Winners and Losers

Lottery operator Gtech was especially kind to the political friends of Texas Comptroller John Sharp. But when supervision of the company was moved from Sharp's office, the party was over.

"That's when I started thinking," recalls Logans, "what have I got myself into?"

It wasn't just the political hires that made him wary, Logans says. As he quickly found out, race was also an issue in Gtech's staffing. He recalls an unsettling conversation with a representative of Enterprise Advisory Services Inc. (EASI), the minority-owned personnel company with Democratic ties that was hired by Gtech to help build the start-up staff.

"She says, 'The Houston district is going to be loaded with blacks. I wasn't able to place blacks anywhere else. You're the black manager, supervisors are black, the manager of technical services is black, so the whole district is basically black as far as management and most of the employees.' That was the first indication I had of any kind of racial stuff."

From the beginning, Logans says, the Houston district had a racial imbalance, with few Hispanic or Asian sales representatives in a district with heavy populations of both ethnicities.

"As far as politicals during the start-up, all these individuals happened to be black. From my viewpoint [as a sales manager trying to create a diverse staff], my ethnic mix was getting worse," Logans says.

Logans soon found that Houston, although it was the lottery's biggest district, was on the same staffing level as the much smaller Austin operation. He says that a Gtech sales officer for the Austin area explained to him that "the reason he got so many political hires was because people who wanted to work for Gtech refused to leave Austin. So they had to hire them in Austin. That's why he was way up there at 22 sales reps." Houston at the time had an equal number, with many more retailer routes to service. The Houston district was the largest on the lottery map and provides about one-third of the revenue for the state.

"So people in Austin were finishing their routes at 10 a.m., noon, and my people were working till 6 p.m., 8 p.m.," says Logans. "They had too many accounts. People might have had a bad attitude about banishment to Houston, and given the situation I can't blame 'em."

Logans says several of the political hires directly under him, particularly Hubbard, were on the outs with his Gtech superiors almost from the day they were hired. It was clear, he says, that while Gtech had hired the politicians' favorites, they were not held in high regard by the corporate managers.

A former Gtech marketing coordinator, Cindy Crowell, confirms Logans' comments. She says Gtech's state training manager at the time briefed her on the situation. According to Crowell, "There was a list of people that Gtech had been given by the state, saying, 'You've got to give these people jobs.' They said, 'These are all our friends. These are the people you've got to take care of. And they kept calling, saying, 'What about this person. Can you find something for this person?'"

Crowell says that Gtech officials drew the line after the lottery was transferred last year from Sharp's overview to that of the Lottery Commission, a move that was planned at the outset of the lottery.

"It was told to me at that time that, yeah, we were going to wait a certain period of time, but within a couple months of the transfer they were going to start getting rid of those people, the political hires that weren't able to do their job, and anybody who had been hired who could actually perform their job, they'd look at them. But everybody else was going to be out of there. And since Gtech was looking to make cutbacks anyway, they'd be the first to go."

While Gtech was committed to hiring Texans for 95 percent of its work force, in its downsizing the casualties all seemed to be locals, says Logans.

Logans says that Gtech officials in Austin also seemed reluctant to implement programs that would document the problems in servicing retailers in Houston. The agreement between Gtech and the state requires that retailers be serviced every two weeks. It also imposes penalties on the lottery operator if the retailers are not serviced on time. Logans claims that had the Houston operation been monitored competently, Gtech would have had to pay plenty.

"What was happening is that since I did not have enough employees to cover all these people," says the former district manager, "they were not really seeing all these retailers when they were supposed to."

Gtech has forfeited more than $1.8 million to the state in penalties since the lottery started, but $1.47 million of that has been for lottery computer downtime. Most of the remainder has been for failure to deliver lottery tickets in a timely fashion.

Deputy comptroller Hartman says the relationship between Sharp's office and Gtech "was not the most rosy thing in the world."

"I know, when we about gave over the lottery, we had issued and assessed more liquidated damages against Gtech than any other state lottery in the nation. The total we assessed was like $2.3 million. I think we settled for a smaller number."

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