Two men played key roles in establishing Kentucky Lottery

Jan 25, 2005, 12:51 pm (Post a comment)

Kentucky Lottery

Two people played key roles in Kentucky's joining the growing ranks of states with lotteries. One of them was a politician who grabbed the headlines. The other was a storekeeper who worked behind the scenes, but his role in the founding of the now 15-year-old Kentucky Lottery Corp. was an important one.

In the headlines was the late Gov. Wallace Wilkinson, a Lexington-based millionaire textbook salesman who was a native of Liberty. Behind the scenes was J.N. Frankel, a prominent Danville merchant who for decades owned the city's landmark downtown business, the old Hub-Frankel Department Store.

The idea of instituting a lottery as a way to raise additional revenue for the state budget was tossed around by Kentucky political leaders and policy-makers for years. But the idea became a reality in the late 1980s, starting with Wilkinson's Democratic campaign for governor in 1987. He made it a focal point of his winning campaign.

"Proposals for a lottery had come and gone in the past, but the idea really took off when Wilkinson made it a big campaign issue," said 22nd District Sen. Tom Buford, R-Nicholasville, who represents Boyle County. "People felt he was onto something.

"Wilkinson sold the idea as a way for the state, then in severe financial crisis, to receive millions a year in badly-needed additional revenue. At the same time, people would be providing that revenue by buying tickets for a game they hoped would make them millionaires."

Partly on the strength of his pro-lottery stand, Wilkinson went on to an upset win in the Democratic primary and an easy victory in the fall general election. He made good on his campaign promise, as one of his first legislative proposals for the 1988 General Assembly was a constitutional amendment to create a state lottery.

The legislature passed Wilkinson's bill, and the constitutional amendment was placed on the November 1988 ballot. Prior to the vote, those in favor of the lottery followed Wilkinson's lead and touted it as a revenue producer for a cash-strapped state government, while those opposed to it charged that it would lead to an increase in gambling addiction and would be played by a disproportionate number of poor people. Many of the leaders of the opposition were conservative pastors, and they also said the lottery was immoral.

With 60 percent of the 1.2 million voters voting in favor of it, the amendment was approved.

Bu before people could start buying tickets, the General Assembly had to enact legislation establishing the lottery, setting up a corporation for managing it and designating where proceeds given by the corporation to the state would go in the budget. To provide information and guidance to the legislature, Wilkinson established a 15-member commission and named Frankel to it.

Frankel rarely was involved in statewide politics but decided to support Wilkinson during the 1987 campaign because he wanted to see someone with ties to the area win the governorship, which had been almost the sole property of a succession of western Kentuckians. Frankel also liked Wilkinson's proposals for economic development for rural Kentucky, which were linked to major road projects, including one to widen U.S. 127, a major artery in the area.

There also was a sentimental reason.

"Wilkinson told me that, as a child and a young man, he used to love coming to Danville, including the Hub," said Frankel.

Nevertheless, Frankel was incredulous as to why Wilkinson named him to the lottery commission.

"For one thing, I am not a politician and never have been. For another thing, I don't believe in a state lottery. I wasn't for a lottery back when I was appointed. I've never been for a lottery."

Still, Frankel agreed to serve. "We divided up into teams of four or five members and visited those states that had lotteries at the time," he said. "I was in a group that went to Massachusetts, Iowa and Missouri. We talked to the heads of each of those states' lotteries. We tried to find out what those states did and determine what we could do that was different, what we could do that would really help Kentucky."

The full commission wrote its report and included a major provision that Frankel not only liked personally but thought would help the state: All "state dividends," proceeds turned over to the state by the lottery corporation after it had paid winners and retailers and covered administrative costs, would be earmarked for education.

The legislature accepted most of the recommendations but not the one Frankel thought was most important.

"They decided to take the dividends from the corporation and put it into the general fund, not specifically earmark it for education. We wanted all the proceeds to go for education," said Frankel.

"That money really could have helped give a boost to the (Kentucky Education Reform Act), which was enacted a year or so later, in 1990. But it wasn't there. It hasn't been there. That was a major disappointment."

But it wasn't Frankel's first disappointment surrounding the process of developing a lottery. He already was having misgivings about the lottery while serving on the commission.

"Most of the members had the state's interests at heart but some were political and motivated by self-interests," he said. "These members were anxious to get their share of the loot generated by the lottery. They saw their membership on the commission as giving them an inside track for state contracts for machines and ticket printing, things like that.

"At some of the meetings, there was too much whispering and winking going on among these members, and I wasn't - and didn't want to be - party to what they were talking about."

As the commission was wrapping up its work, Frankel resigned, partly out of concern for what he saw as some members wanting to cash in on the lottery. His displeasure grew when the legislature decided against putting all lottery proceeds into education. Overall, the experience left a bad taste in his mouth.

"While I don't know why he put me on the commission, I appreciated the governor's naming me. It was an honor," he said. "But overall I'm unhappy with what happened. A lot of people ended up making money from the lottery from contracts they positioned themselves for, and the state agency that really needed the proceeds didn't get them.

"I don't think the lottery has turned out well, at least as well as it could have. We could have done better."



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