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The Lottery is far too valuable an asset to squander on ill-conceived or shortsighted proposals

in Lottery

The Connecticut Lottery Corp. is a $1.3 billion a year operation generating more than $330 million annually to the general fund, more than both casinos combined. Overall, the Lottery is valued as a $4.5 billion asset. 

State Lottery Must Face Up To Its Problems

The Connecticut Lottery Corp. is a $1.3 billion a year operation generating more than $330 million annually to the general fund, more than both casinos combined. Overall, the Lottery is valued as a $4.5 billion asset. Nonetheless, the Lottery suffers from growing operational stress, relational issues with the legislature and the Department of Consumer Protection, relentless pressure to generate revenue and inadequate levels of organizational investment. These problems need to be addressed.

Last fall, Gov. Dannel P. Malloy appointed me chairman of the Lottery’s board of directors. I accepted the position with no preconceived notions in hopes that a path to a more administratively stable, more credible and financially productive Lottery could be found.

In 2016 and 2017, several embarrassing incidents occurred at the Lottery, resulting in resignations by the board chairman and chief executive officer. Since then, the interim administration has improved agency management and strengthened lottery performance. No doubt, the Lottery has suffered a period of poor management and bad administrative decisions. The current executive staff, though, has stabilized operations and demonstrates competence and effectiveness in managing day-to-day operations.

Twenty years ago, the General Assembly made the Lottery a free-standing business organization with far fewer regulatory constraints than most state agencies. This was to encourage efficiency, independent decision making and to promote a greater degree of administrative agility in a very fast moving and competitive industry. This level of autonomy, however, until recently, has limited both effective Lottery relations with its regulatory control agency, the Department of Consumer Protection, and its responsiveness to legitimate legislative oversight.

Since 2007, the Lottery has been the state’s most reliable revenue source, with revenue increasing from $280 million then to $337 million in 2017. Connecticut is 29th among the states in population, but 19th in terms of lottery revenue and fifth in terms of per capita sales. This is being accomplished at a ridiculously low administrative cost figure of approximately 4 percent, making the Lottery, arguably, the most efficient agency of state government. With normal operational challenges and continuing legislative criticism, however, this record of consistently good performance is often overlooked.

The inescapable conclusion is that, despite some very visible operational difficulties, the Lottery’s basic model has been highly successful and the public’s confidence in the Lottery, as measured by increasing sales, remains strong.

Even so, the Lottery has never undergone a comprehensive organizational analysis. More frequent restructuring is needed to ensure that a competitive business model is maintained and an adequate level of organizational investment is regularly made. The legislature is correct to insist that influences of the former Lottery administration are eliminated and efforts to do so are being led by the board of directors. The regulatory relationship between the Department of Consumer Protection and the Lottery also needs to be reassessed, clarified and strengthened.

Seven months as chairman leads me to conclude that, after 20 years of administrative autonomy, growth and profitability, the Lottery system, and that includes the Department of Consumer Protection’s regulatory role, needs to be examined by independent experts who can identify its strengths and weaknesses and prepare an objective analysis for consideration by the Lottery, the governor and the legislature. We need to step back, hit the reset button, suspend the acrimony and develop a plan that prescribes a level of administrative intervention that can effect meaningful and strategic change in Lottery operations. Toward that objective, the Lottery has authorized a study and the board is working cooperatively with the Department of Consumer Protection to select a consultant and implement that effort.

After decades of doing the same things the same way, its time to review our entire system, correct its deficiencies, build on its strengths, invest in its future and prepare it for the growth opportunities that lie ahead. Without this cooperative effort, it is quite likely that more, not fewer, problems will occur, inefficiencies will increase and revenue to the General Fund will decline. The Lottery is far too valuable an asset to squander on ill-conceived or shortsighted proposals.

Donald DeFronzo lives in New Britain.

http://www.courant.com/opinion/op-ed/hc-op-defronzo-ct-lottery-needs-outside-review-20180329-story.html