UPDATED: AR Lottery Director Steps Down

It's the end of an era for the Arkansas Scholarship Lottery: the man at the helm since the lottery began has called it quits.

After nearly two hours discussion behind closed doors Monday, lottery commissioners accepted the resignation letter of director Ernie Passailaigue.

Commission chair Diane Lamberth says he was not asked to step down, but she couldn't convince him to stay.

"He said he would not, he did not want to stay. He had done what he could do getting us started and we appreciate that," Lamberth said.

Amoung Passailaigue's credits, she says, is a swift start to a successful scholarship program. But that's not all he had become known for.

"On the other hand there was a lot of controversy around the day to day operations, that was a problem," said Governor Mike Beebe.

Governor Beebe pointed to several issues in Passailaigue's tenure.

First, there were grumblings about Passailaigue's and other staff members' salaries. The director was paid nearly $300,000.

Then, there were more than a dozen questionable legislative audit findings last year including improper travel reimbursements and comp time.

Most recently, concerns arose about nearly $100,000 in penalties owed to the IRS for late taxes.

Last year, Passailaigue did survive two attempts by commissioners to oust him.

But though Governor Beebe never called for it, a change now, he says, may be a good thing.

"To the extent that this causes a change of leadership to see if some of those problems can be addressed, it's probably best for everyone, but that's his choice," he said.

Passailague gave no reason for retirement in his letter. He wasn't at the meeting Monday and didn't return our attempts for comment.

Now, the next task for commissioners: a replacement.

"All I am going to focus on now is moving forward and finding someone that can handle the job in a good and professional way," said Commissioner Steve Faris.

There are no names yet, though Governor Beebe says the next director should have a smaller paycheck.

"I would hope that the salaries would be less than what they were, that way there would be more money for scholarships," he said.

Lottery commissioners named Julie Baldrige as interim director, currently in a public relations position. But she says she has no desire to take the post permanently.

Passailaigue was not under contract so will not receive a buyout or severance.

His last day is October 7th.

Passaiaigue's letter was addressed to commission chair Dianne Lamberth and read in part:

"This should allow sufficient time to select a new Director and get us past the launch of our new game, Arkansas 50/50 Raffle on October 1."

"It has been both a pleasure and a privilege to serve the Commission as Director since the start up of the United States' newest lottery. Thank you and the Commission for all the courtesies that have been extended to me over the last two and a quarter years."

Passailaigue was hired to run the state's new lottery in the summer of 2009.

He came to Arkansas from South Carolina where he had also served as the state's lottery director.

Passailaigue's resignation is being called an opportunity for the lottery "to move in a more responsible direction" by the president of Arkansas Family Council.

In a statement this afternoon, Jerry Cox also: "I'm convinced that now at least three things need to happen. One, the lottery director's current salary--$324,000--should be brought in-line with the national average for lottery director salaries, about $125,000. Two, reduce the administrative costs of the lottery, which are third highest in the country for a state-run lottery. And finally, more funds should be allocated for the lottery's intended purpose of providing college scholarships. Right now, our lottery only pays out about 21.8% of its proceeds for its intended purpose--well below the national average of around 30%."

"It is no secret that we have opposed the lottery from the very beginning. However, if the lottery commission genuinely wants to start fixing the lottery's problems, they should adopt at least these three changes," said Cox.