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Lottery Ad Contract Process Reveals Fissures

3 min read

It wasn’t smooth, but the Arkansas Scholarship Lottery has a new advertising agency, CJRW of Little Rock.

A five-year contract worth $34.5 million is all but signed, despite two official protests, an initial legislative vote against it and a vigorous debate.

The contract, which has captivated the Arkansas advertising community, will pay CJRW a 13 percent commission for media placement. Media placement is 77 percent of the total budget, or $26.6 million, according to Lottery Director Bishop Woosley, so CJRW stands to reap $3.45 million over five years. Future years could yield larger media budgets, according to the lottery’s five-year business plan.

CJRW’s original rate schedule called for a 15 percent commission, but it agreed to accept less just as a legislative subcommittee was taking a hard look at the contract. Under the earlier terms, CJRW would have been paid nearly $4 million.

In the end, the Office of the Arkansas Lottery is getting a highly skilled and well-staffed marketing firm that Woosley says he needs for an ambitious campaign to jolt the slumping lottery. 

CJRW’s rivals, including previous vendor Mangan Holcomb Partners and a joint venture between Natalie Ghidotti of Ghidotti Communications and Brooke Vines of Vines Media, questioned why the state should favor a vendor representing both the lottery and Oaklawn Park, a gaming company that lottery consultants had identified as a competitor.

Neither Woosley nor Oaklawn sees a conflict, but several lawmakers reviewing the deal for the Joint Budget Committee did. Eventually the contract prevailed in a 13-4 subcommittee vote and a subsequent voice vote of the full committee.

“We understand and welcome the scrutiny and appreciate the favorable review,” Woosley said in a written statement. “We are happy to have the opportunity to move forward and work with CJRW.”

Woosley hopes to execute the contract quickly, but a state spokesman, Jake Bleed, said last week that no date for signing had been set. CJRW representative Gary Heathcott won’t comment on the contract until it is signed.

Both official protests suggested that CJRW was obligated to reveal its relationship to Oaklawn as a potential conflict. Oaklawn, which offers casino games as well as thoroughbred racing in Hot Springs, was listed as a competitor in a lottery business plan prepared by consultants at Camelot Global of Britain.

State Procurement Director Edward Armstrong disagreed, saying that the language of the bidding documents made only the “successful vendor” responsible for reporting potential conflicts. There could be no “successful vendor” until a contract is signed, he wrote. He also held that flagging conflicts was an obligation to be applied only in the future.

At least a half-dozen lawmakers, including Sen. Gary Stubblefield, R-Branch, and Sen. Joyce Elliott, D-Little Rock, forcefully argued that for the sake of good government, conflicts should be revealed beforehand.

As it turns out, the “successful vendor” language was not included in the state’s original Request for Qualifications from Sept. 15. It was “added to the RFQ on Sept. 30, 2016, by Addendum 1,” Armstrong said in reply to a question from Arkansas Business. “It was intended to help clarify that the successful vendor would have an ongoing contractual duty …”

He said the section altered by the addendum clearly relates to future obligations, calling for disclosures of conflicts “to be made within 15 days of the vendor learning of them.” That provision “makes it absurd to try to apply it to conflicts that a vendor learned of years ago,” he said. CJRW has had Oaklawn as a client since 1974.

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