Tennessee Lottery: Tennessee lottery marks six-month anniversaryThe Tennessee Lottery celebrated its six-month anniversary this week, having raised more than enough money to pay for college scholarships for good students. But the executives who run the lottery are still hearing criticism from legislators that they make too much money and get too many perks.
Sen. Steve Cohen, a Memphis Democrat who was the primary force in the Legislature for creating the games, said the lottery is "doing as well as expected because people have played it and enjoyed it.
"The only bad side is we're paying way too much to our officers and giving them way too much leeway."
Last Thursday, the lottery turned over $123 million to the state's scholarship fund - well ahead of the estimated $88 million needed for the upcoming school year.
The first ticket went on sale Jan. 20, and technical complaints have been rare - an achievement considering more than 4,300 vendors are selling roughly 13 million tickets a week.
Much of the credit has gone to lottery President and CEO Rebecca Paul, whom the lottery board of directors lured away from the Georgia Lottery last fall with a hefty pay and incentive package.
Paul, who started lotteries in Georgia and Florida, was considered the best lottery director in the country. Cohen often referred to her as "the Michael Jordan" of lottery chiefs.
She was given a base salary of $350,000, less than the $500,000 she was making in Georgia. But on top of that, Tennessee offered her incentives of up to $402,000, depending on the success of the games.
Paul started hiring top level executives, several from her staff in Georgia, and paying them $180,000 a year plus moving and living expenses. The salaries became an easy target for critics, and even Gov. Phil Bredesen said he thought the lottery "has enough Georgians."
But lottery board member Jim Hill of Chattanooga defended Paul and her startup team last week in a legislative hearing.
"Clearly her experience and performance outstripped any of the other candidates," Hill said. "What business have you ever started where you wouldn't hire the best candidate in the universe?"
Paul said the startup has been "virtually flawless" from a technical perspective.
"All the political stuff is something I didn't anticipate," she said Tuesday. "It's been very difficult for me to defend what the board agreed to pay me. I think the board did an extremely good job (in the committee hearing) defending the decisions they made."
Board chairman Denny Bottorff repeatedly said the first year of the lottery was unique. Every day that passed without games meant the loss of $800,000 to $1 million in sales. The salary incentives were geared to get the lottery running as quickly as possible, he said, and would be reassessed in the coming months. He estimated Paul's bonuses would go down in coming years.
"There is no clear benchmark against which to compare the compensation and benefits for this enterprise," Bottorff said. Rep. Chris Newton, R-Benton, said the lottery executives earned their salaries.
"The folks that were brought were paid a premium because they're some of the best in the business. That's a good justification. We're way ahead of projections in ticket sales, and I credit a lot of that to the board and their insight in hiring Rebecca Paul," he said.
Newton said the complaints about salaries and benefits were and continue to be a good thing because they let the board and its top management know people are watching. On the other hand, he said, the lottery hasn't played its trump card yet.
"In the big picture here, whenever the first scholarships go out a lot of these issues will die down," he said.
