New Connecticut Lottery CEO optimistic, despite past issues

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The newly appointed CEO of the Connecticut Lottery Corporation may be inheriting an agency rattled by scandal, but his optimism is not wavering.

Greg Smith, 59, a New York native with experience ranging from hospitality to lottery management, says he had heard about the Connecticut Lottery’s tumultuous past, but it did not deter him from taking on the role of its leader.

“Had I heard some industry news stories involving Connecticut over the last couple of years? Yes I had. But I don’t think that’s going to end up defining the Connecticut Lottery in any way,” Smith said in a recent interview with The CT Mirror. “While we might have experienced a couple of difficult items over the last couple of years, we’re in a good place.”

Since joining the Rocky Hill-based office on July 20, Smith’s days have been largely characterized by learning the agency’s operations and history. That includes learning about the agency’s quasi-public model and marketing strategies, and about the two-year period of turmoil with which the agency continues to grapple.

The lottery’s ethical lapse was catalyzed by a string of arrests of some lottery retail employees in 2015 after they printed out winning tickets for themselves in a game. That led to the resignation of then-CEO Anne Noble. Subsequent controversies centered around Frank Farricker, who was board chairman before taking on the additional role of temporary CEO upon Noble’s departure. He stepped down in 2017, paying a fine and restitution of $11,318 when the Office of State Ethics found he had been improperly reimbursed by the lottery corporation for more than $6,000 in personal expenses on his home internet, cable TV and other services.

Most recently, on New Years Day 2018, five employees mistakenly excluded almost half of the eligible tickets for the Super Draw game, costing the corporation $1 million and necessitating a do-over game January 16.

But amid the chaos, the state lottery has nevertheless achieved financial success. In the 2018 fiscal year, it returned a record $345 million for the state’s general fund, surpassing its previous record of $337.5 million in the 2016 fiscal year. It also made $1.268 billion in sales, retailers earned $70 million in commissions, and players won more than $790 million. Additional contributions to the state of Connecticut from the lottery totaled $13 million, including more than $160,000 to the Department of Social Services.

Smith’s optimism is in part fueled by the corporation’s monetary growth.

“You think of the problems….and yet, we set another record. That’s very good, and the public continues to buy the products. Things appear to be fair and a good engagement for the players,” he said.

Though Smith joins the corporation in what he hopes will be a new, clean era for the lottery, he will have to grapple with some of the aftermath of the corporation’s past problems. He is starting by tying together the loose ends of the New Years Day Super Draw episode, which he describes as the “specific human error” of five people at the same point in time.

“There were a number of people involved in that drawing… we need to make sure it doesn’t happen again,” he said. Currently, he is working with the corporation’s employees to pay prizes, get claims validated, and evaluate the practice and rule-writing “so there is never a chance for this to repeat itself.”

“These matters need to be resolved,” he said. “Wrapping the whole thing up and having the audit reports written about it… making sure the lottery and the Department of Consumer Protection will all say the matter is finalized…. we’ll get there. And part of that is going to fall in my lap, but it’s not going to happen this week.”

Smith, however, is not a stranger to business complications. Prior to joining the Connecticut Lottery, he served as the Director of the Illinois Lottery — a state agency with a $2.8 billion budget and more than 7,500 retail outlets statewide. Smith stepped into that role in 2016, at a time when Illinois Lottery’s private management company had recently been terminated. The state’s lottery is one of only three in the country to use a private company to manage its day-to-day operations, and Smith was charged with transitioning to the corporation’s second ever private manager.

He was not keen on the private management model because it makes the day-to-day work more challenging.

When asked why he chose to transition to Connecticut, Smith’s answer was lean: “The search for a director in Connecticut came to me,” he said, though he later applauded the state’s quasi-public model, which reports to the legislature while generating profit from its own services.

Smith got his start in the state lottery industry by serving as executive director of the Vermont Lottery Commission from 2012 to 2016 — a much smaller operation. Prior to that, with a degree in hotel and restaurant management from Purdue University, he owned and operated a few Vermont businesses, including an inn with his wife, and a Vermont retail shop.

With his varied experience in lottery, Smith has some thoughts about some processes he can potentially carry over to Connecticut, though he stresses the importance of learning the state operations before implementing any changes.

“For me to be relevant, and for me to be thoughtfully bringing forth ideas, I need a little bit more homework time,” he said. “I’m going to learn and continue doing the steps we’ve been doing for our game evaluations before we launch them and after we do.”

Instant ticket vending machines are one item on Smith’s agenda, which he hopes will be implemented later this fiscal year. He is also hopeful that Connecticut will eventually embrace sports betting and an online lottery, although he believes both need further study.

“Connecticut should look at iLottery and sports betting to see how they can best serve [the state]. I am very interested and I consider it a positive that Connecticut is this far along and engaged.”

Smith will be earning $200,000 annually.

CONTROVERSIES DATE BACK TO 2015

Prior to Smith’s appointment, the corporation underwent intense scrutiny from the Department of Consumer Protection, which initiated multiple investigations of the lottery in the wake of a 2015 fraud scheme.

Anne Noble was serving as the corporation’s CEO when employees at lottery retail outlets were charged with printing out winning tickets for themselves in a five-card cash game. The retail fraud led to 15 arrests of employees at retail outlets that sold lottery products. Shortly after, in 2016, Noble stepped down following an investigation of her handling of the fraud scheme. She entered into a profitable severance deal with the agency that would allow her to, among other things, qualify for lifetime retirement benefits.

The lottery’s top position has been vacant ever since, but various individuals have temporarily served as acting leaders, including Farricker.

Following him, the then-chief-of-strategy Chelsea Turner assumed the role as acting CEO. Turner led the corporation to unprecedented financial success. But on New Year’s Day 2018, the lottery corporation experienced another setback when a five-member drawing team excluded nearly half of the eligible tickets from a New Year’s Day Super Draw game. The error resulted in a do-over drawing January 16, the suspension of a number of employees, and lingering government investigations.

The corporation’s security director, Alfred DePuis, went on leave following the New Year’s Day drawing and has not yet returned.

Smith declined to comment on the specifics of the issue. “There’s not a lot that can be actually said about an ongoing investigation,” he said.

Lottery Board Chairman Donald DeFronzo — a former state senator, commissioner of administrative services and mayor of New Britain — said he hopes Smith will restore the agency’s reputation for integrity.

“With the selection of Greg Smith we are clearly defining our objectives as follows: First and foremost is a commitment to integrity at all levels,” DeFronzo said in a written statement. “In selecting an individual with Greg’s mix of experience and skill we expect to change the face of the Lottery and to move forward with innovative measures that will propel the [Connecticut Lottery Corporation] to the forefront of gaming operations national[ly], resulting in expanded growth for the CLC.”