N.C. lottery enthusiasts await Shaheen's position on dreaded computerized drawings issue

Chosen amid an ethical scandal involving lottery commissioners, the man picked yesterday as executive director of North Carolina's new lottery wasted no time promising games that will be run honorably, with low-key advertising.

"The key to a successful lottery is the integrity issue," Tom Shaheen told the N.C. Lottery Commission. "But that's a word that is used rather loosely in the lottery industry. "You can only define integrity with actions.... The public has to understand through our actions that we are a lottery with integrity."

Shaheen will be paid a base salary of $235,000 a year as the head of North Carolina's lottery, said Dr. Charles Sanders, the chairman of the lottery commission. He will get a bonus of $50,000 if the lottery starts within four months of the day he begins work in Raleigh. Shaheen was paid $207,000 a year to head New Mexico's lottery. He resigned from that position Tuesday,

"It's not every day that an individual is asked to start a billion-dollar business from scratch," Sanders said. "If he takes five months, he doesn't get any bonus at all. So I think he's properly motivated."

Lottery commissioners interviewed six candidates for the job, including officials from South Carolina, Virginia and Tennessee, at a hotel in Cary last week. Sanders said that experience with starting a lottery is important, and Shaheen has helped do so in Florida, Georgia and Texas.

"The charge is enormous ... so our choice was to go with someone who had this experience," Sanders said.

With investigations under way into how lottery vendor Scientific Games Corp. lobbied for passage of a lottery and gave payments of $24,500 in consulting fees to Kevin Geddings, who was later forced to resign as a lottery commissioner, Shaheen was asked whether those issues gave him pause in applying for the job.

"Absolutely not," he said. "Again, I'm here to raise money, and to bring my skills in sales and marketing to help raise money for education."

Shaheen said he thinks that public attitudes will improve over time.

"We're not going to change this next week," he said. "Once they see how the lottery is up and running, and that it's running honestly and fairly and with integrity, then they'll start to change their mind. Then as the money starts to come in and they see it go to those educational programs that have been designated for it, that's the time. And that's what happened in Georgia."

Shaheen said he helped start "huge" lotteries in Florida, Georgia and Texas, then went to run a smaller lottery in New Mexico, which has sales of about $150 million a year.

"At this point in time, the challenge of another startup and the challenge of getting back to a good-sized lottery is very intriguing," he said.

"This is certainly a lottery that has the potential of doing a billion dollars in sales, but there's a lot of factors that have to fall into place," he said. "Is that reachable? Sure. Will it happen? Well, I hope so. That's what I'm coming here to do."

Although the date he starts work here will depend on when he is released from his contract in New Mexico, Shaheen said that a lottery can get under way here in four months.

The lottery in North Carolina would start with instant "scratch-off" games, followed by computerized or "online" games played at terminals. Eventually, multistate games will be added.

Shaheen is the vice chairman of the Powerball multistate game, but he said he will lose that position with the resignation of his post in New Mexico.

As for the controversy surrounding Scientific Games, Shaheen said that the company is a solid one that has proven that it can run lottery games.

Sanders continued to say he is reluctant to rule out Scientific Games as a bidder for North Carolina's lottery contracts.

"I think it's in North Carolina's best interest to have as many bidders as possible," he said. "They have a good product. What we're interested in is buying good products. We're not interested in buying from people who are under criminal indictment.... Let's see what happens."

Trying to calm one of the fears of lottery opponents, Shaheen said he expects that initial advertising for the lottery will be almost "boring" to some viewers, mainly telling players where they can get tickets.

"We certainly aren't going to be targeting any specific group of people. We aren't going to be inducing anyone to play.... It'll just be clean advertising," he said.

He acknowledged that the point of advertising is to get people to play.

"That's why this is such a tough business - because this is a business where you're marketing a consumer product, and yet you're following (legal) guidelines that no other private company has to follow," he said. "If they like the lottery, and they want to play the lottery, all you really have to do is tell them where the product is."

Also yesterday, the lottery commission decided that it does not have legal authority to prohibit video-poker operators from selling lottery tickets, despite a request from N.C. Senate leader Marc Basnight,

"While we have concerns about that co-existence, we don't feel we have the authority to ban that," said Linda Carlisle, a member from Greensboro who heads the commission's retail committee.

Legislators can decide whether to ban lottery sales at video-poker outlets, she said. Basnight and opponents of video poker call the games addictive, saying that they can bankrupt people.

She did say that the commission has "concern about video poker and how that might tarnish what we're doing with the lottery."

Carlisle said that more than 600 retailers with more than 3,500 locations have already applied to sell lottery tickets. Robert Farris, a board member from Wilson, said that the commission's process for screening retailers might prevent some video-poker operators from selling lottery tickets as well.

"I think there will still be some weeding out," he said.

Thomas H. Shaheen

Experience with four state lotteries, including

• Chief executive of the New Mexico Lottery Authority
• Executive vice president of operations and administration - Georgia Lottery Corp.
• Marketing operations assistant manager - Texas Lottery
• Sales representative - Florida Lottery
• President of the North American Association of State and Provincial Lotteries
• Secretary of the Multi-State Lottery Association