Lottery, track pacts discrete, ad firm vows

CJRW pledges no conflicts from its work for Oaklawn

The Arkansas Scholarship Lottery has executed a five-year, $34.5 million advertising contract with the Little Rock firm of CJRW, which will keep separate the employees who work for the lottery and those who work for another client with a gambling clientele, Oaklawn Racing & Gaming, officials for the lottery and CJRW said.

The contract was signed Thursday, said Jake Bleed, a spokesman for the state Department of Finance and Administration. The lottery is part of the department.

The signing of the contract comes after the Legislature’s Joint Budget Committee agreed Jan. 26 with the recommendation of one of its subcommittees to complete the legislative review of the proposal. The Performance Evaluation and Expenditure Review Subcommittee first voted not to review the proposal, then on Jan. 24 voted 14-4 to complete its review and recommend it to the full committee.

Protests filed by CJRW’s rivals for the contract — Mangan Holcomb Partners and a partnership of the Little Rock firms Ghidotti Communications and Vines Media — were rejected by Office of State Procurement Director Edward Armstrong prior to the legislative action. In past years, when the lottery contract was available, CJRW didn’t seek the work.

Asked whether CJRW has disclosed any possible conflicts of interest to lottery officials, Bleed pointed to correspondence between lottery Director Bishop Woosley and CJRW consultant Gary Heathcott.

In a letter dated Jan. 25 to Woosley, Heathcott said his letter was official notice under Section 2.5H of the lottery’s request for qualifications for advertising, marketing and public relations. That section relates

to disclosure of conflicts of interest.

“In short, we do not feel that we have any conflicts of interest, which would inhibit or has the potential to inhibit us from placing the interest of the Arkansas Scholarship Lottery first,” Heathcott wrote.

“However, out of an abundance of caution please consider this as official notification that we do represent Oaklawn Racing and Gaming,” he said. “Again, we do not feel this relationship constitutes a conflict of interest, nor do we feel that this relationship presents an incompatibility that has the potential to inhibit our agency from putting the interests and the mission of the Arkansas Scholarship Lottery first. Despite this belief, and based upon the great deal of interest which has been given to the subject over the last two months, we wanted to note this in our disclosure.

“In an effort to alleviate any concerns related to this issue, we intend to maintain a separation between the two contracts within our agency,” Heathcott said in his letter to Woosley. “At CJRW, the staff

that works with the lottery will not work with Oaklawn and vice versa. Please let us know if you have any concerns with this disclosure or our plan as it relates to our representation of the lottery account.”

In an email dated Jan. 27 to Heathcott, Woosley said he appreciated that CJRW is sensitive to the concerns that have been voiced in this process, specifically by legislators and other vendors who bid on the advertising request for qualifications.

“CJRW has taken steps to ease those concerns by using separate staff for the [lottery] and Oaklawn contract,” Woosley wrote in his email. “This is above and beyond what was called for under the [request for qualifications] and we appreciate the arrangement …

“I am satisfied that a conflict does not exist and we are prepared to move forward as soon as all necessary procurement regulations are satisfied,” he said.

Sharon Vogelpohl, president of Mangan Holcomb Partners, on Monday declined to comment. Mangan previously held the lottery advertising contract.

Natalie Ghidotti, president and chief executive officer of Ghidotti Communications,

said in an email, “Looks like all the i’s have been dotted and the t’s crossed as far as the required disclosure of conflict of interest.”

She declined further comment.

Heathcott said in an email Sunday that management at CJRW carefully considered the idea of responding to the bid for the lottery marketing account.

“Officials from a CJRW client of 41 years, Oaklawn Racing and Gaming, were contacted to seek their input on the subject matter. They expressed strong support of the Lottery and the good works that it produces. Further they confirmed that they did not view the Lottery as a conflict with their operation nor did they see any reason that CJRW should not represent both entities,” he wrote.

In July 2014, the Legislature enacted a law, sponsored by Sen. Jimmy Hickey, R-Texarkana, to temporarily bar the lottery from offering electronic monitor games until March 2015. At that time, Oaklawn’s lobbyists and other lawmakers opposed allowing the lottery to implement electronic monitor games, such as keno and quick draw, that could compete for gamblers’ dollars.

The lottery’s five-year business

plan states that in fiscal 2020, it should focus on building a case for new product innovation that may include monitor games, Bleed has said. During his 2014 gubernatorial campaign, Gov. Asa Hutchinson said he opposed allowing the lottery to offer electronic monitor games.

The lottery has been selling tickets since Sept. 28, 2009. It has helped finance more than 30,000 Arkansas Academic Challenge Scholarships during each of the past seven fiscal years.

Its revenue and net proceeds raised for college scholarships peaked in fiscal year 2012 before dropping for three consecutive fiscal years. With the help of a world record $1.6 billion Powerball run in January 2016, the lottery’s revenue and net proceeds increased in fiscal 2016, which ended June 30.