By John Lyon
Arkansas News Bureau

LITTLE ROCK — The Arkansas Lottery Commission on Wednesday named firms it intends to hire to handle advertising and run instant-win games for the state’s new scholarship lottery.

Also, a Little Rock business owner criticized lottery officials for rejecting his company’s bid for the advertising contract, and a member of the commission accused state legislators of delaying the lottery start-up process.

The commission voted to issue notices of intent to award the lottery’s advertising contract to The Communications Group of Little Rock and the instant-win contract to Scientific Games of Alpharetta, Ga.

Six companies submitted bids for the advertising contract, but four bids were rejected because they did not meet requirements set by the commission, Lottery Director Ernie Passailaigue said.

Gary Lay, owner of GWL Advertising Inc. of Little Rock, one of the four rejected firms, attended the commission’s meeting Wednesday at the University of Arkansas at Little Rock. Lay told the commission he would file a formal protest with the state Department of Finance and Administration over the rejection of his company’s bid.

Lay said his company was unfairly rejected because its financial statements were not audited and it did not have an earned net income of at least $300,000 for two of the past three years.

“The protest … is simply to have a fair and equitable decision made,” Lay said.
He later told reporters the process appeared to be geared toward eliminating rather than qualifying companies.

Passailaigue acknowledged the requirements placed on bidders set “a high standard,” but he said a high standard is appropriate for a mutlimillion-dollar operation like the lottery.
“We have to make sure (Arkansans) say, ‘That group of people is dedicated to security and integrity,” he said.

The commission also voted to approve a final contract with Athens, Greece-based Intralot, the only company to submit a bid to run Arkansas’ drawing games, pending approval by a legislative oversight committee on the lottery.

The commission voted last week to issue a notice of intent to award a contract to Intralot, but Bishop Woosley, procurement director for the lottery, told the commission Wednesday it had to approve a final contract before the legislative committee would review it.

Commission member Dianne Lamberth of Batesville expresses frustration with the legislative committee.

“We felt they were going to meet last Thursday and (they) opted not to do so,” she said. “We were told they would meet either Friday or Tuesday of this week — they did not do so. We were told they would meet this Thursday, tomorrow — they are not going to do so.

“Every day that they don’t see fit to move forward as quickly as we do is a few more dollars that aren’t going to get into our students’ hands.”

The committee’s Senate chairman, David Johnson, D-Little Rock, said in an interview Wednesday the committee is moving as fast as it can. “We need that final contract, we need time to review the final contract, and provided those things are done we’ll be ready to have a formal review at a committee meeting,” he said.

Johnson said he did not know when the committee would meet next.

The Communications Group is asking for a 5 percent commission on every ad placement. The amount of the lottery’s advertising budget has not been determined but is expected to be in the millions, Passailaigue said.

The Communications Group has said it intends to use Chernoff Newman of Columbia, S.C., as a subcontractor. Chernoff Newman formerly provided advertising services to the South Carolina Education Lottery, which Passailaigue ran before taking over as Arkansas lottery director July 1.

Passailaigue said he and the lottery employees he has hired from South Carolina did not participate in evaluating the bids for the advertising contract.

Ray Thornton of Little Rock, the commission’s chairman, abstained from voting on the advertising contract. The Communications Group has worked on political campaigns for Thornton, a former congressman.

The only other company whose bid was considered was The Ramey Agency of Jackson, Miss.

In its bid for the contract for instant-win games, Scientific Games asks for 1.75 percent of net ticket sales. Lottery officials said that was the lowest bid; the second-lowest was from Gtech of Providence, R.I., which asked for 1.95 percent of net sales.

Pollard Banknote Limited in Winnipeg, Manitoba, Canada, also bid for the contract.
Passailaigue said the lottery in all likelihood will use one of the runners-up as a secondary vendor for special games.

Passailaigue also said he expects Scientific Games will be able to meet the early start date of Sept. 28 proposed by Intralot. The date is well ahead of the Lottery Commission’s previously announced target dates of Oct. 29 for the start of instant-win games and Dec. 14 for the start of drawing games.