Is Georgia too much on their minds?

Sep 3, 2003, 3:54 am (1 comment)

Tennessee Lottery

Tennessee's new lottery board appears to be rushing headlong into a partnership with Georgia, and someone needs to slow the train down so the public can have a better view of where it is headed.

The plunge to do business with Georgia has raised more questions than members of the Tennessee Education Lottery Corp. have answered. The first and foremost is the legality of such a contract.

That question is expected to have an answer from Tennessee Attorney General Paul Summers in a formal legal opinion this week. The seven-member board of TELC has scheduled a vote for Friday on whether to accept the Georgia offer.

There are several reasons the Georgia deal sounds good - and perhaps it is the correct path for Tennessee's new lottery, which was approved in a referendum less than a year ago. But there are several questions hanging like red flags that the board needs to consider and answer.

On the positive side, with the Georgia lottery's assistance, Tennessee could begin its lottery ticket sales by early December instead of March, the likely date if Tennessee launches a lottery of its own. In addition, a consultant hired by the board has estimated that the earlier start and lower fees from piggybacking on Georgia's contracts would bring in from $100.9 million to $248.9 million in additional revenue over the seven years of the contract.

On the other side, the lottery board's decision to go with Georgia is likely to bring lawsuits from vendors who will argue that the board illegally bypassed requirements for competitive bidding. Lawsuits could tie up the start of the lottery, pushing an opening date well into 2004.

The competitive-bidding question is one of the issues Summers is expected to rule on this week. The law creating the lottery stipulates that all contracts for procurement of more than $75,000 worth of goods and services must go through the competitive-bidding process. However, a separate provision declares that the board has the authority to enter into joint ventures with other states.

Teaming up with Georgia also represents relatively new territory for a state lottery system. Three Canadian provinces have joined their lottery programs. Three New England states considered combining but did not follow through on the idea.

There also is a question about the cost of joining the Georgia lottery. Estimates are that Tennessee will pay less than 25 percent of its savings over the seven-year period to Georgia. TELC Chairman Denny Bottorff declined to provide a more specific figure, saying it would be part of the final negotiations.

One reason the lottery won approval last year was the contention that the money of Tennesseans who crossed the border and played the lottery had been going to provide scholarships for college students in Georgia. Some now are questioning whether that will remain the case if the Tennessee lottery is tied to the Georgia program. In other words, will Tennessee's lottery aid Georgia with only residual benefits for Tennessee?

And there is so much of this business being conducted behind closed doors that the public can rightly believe it will know the details only when the TELC gets ready to announce them. This is not a promising beginning for something designed to benefit higher education in the state.

Bottorff claims vendors questioning the proposal to link with Georgia have a bias toward profits, while "we've got a bias toward scholarships for Tennessee children." That is an oversimplification of the problem. We wish the lottery board had a bias toward more openness, such as an acknowledgement of the risks involved.

Bottorff has indicated that Friday's target date for a decision on the Georgia lottery connection might be postponed. At this point, that would be in the best interest of everyone involved, especially for answering some questions from an increasingly skeptical public.

Knoxville News-Sentinel


Littleoldlady's avatarLittleoldlady

As of 9/3/03, 5 p.m.  THE

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