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Change of Plans

It looked like a win-win situation for two states: If Tennessee and Georgia joined forces to operate a bi-state lottery, they could afford to give more college scholarships to their best high school students.

Then came the legal threats from overseas that prompted Tennessee to pull out of the talks this month.

Consultants hired by the state found that Tennessee could reap upwards of $100 million in new funds if the state tapped into Georgia's already-established lottery system and its contracts with vendors, which are more favorable than Tennessee has been able to negotiate.

Georgia, in turn, would have gotten a cut of Tennessee's proceeds to help cover the costs of its own expanding educational programs.

But earlier this month, Tennessee lottery officials said they were facing lawsuits from a group of small international-gaming vendors who hoped to gain business from Tennessee's lottery, and who contended that the state would see fewer savings than if it started its lottery through traditional means. While the Tennessee officials didn't think the lawsuits had much credibility, the move threatened to delay the start-up of the state's much-anticipated lottery and cause the state to lose significant early funds.

Tennessee is still planning to start its venture early next year, and it has signed up more than 2,300 retailers that are eager to sell tickets.

Voters approved a ballot initiative last November that removed a state constitutional amendment barring a lottery. The legislature quickly approved a lottery bill last winter, and Gov. Phil Bredesen, a Democrat, formed a lottery commission that has been ironing out details ever since.

Tennessee modeled its lottery proposal after Georgia's lottery, which offers scholarships for in-state higher education institutions. Any revenue remaining in Tennessee after its college scholarships are paid for will go for early-childhood education.

In a statement, Denny Bottorff, the chairman of the Tennessee commission, offered assurances that the Tennessee lottery would be soon be open.

"In addition to holding joint-venture talks, we have been diligently pursuing a traditional start-up," Mr. Bottorff said. "The first lottery ticket will go on sale in the first quarter of 2004, as originally planned. We won't miss a beat."

—Joetta L. Sack

Vol. 23, Issue 3, Page 19

Published in Print: September 17, 2003, as State Journal

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