in Houston, Texas

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The lottery commission did, however, vote 3-0 at its Nov. 17 meeting in Austin to revive the executive director issue by seeking to offer more pay. Williamson and Kuempel insist the current salary did not, in and of itself, deter qualified candidates. In its letter to the Legislative Budget Board, the commission asked that the annual salary be set higher to compete with the salaries of the heads of lotteries in neighboring states, board spokesman John Barton said.

The increase would do just that. However, a canvass of lotteries in the region and lotteries of comparable annual revenues and population done by Texas Watchdog shows the notion of a competitive salary to depend upon a more complicated set of factors.

Based on annual revenues alone, the Texas Lottery ranks behind only New York, Florida and Massachusetts in states that sponsor lotteries. However, Texas currently sets its annual salary for executive director higher than the current directors in Florida and Massachusetts. A pay increase would put Texas' lottery director well ahead of the director in New York, who currently makes $164,400 a year.

Lottery directors getting big bonuses

And then there is a trend among several states to offer big salaries plus performance bonuses to executive directors who are treated more like the chief executive officers of corporations.

Tennessee pays its lottery director $436,144 a year and last year added about $65,000 in bonuses. Georgia's director's pay is $286,000, but she also made bonuses totaling $150,000.

Not surprisingly, these directors run two of the highest-powered lotteries in the country. Georgia's lottery in 2008 generated slightly less revenue - $3.5 billion - than the Texas lottery that year in a state with about 14 million fewer people. Per capita annual spending on the lottery is $353.89 in Georgia and $149.19 in Texas.

When it was ready to launch its new lottery this summer, the state of Arkansas lured Ernie Passailaigue away from another of the high-powered small state lotteries, in South Carolina, at a bitterly controversial $324,000 annual salary. Passailaigue also managed to win approval to hire his two top assistants in South Carolina for $225,000 a year each. Since selling the first lottery ticket on Sept. 28 Passailaigue has twice had to revise his revenue projections upward and is expecting the Arkansas lottery to take in $500 million in its inaugural year.

Arkansas lottery spokeswoman Julie Baldridge, who was Bill Clinton's press secretary when he was governor of Arkansas, said she was surprised both by the longstanding vacancy at the head of the Texas lottery and a salary she said did not seem commensurate with the lottery's size. Although it was the subject of fiery debate, Baldridge said a majority in the Arkansas legislature voted in the belief that an executive with proven lottery success would produce a better performing lottery.

"It was the judgment of the legislature that we wanted to be number one in the lottery business and that if we wanted to make a lot of money we better make sure the money was there to get the top person," Baldridge said. "We have assembled a highly business-oriented staff that knows what they're doing and how to do it."

How the Texas Lottery Commission goes about filling its executive director vacancy will be entirely up to the commission, Kuempel said. "We haven't told them anything that we want from the committee," he said. "They'll come back to us when they're ready. I'm not one likely to meddle."

Contact Mark Lisheron at mark@texaswatchdog.org or 713-980-9777.



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