LITTLE ROCK UPDATE:
The Arkansas Lottery Commission has voted to reaffirm its contract with a company that provides scratchoff tickets for the agency amid questions about the legality of the agreement.
Two commissioners - George J. Hammons and Bruce Engstrom - voted against the measure, which came up Wednesday after the body heard an internal audit report that recommended the lottery seek outside legal advice on the issue.
The contract has come under question because former agency director Ernie Passailaigue increased the percentage of net sales paid to Scientific Games without consideration by the commission or the Lottery Legislative Oversight Committee. An internal auditor said the change has so far cost the state $7.29 million more than it would have paid out otherwise.
Engstrom said reaffirming might have closed the door on legal action. The lottery commission had not approved the changed contract beforehand, but "now we have," he said.
Bishop Woosley, the lottery's former chief counsel who became its director earlier this year, said it's hard to say whether the lottery lost money because of the changes. He noted the agreement with the changes helped the agency exceed its projections.
"I don't know that I would agree with any of the numbers," Woosley said. "... The fact that we were originally projected to do scholarships of $50 million and we did $94 million last year, I think has a lot to do with the contract terms."
Scientific Games last month offered to credit the lottery $2 million over the life of the contract if the terms were maintained. It noted that it was not admitting any guilt and described the credit as a "gesture of goodwill" to put the "issue behind us for good."
The Arkansas Lottery Commission is to discuss an internal audit that includes a contract that generated an extra $21 million for a company that provides the lottery’s scratch tickets.
The panel is to meet Wednesday afternoon, in part to discuss how Scientific Games got the additional money under former lottery director Ernie Passailaigue.
The contract runs through 2016, and Scientific Games has offered the commission $2.2 million as a goodwill gesture. But the company says the offer won’t stay on the table forever.
Internal auditor Mike Hyde is to give his assessment of the contract to the commission. New lottery director Bishop Woosley disagreed at a meeting last month over the financial implications of the contract.