Top officials in South Carolina said Tuesday savings projections acquired by Tennessee lottery board members regarding a potential partnership with the successful Georgia lottery are likely inaccurate.
They also detailed other concerns they had about partnering with Georgia before they rejected such an alliance.
The Tennessee Education Lottery Corporation (TELC) is poised to make a decision next week on whether to team with Georgias lottery to possibly maximize spending power and curb start up costs and time.
Rebecca Paul, Georgia Lottery Corporation CEO, pitched such a partnership to South Carolinas startup more than 19 months ago but was turned away due to legal considerations and a perceived conflict of interest, say officials of the South Carolina lottery.
Consultant North Highland Company recently told lottery board members here a projected savings of up to $248 million over seven years could be possible through a partnership with Georgia.
However, without a set percentage set aside for vendors its impossible to tell how much could be saved, says John C.B. Smith, chairman of the South Carolina Education Lottery Commission.
The only way to get an accurate [estimate] is to know what vendors will bid for services, said Smith. Without knowing who [are the vendors] from the result of a competitive bid, its really impossible to know how much money youll save.
TELC board chair Denny Bottorff says rates, which would go to vendors as well as Georgia, cant currently be divulged due to ongoing negotiations.
TELC spokesperson Will Pinkston says consultants provided a range of savings under which the board will likely pay a set fee to Georgia each year for seven years.
In effect, Tennessee would benefit from Georgias percentage, which is lower than the industry average, due in part to the success under the game there, said Pinkston. In return Tennessee could pay up to 25 percent a rate yet to be determined of the savings made under Georgias lower rates.
Pinkston says the consultants numbers were based on the industrys going rates of 2 to 4 percent. Tennessee, overall, could benefit from Georgias current rate of 1.28 percent.
Paul told the Tennessee board, when asked, that attempts made by Georgia to join with South Carolina were denied due to restrictions under the law there.
Smith and South Carolina lottery CEO Ernie Passalaigue agree that their startup process ruled out Georgia early on due to requirements under the legislation there to hold an open bidding process and an express restriction to join with other entities.
South Carolinas lottery was up and running in five months. The Tennessee board has predicted, assuming the corporation starts from scratch, the first ticket here could be sold by early March. Paul says she can have Tennessees games up by December.
Passalaigue says, however, that a partnership would have been unlikely anyway because the state had a potential conflict of interest due to South Carolinas border with Georgia. The shared border concerned board members there.
We saw a significant border with Georgia and they would be sharing information, said Passalaigue. Lets say we bordered Tennessee, I would make decisions that would be best for South Carolina not Tennessee.
Smith says the South Carolina board was also concerned about potential fallout in the partnership, which he believes could have caused the suspension of ticket sales for a period.
Youre talking about a deal where if theres an issue you build in a provision to do something in the meantime, said Pinkston of any dispute in a partnership with Georgia.
Several vendors last week were critical of the TELC boards consideration to join Georgia. The four vendors, which wrote the board, say a venture with Georgia would circumvent the bidding process.
Passalaigue says this could mean a lawsuit for Tennessees fledgling game.
This is a litigious business, he said. If you can be sued you will be sued; just count on it.
State Attorney General Paul Summers, at the request of state Sen. David Fowler (R-Signal Mountain), is currently reviewing the legal ramifications of the potential partnership.
Most agree any savings could help to benefit early learning and after school programs as well as K-12 capital outlay projects. Lottery net proceeds are to go first to college scholarships with excess benefiting the other areas eligible to receive funds.