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Is Rebecca Paul as good as they say?

Tennessee LotteryTennessee Lottery: Is Rebecca Paul as good as they say?

When state lottery commissioners hired Rebecca Paul as the nation's highest-paid lottery director, they justified their decision by saying she was "the best," the "gold standard."

State Sen. Steve Cohen dubbed her "the Michael Jordan" of her field.

But a Tennessean review has found that many of the claims surrounding her are overstated.

For instance, Paul said last month that Georgia lottery sales had grown on average 13% a year during her tenure. Lottery commissioners cited similar increases in explaining her pay package.

The claim has merit. Lottery ticket sales in Georgia climbed from $1.12 billion in 1994 to $2.6 billion last year an increase of about 132%.

But just because ticket sales go up, that does not mean profits follow suit. In Georgia, lottery profits support education and Paul herself has stressed the significant amount of money turned over to education under her stewardship.

Yet, records for the eight years following the first year's boom in sales show lottery payments to education increased by just over 3% a year, on average, when adjusted for population growth.

And during the last four years payments increased even more slowly.

Meanwhile, The Tennessean found that other lotteries have generated higher sales. Other lotteries also have done a better job of producing income for their states. And many lotteries have operated at a lower cost.

To be clear, Paul's achievements have been significant. During her decade in Georgia, that state's lottery generated more than $6 billion for education. For the most part, her bosses and lawmakers have praised her.

She led the nation by one measure used to assess lottery performance: Ticket sales increased faster in Georgia during the last decade than in any other lottery state that did not have video lotteries.

"I think you can look at any jurisdiction in the first 10 years and you won't find many that went from $1.1 to $2.6 billion in 10 years," Paul said.

But Tennesseans who expect to see lottery money for education programs here increasing more than 13% each year are likely to be disappointed, experts say.

"If the goal is to raise as much money as possible in the first two years, you can't expect double digit sustained growth to occur for a decade thereafter," said Ed Stanek, longtime director of the Iowa Lottery, who also founded the multistate Powerball lottery game and is past president of the North American Association of State and Provincial Lotteries and of the International Association of State Lotteries.

"Obviously, that's a false expectation," said Sen. Ron Ramsey, R-Blountville, chairman of the Senate Republican Caucus and a lottery opponent.

In defending Paul's record-breaking pay of up to $752,500 a year about six times more than lottery directors in California, Texas or Florida members of the Tennessee Education Lottery Corp. touted Georgia's double-digit sales growth since 1995.

"I think we've got a real winner here," said Tennessee lottery Chairman Denny Bottorff.

But double-digit growth in ticket sales was not sustained in Georgia. Sales actually declined 5.2% in 2001.

Moreover, ticket sales are just one indicator of a lottery's performance.

The more important measure for students is the amount of money left over after prizes and administrative expenses have been paid. Those are the net proceeds that are then available for scholarships and other education programs.

But proceeds did not rise as fast as ticket sales in Georgia, because lottery officials were paying out a greater share on prizes to entice people to spend more money on tickets.

Proceeds rose about 107% from 1994 to 2003, less than 12% a year.

But that figure also overstates Georgia's achievements because the state's population was exploding. This means there were many more people in Georgia to buy lottery tickets last year than there were in 1994.

To account for such population differences, lottery experts typically report financial results on a per- person basis, or per capita.

The amount of money the Georgia lottery was generating in proceeds when viewed on this per capita basis was growing even more slowly. It grew 68.8% per capita between 1994 and 2003, less than 8% a year.

But that figure, too, can be misleadingly high.

A large share of that 68.8% growth occurred between the first and second year the lottery was in operation. Lotteries often get off to a rousing start and level out later. This happened in Georgia.

And when viewing per capita lottery proceeds since 1995 instead of 1994, they grew a much more modest 25.5% a little over 3% a year.


Rebecca Paul is the new Tennessee Lottery CEO.


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1 comment. Last comment 14 years ago by Lee123.
Page 1 of 1
United States
Member #1528
May 18, 2003
728 Posts
Posted: October 20, 2003, 7:57 am - IP Logged

They better check there pockets.