment 1 month ago by Scratch$.
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LottoMetro's avatar - Lottery-024.jpg
Happyland
United States
Member #146350
September 1, 2013
645 Posts
Offline
Posted: September 2, 2014, 10:09 am - IP Logged

Traveling lottery officials is very common and nice to see an article draw this to attention. I know there are some directors who spend more than half their time giving presentations or attending these 'development' seminars. Makes me wonder why they are director, if they are never at the commission to direct operations? Chair

If the chances of winning the jackpot are so slim, why play when the jackpot is so small? Your chances never change, but the payoff does.

If a crystal ball showed you the future of the rest of your life, and in that future you will never win a jackpot, would you still play?

2013: -35.14% (158 tickets) || 2014: +43.40% (14 tickets)

    Green Onion$'s avatar - Lottery-031.jpg

    United States
    Member #153105
    March 6, 2014
    97 Posts
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    Posted: September 2, 2014, 10:11 am - IP Logged

    TwitchSmells fishy...

    Lep

      Tialuvslotto's avatar - Jailin
      Texas
      United States
      Member #150804
      December 31, 2013
      207 Posts
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      Posted: September 2, 2014, 10:42 am - IP Logged

      This is what government employees do with our money.  Travel will drop off for a while since its in the headlines, but then it will start to creep back up again.

      259,762 lottery tickets had to be sold at a dollar each to fund that travel, money that was no longer available for prizes or funding the education system.

      That said, you can't explain a $21 Million shortfall with $130K of silly travel expenses.  I wonder where the BIG bucks are going?

      If you can track it you can trap it!  Hippy

        noise-gate's avatar - images q=tbn:ANd9GcR91HDs4UJhjxO7cmeMQWZ5lB_FOcMLOGicau4V74R45tDgPWrr
        Bay Area/ California
        United States
        Member #136482
        December 12, 2012
        2062 Posts
        Offline
        Posted: September 2, 2014, 11:28 am - IP Logged

        " One of the Popular destinations Party was 

         

        VEGAS....Baby!

         

        "What happens in Vegas stays in Vegas"..that's their motto. 

          lejardin's avatar - Lottery-014.jpg

          United States
          Member #118613
          November 4, 2011
          337 Posts
          Offline
          Posted: September 2, 2014, 3:00 pm - IP Logged

          This is what government employees do with our money.  Travel will drop off for a while since its in the headlines, but then it will start to creep back up again.

          259,762 lottery tickets had to be sold at a dollar each to fund that travel, money that was no longer available for prizes or funding the education system.

          That said, you can't explain a $21 Million shortfall with $130K of silly travel expenses.  I wonder where the BIG bucks are going?

          That shortfall is exactly what stuck out to me too. 

            Avatar
            Kentucky
            United States
            Member #32652
            February 14, 2006
            5522 Posts
            Offline
            Posted: September 2, 2014, 5:45 pm - IP Logged

            Reardon told a Missouri House committee last week that the lottery's payment to education wasn't as high as expected because of factors beyond the agency's control. For example, the most profitable game is Powerball, which had fewer large jackpots last year, depressing sales.

            Assuming they're talking about the fiscal year 2013 (July to June 2014) there were two huge PB jackpots, both over $400 million. But apparently none of the other jackpots sparked a jackpot frenzy. If the Missouri legislators believe profits can be higher by outsourcing their lottery, they must have missed the memo from the Illinois Lottery.

              sully16's avatar - sharan
              Listens to the wind
              Michigan
              United States
              Member #81740
              October 28, 2009
              19989 Posts
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              Posted: September 5, 2014, 1:02 pm - IP Logged

              Never ends, someone always has to take advantage.

              There's only one US Flag

                Avatar
                frontenac, kansas
                United States
                Member #67724
                December 3, 2008
                117 Posts
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                Posted: September 16, 2014, 11:09 am - IP Logged

                In my opinion I have found the Missouri Lottery probably one of the best run operations of most states.  They seem to have one of the highest payouts on pick 3 and pick 4.  They seem to come up with new games for the public.  I see nothing wrong with attending other events to learn and pick up new ideas or whatever.

                There adminastrative expense were in line.... I think you all look for something to complain about.   The only thing i would like to see Missouri do is go back to the blown balls for the draw instead of the RNG.

                  Scratch$'s avatar - sm lottery.jpg

                  United States
                  Member #158848
                  September 5, 2014
                  145 Posts
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                  Posted: September 16, 2014, 12:12 pm - IP Logged

                  I think they should examine more than just the airline expenses. Take a look at hotel, meal, and other expenses also. Are they staying at 4-star hotels or someplace reasonably priced like Holiday Inn Express? Are they eating at expensive gourmet restaurants or places like Denny's? Is the Lottery picking up the tab for car rentals? Auditors need to be asking a whole bunch of questions.

                  Scratchers ~ Cash 5 ~ Powerball ~ Mega Millions

                    Scratch$'s avatar - sm lottery.jpg

                    United States
                    Member #158848
                    September 5, 2014
                    145 Posts
                    Offline
                    Posted: September 16, 2014, 12:24 pm - IP Logged

                    In my opinion I have found the Missouri Lottery probably one of the best run operations of most states.  They seem to have one of the highest payouts on pick 3 and pick 4.  They seem to come up with new games for the public.  I see nothing wrong with attending other events to learn and pick up new ideas or whatever.

                    There adminastrative expense were in line.... I think you all look for something to complain about.   The only thing i would like to see Missouri do is go back to the blown balls for the draw instead of the RNG.

                    How were you able to determine that it's one of the best run lotteries in the country? You've examined the internal workings, books, expense reports etc. of exactly how many state lotteries?  Big Grin

                    Scratchers ~ Cash 5 ~ Powerball ~ Mega Millions