Lottery-review prospect also tried to snag other study

The consultant that lawmakers are considering hiring without seeking bids to review the Arkansas Lottery asked its commission in August to extend its deadline for submitting a bid to conduct a separate performance audit, lottery records show.

Camelot Global Services "is keenly interested by the opportunity to submit a response to the [Arkansas Lottery Commission]," Adam Barry of the company wrote in an email dated Aug. 13 to the lottery's chief legal counsel, Jean Block.

"To ensure we can submit a proposal that best aligns with the [lottery's] objective [while] providing clear 'optionality' to the lottery around the scope, we would like to request a three-week extension to the submission date," Barry wrote in his email, released by the lottery Wednesday in response to a public records request by the Arkansas Democrat-Gazette.

But Block responded that the commission "may not grant an extension to one respondent" in order "to ensure fairness and equity to all prospective [request for proposal] respondents." All proposals were requested to be submitted to the commission by 10 a.m. Aug. 18, she wrote.

Ultimately, Camelot Global Services of Philadelphia wasn't among the two companies to submit a proposal to the lottery. Those companies were Delehanty Consulting of Wisconsin, which submitted a proposal costing $170,000; and Rhode Island-based Gtech Corp., which submitted a proposal costing $30,000, lottery officials said Wednesday.

In late August, lottery spokesman Patrick Ralston denied the newspaper's request for the names of the companies that submitted proposals to conduct the lottery's audit of its own operations, including whether Camelot submitted a proposal.

"Divulging the details of any proposal during the procurement process might be used by competitors or bidders to gain advantage, so I am denying this request in accordance with [Arkansas Code Annotated] 25-19-105(b)(9) (A)," Ralston said at that time.

Lottery Director Bishop Woosley said Wednesday that he decided to release the information on the companies to the newspaper because "we anticipate that we may get some questions [today about the proposals from the Legislature's lottery oversight committee] and we wanted to make sure we had clearance [from the companies] to provide any information that may be requested of us."

About two weeks after the lottery declined to extend its deadline for Camelot Global Services to submit a proposal for a performance audit, state Sen. Jimmy Hickey, R-Texarkana, told members of the Legislature's lottery oversight committee that he wanted the Legislative Council to hire Camelot for a consulting fee of $149,500, plus reimbursement of travel expenses up to $20,000, without seeking bids from other companies.

The proposed contract, which would be for a legislatively initiated review described as more comprehensive than the lottery's performance audit, would start Friday and end Dec. 31.

Capitol Advisors Group lobbyists Bill Vickery and Mitchell Lowe represent Camelot Global Services.

Hickey said he became aware of Camelot Global Services in mid-July from Vickery. Hickey said it was his understanding that Camelot didn't intend to submit a proposal to the lottery to conduct a performance audit of the lottery.

He said he didn't know that Camelot asked the lottery for an extension of the agency's Aug. 18 deadline to submit a proposal to conduct a performance audit.

Hickey acknowledged that he didn't talk to any other possible consultant about reviewing the lottery's operations prior to recommending that lawmakers hire Camelot Global Services.

There are only a limited number of people "who actually know the [lottery] business," he said, and he wants a consultant that has run a lottery to review the Arkansas Lottery's operations.

Camelot operates the United Kingdom's lottery, Hickey noted.

"They are the best-suited to fulfilling our needs," he said, adding the company has reviewed several other state lotteries.

Vickery said he started talking to Hickey in mid-July about the possibility of Camelot conducting a study of the Arkansas' lottery because of the "desperate straits of the lottery."

The lottery's ticket sale revenues and net proceeds raised for college scholarships have declined during each of the past two fiscal years.

The lottery has been selling tickets since Sept. 28, 2009, and has helped fund scholarships for more than 30,0000 students during the past four school years. State lawmakers have cut the size of the scholarships for new recipients twice during the past few years because lottery proceeds fell short of initial projections and more students than initially projected have received the scholarships.

Vickery said he had suggested a more comprehensive, in-depth study of the lottery than what the lottery commission sought for its performance audit.

"So we decided on a legislative-side [study] rather than competing over on the commission side," he said, adding that the Lottery Commission and Woosley and the Legislature aren't always on the same page.

Ralston, the lottery spokesman, said the lottery's request for proposals to conduct a performance audit of the lottery is very detailed and very extensive, while Camelot's proposed contract with the Legislative Council is written in very broad language.

"There's no real indication of how deep Camelot's study will be, at least not in the proposal handed out at Monday's Legislative Council Executive Committee meeting. We do know it will be fast," he said.

Asked whether he prefers that the Legislature Council not hire Camelot Global Services to study the lottery and instead have the Lottery Commission hire a consultant to conduct a performance audit, Woosley said he doesn't have an opinion about that.

"It's the commission's decision as to whether or not to go forward [with the performance audit], and they were kind of waiting to determine what the legislative oversight committee wanted to do. Either way, we are happy to participate and cooperate in any way," he said.

The commission is to meet next Wednesday.

The commission originally intended the performance audit of the lottery to be completed by this spring, Woosley said.

On April 16, the commission authorized its staff to proceed with deploying electronic-monitor games -- a day after a majority of the Legislature's lottery oversight committee supported a motion by Hickey to oppose such a move. In a special session in July, the Legislature approved a bill by Hickey to ban the lottery from deploying electronic-monitor games until mid-March.

Last month, the commission approved a revised budget that reduces its projection for money raised for scholarships by $3 million to $78.2 million in fiscal 2015 and cut out any references to electronic-monitor games. It also trimmed its ticket revenue projection from $429.3 million to $416.8 million.

The amount raised for scholarships by the lottery peaked in fiscal 2012 at $97.5 million. It dropped to $90.2 million in fiscal 2013 and to $81.4 million in fiscal 2014.

A section on 09/18/2014

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