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LOTTERY CHIEF WOULD LIKE $4M DEBT FORGIVEN

May 13, 2003 – Although the V.I. Lottery recently made a payment of $100,000 against its debt of more than $4 million owed the government, officials told the Senate Finance Committee on Monday that they would like the Legislature to forgive the past-due contributions.
During the five-hour hearing on St. Croix, Austin Andrews, V.I. Lottery executive director, testified about the lottery's financial status but provided little new information, to the dissatisfaction of most committee members.
Andrews could not provide the V.I. Lottery monthly financial figures, information on how his agency monitors the operations of Caribbean Lottery Services — the company contracted last year to provide regional games to the territory — or a marketing plan for boosting lottery sales, according to The Avis.
At a Finance Committee hearing on lottery operations on St. Thomas on April 23, Andrews said that lottery financial statements for 2002 are still being prepared and that he would provide them to the committee in the next few days.
One set of figures that Andrews has made available to the public via the Source concerns proceeds through mid-April from the Powerball game. See the April 24 report "Andrews: Powerball grosses $2M so far in V.I.".
The Legislature's Post Audit Division is completing an audit of the V.I. Lottery and will release its results within a week, according to the Finance Committee chair, Sen. Adlah "Foncie" Donastorg. It was at the Finance Committee's behest that the audit was undertaken.
Last week, Andrews announced in a release headlined "USVI Lottery director sets record straight on lottery operations and payments to the Special Fund for the Handicapped" that the agency had made the $100,000 payment on April 15 to the fund cited. He said the money came from revenues generated by Caribbean Lottery and Powerball payments.
He said another $100,000 should be paid into the fund by the end of the summer.
The V.I. Lottery has been operating in the red for years, Andrews said, because until recently it was required to contribute 5 percent of gross revenues to the government treasury. Sales of traditional lottery tickets were not covering operational and administrative expenses and prize liability, he said.
The 24th Legislature changed the contribution formula to 20 percent of net revenues, "for certain statutorily defined objectives," Andrews said. He said the change should make the lottery solvent. But he could provide no timeline for paying back to the $4 million. "I'll try to scale it down as soon and as fast as I can," he told the senators.
Andrews was optimistic about the future of both the traditional paper-ticket lottery games and the new games offered by CLS. "Sales are good, and they're beginning to increase and improve," he said. "There has not been a significant decrease in sales of traditional lottery games at all."
He said the fact that the V.I. Lottery gets no governmental funding makes complying with financial mandates difficult. "We're the only jurisdiction that doesn't get assistance," he said. The agency's yearly operational costs are about $2.5 million, he said, and it has an annual budget of $13 million which includes salaries for 52 full-time employees.
The V.I. Lottery maintains offices on St. Thomas, St. Croix and St. John. In addition to the full-time employees, it has 37 "active drawing board members" and 478 independent lottery dealers. The drawing board members, Andrews said, receive per diem pay of $75 and are generally retired government employees. They generally work from one to three days per week, he said.
"Our sole source of revenue is from ticket sales," Andrews said.
In the May 5 release, Andrews also said that it was because the lottery was unable to make ends meet that it entered into an agreement with CLS in January 2002 "to furnish additional games and potential new revenue sources to support the V.I. Lottery operations, expenses and other statutory requirements." Similarly, last November, he said, the agency "entered into an addendum to its existing agreement with CLS to add the Powerball and Powerplay games to CLS's FlexLink online lottery terminals" in the territory.
In that release Andrews also stated that CLS had made payments through April 25 to the V.I. Lottery "in excess of $1 million."
At the Finance Committee's April 23 hearing on St. Thomas, Finance Commissioner Bernice Turnbull stated that she had not received any revenues from the lottery for either CLS or the Powerball game. "We haven't gotten any revenues," she said. (See "Lottery audit to begin; more answers sought".)

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