Posted: Friday, July 8, 2005 11:30 PM

Texas Lottery Director Resigns
Stories as they appeared in

Corpus Christi Caller-Times
Dallas Morning News
Ft. Worth Star Telegram

Greer resigns as lottery director
By NATALIE GOTT Associated Press Writer
Appears in the Corpus Christi Caller-Times
July 8, 2005

AUSTIN- The executive director of the Texas Lottery Commission resigned Friday, two weeks after he admitted he signed off on advertising Lotto Texas jackpots that were higher than ticket sales could support.

Reagan Greer, who has overseen day-to-day operations at the nation's third-largest lottery since February 2003, resigned Friday afternoon in a letter to commission chairman Tom Clowe.

"In recent days, it has become clear that intense, ongoing efforts to restore Texans' confidence in the lottery can best be advanced through a change of leadership so that the successes achieved during my tenure with the commission remain on track," Greer wrote.

Gary Grief, the commission's deputy director, will assume Greer's duties until an acting executive director is named, lottery spokesman Bobby Heith said.

Greer told the commission he approved a staff report proposing an $8 million advertised Lotto Texas jackpot for the June 8 drawing even though that report stated estimated sales could cover only $6.5 million.

He said he approved that jackpot proposal and two other inflated estimated jackpots in October and February without really looking at them because he trusted them to be accurate.

The incident drew scrutiny from lawmakers and Clowe, who told legislators the public was deceived by the inflated jackpot estimates. Clowe said Greer was responsible for the deception.

The lottery commission is scheduled to meet on Monday, and its agenda suggested Greer's job could have been on the line if he hadn't stepped down. The agenda said the panel could meet behind closed doors to discuss the evaluation, reassignment, discipline or dismissal of Greer.

The agenda also indicates the commission may discuss the reassignment of Grief and four other top staff members.

Clowe did not immediately return a telephone call from The Associated Press on Friday. Lottery Commissioner James Cox referred calls to the Lottery Commission press office.

The incident came to light after Dawn Nettles, a longtime lottery watchdog, filed a complaint about the inflated jackpots with the state's attorney general's office. Nettles said Friday that the problems at the lottery existed before Greer arrived.

"Greer's biggest failure was not recognizing and identifying the real problems," Nettles said. "They need to clean house at the TLC."

After Nettles filed her complaint, the commission, for the first time in the game's history, held the jackpot for the June 11 game at $8 million because that was all estimated ticket sales could support.

The Lotto Texas jackpot starts at $4 million and traditionally grows by at least $1 million each time no tickets match all five numbers and a bonus ball.

During the first four drawings, the commission is allowed to use its reserves to pay a grand prize winner if it hasn't sold enough tickets to cover the jackpot. But ticket sales usually are slow until the jackpot reaches $9 million in the sixth drawing.

All three cases of inflation involved the fifth drawing with the jackpot rolling from $7 million to $8 million.

Robert Tirloni, one of the two managers in charge of estimating jackpots, said he proposed the higher number even though he knew the agency wouldn't sell that many tickets because he was afraid players would lose interest if the jackpot stayed the same for multiple drawings.

Lee Deviney, the other manager who proposed the inflated jackpots, said the agency didn't have a clear policy on what should happen in that kind of situation, even though top management knew as early as March 2004 that such a shortfall was looming.

Deviney was fired after the inflation became public. Lottery officials said his dismissal was not related to the controversy, but Deviney said he received a positive evaluation in October and a 4 percent merit pay raise.

In his Friday letter to Clowe, Greer said that he had taken full responsibility for "my reliance on staff recommendations without studying them more and asking harder questions."

Lottery officials are considering holding jackpots at the same amount more often, adding a decimal place to billboards so advertised jackpots can be more precise or starting the jackpot at $2 million.

Associated Press Writer Liz Austin contributed to this report.

Copyright 2005, All Rights Reserved.

Lottery director resigns
Others could be fired by commission in jackpot controversy

09:15 PM CDT on Friday, July 8, 2005
By KAREN BROOKS / The Dallas Morning News

AUSTIN – The executive director of the Texas Lottery Commission resigned Friday, just days before commissioners were to consider ousting him over inflated jackpot estimates and questionable firings of employees.

Reagan Greer "In recent days it has become clear that intense, ongoing efforts to restore Texans' confidence in the Lottery can best be advanced through a change of leadership," Reagan Greer wrote in a letter to commission Chairman Tom Clowe.

Mr. Greer, 47, becomes the fourth straight executive director – every leader since the agency's creation in 1992 – to leave in a storm of controversy.

His resignation set off speculation among lawmakers, lottery watchdogs and gaming interests about who else might resign or be punished in the wake of a scandal that surfaced last month, when Greer staffers inflated a lottery estimate to boost lagging ticket sales. It was the fourth time they had done so since last fall, and each time, Mr. Greer signed off on the decision.

Some questioned whether Mr. Greer should be the only one to lose his post, and others said he was taking the fall for lower-level employees who were directly responsible for deceiving players.

A former politician who saw his lack of lottery experience as an asset, Mr. Greer had been in the post for just less than two and a half years. He was tapped for the $110,000-a-year job after the commission changed the qualifications, allowing someone without a college degree to assume the position.

At the time, Mr. Greer, a Bexar County GOP operative, had lost a re-election campaign for county clerk, and Gov. Rick Perry reportedly championed him for the lottery job.

On Friday, a spokeswoman for Mr. Perry praised the director's decision to quit without directly blaming him for the troubles.

"Reagan Greer has served the state of Texas ably in his capacity as executive director, and his resignation will serve to restore public confidence in the lottery," said spokeswoman Kathy Walt.

In a prepared statement released Friday, Mr. Greer noted that the lottery contributes $1 billion annually to schools and that he played a major role in Texas joining the multistate Mega Millions.

But he came under fire in recent weeks from Mr. Clowe and some lawmakers who said he was ultimately responsible for his staff's decision to advertise the Lotto Texas jackpot at $8 million – even though ticket sales would support a jackpot of only about $6.5 million.

At Mr. Greer's direction, the agency froze its jackpot for the first time last month to ensure that the pot could live up to the advertised number. Nobody won any of the drawings.

Mr. Greer has also had to answer critics who blasted the agency last year for spending hundreds of thousands of dollars on private, politically connected consultants to write legislation allowing slot machines. That measure did not pass in either last year's special session or this year's regular session.

Mr. Clowe, who has publicly lambasted Mr. Greer for his role in the recent scandals, said he would discuss plans for a replacement during a highly anticipated Monday meeting of the commission.

The commission could also take action against other employees deemed responsible for phony jackpot estimates that Mr. Clowe and others have said amounted to a wide-scale deception of Lotto Texas players.

In recent meetings with commissioners and lawmakers, Mr. Greer accepted responsibility for not checking the work of those staffers more closely.

"I've criticized myself over this," Mr. Greer told the House Licensing and Administrative Procedures Committee a week ago, calling the episodes "a black eye" for the lottery.

But some of the commission's harshest critics say he's a scapegoat.

Dawn Nettles, a Garland resident who first brought the false estimates to light last month, said Friday that Mr. Greer was falling on the sword for employees who were responsible for the problems.

Deputy Director Gary Grief, who has been with the lottery since it began, and General Counsel Kim Kipling were among those named by Ms. Nettles as being "just as responsible for this as Reagan Greer" for long-term deception in the state's lottery games.

"I feel sorry for him," said Ms. Nettles, who publishes "They [Ms. Kipling and Mr. Grief] have been deceiving the public for a lot longer. Even though Reagan was not qualified for the job, he was set up. ... Now let's see if the guilty ones resign, too."

Rep. Kino Flores, chairman of the House committee charged with overseeing the commission, agreed Mr. Greer was "a fall guy" for the "four or five employees directly under him."

"He either got forced, squeezed, or took the fall," said Mr. Flores, D-Mission. "He was being proactive and he had accepted the responsibility, but that enormous responsibility and the deception to that level should not have been put on one pair of shoulders."

Mr. Grief has distanced himself from Mr. Greer's troubles. Neither he nor Ms. Kipling could be reached Friday.

In his letter and statement, Mr. Greer said that he had tried to "take swift and decisive actions" in response to the false estimates.

Those actions include changing the way lottery jackpots are estimated, ordering a review of past estimations, and recommending that the commission change the way it runs the games in order to better guarantee prizes and win the trust of players, he said.

The commission could take up all those issues during its Monday meeting. It could also address the issue of firings.

That includes the dismissal of financial director Lee Deviney, who has said he warned officials about the false estimates two weeks before he was fired without notice or documentation of any wrongdoing.

Lawmakers have criticized lottery officials for abusing their rights to terminate employees with no stated reason or documentation, saying they exposed the agency to potential lawsuits. Mr. Flores and others said they plan to ask the commission to change those policies.

Mr. Greer, who has three young children, plans to return to San Antonio, a family friend said.

Staff writer Christy Hoppe contributed to this report.


Texas lottery chief resigns

By John Moritz
Star-Telegram Austin Bureau

AUSTIN - Texas lottery director Reagan Greer, under siege for his role in inflating the advertised Lotto jackpot last month, resigned his post Friday just three days before lottery commissioners were to consider firing him.

Greer, who took over the agency in February 2003 after losing his re-election bid as Bexar County district clerk, becomes the fourth lottery director to depart under fire since 1997.

"It has become clear to me over the last weeks that the way this scenario was playing out, a change of leadership was needed for me and for the agency," Greer said in an interview shortly after submitting his resignation letter to Lottery Commission Chairman C. Thomas Clowe.

Greer, whose annual salary was $110,000, found himself in the center of a swirling controversy after the Star-Telegram reported that he had signed off on a recommendation to advertise the June 8 Lotto Texas jackpot at $8 million even though it was clear that ticket sales would not support a prize of more than $6.5 million.

Two weeks later, the three-member panel that oversees the lottery criticized Greer for lax management and said the inflated jackpot estimate undermined the public's faith in the agency that generates $1 billion annually for the state.

Greer and other top lottery executives were also chastised last week for the controversy by a legislative committee. The lawmakers also were critical of the decision to fire a lottery staffer who helped make the inflated jackpot recommendation but then later raised a red flag, saying the figure should have been revised downward before the advertisements went up.

The lottery's oversight panel also served notice last week that it planned to meet behind closed doors on Monday to discuss whether Greer and other top managers should be disciplined or reassigned. Greer said he met privately with Clowe on Thursday and came away with the impression that his position had become untenable.

"We had a very candid conversation, and he was very upfront," Greer said. "I just felt like after that meeting that it was going to give me some insight to what I needed to do in making a decision, and it did play a role."

Clowe, a Waco businessman, did not return calls Friday. But during the lottery commission meeting and the hearing before the House Committee on Licensing and Administration, he placed the blame for the inflated jackpot squarely on Greer's shoulders.

Greer, 47, took responsibility for the matter, but said he had relied too heavily on the recommendations of his staff in making jackpot estimates. Asked if his staff -- many of whom had been on the job long before he arrived at the lottery -- should have sounded a louder warning, he said: "I would not disagree with that statement."

"I want to reassure the public that there was no intent on my part to create an environment where they would be questioning the integrity of the lottery," Greer said.

Under lottery rules, a winning player is guaranteed to receive the advertised jackpot only during the first four drawings in a Lotto roll. After the fourth drawing, the jackpot is awarded based on a percentage of ticket sales, regardless of the advertised amount.

Greer and other officials said it was "a business decision" to go with the inflated estimate on the theory that if the jackpot was not climbing higher each time there was no winner, ticket sales would plummet and the state would lose money.

Dawn Nettles, who runs an online tipsheet called Lotto Report and was the first to alert state officials that the July 8 jackpot might be inflated, said the 13-year-old lottery's bureaucracy needs a top-to-bottom re-examination.

"This problem did not start and stop with Reagan Greer," said Nettles, who attends nearly all of the lottery commission's meetings and frequently inundates the staff with requests for documents and ticket sales figures. "The lottery needs a complete house-cleaning."

During his testimony before the House panel last week, Clowe promised lawmakers a thorough review of the agency.

"We want the public to have confidence in the lottery," Clowe said at the time. "This is the people's business."

Greer came to the lottery after the qualification requiring a four-year college degree for the executive director's job was relaxed. Critics at the time said the standard was changed to accommodate Greer because he was a friend and supporter of Gov. Rick Perry.

The governor's spokeswoman, Kathy Walt, said such assertions were wrong. Walt also said Greer had "served ably" but that his "resignation will restore public confidence in the agency."

Greer's tenure, which included overseeing Texas' entry into the multistate Mega Millions game, ended in somewhat the same fashion as his three predecessors at the state lottery.

The lottery's first director, Nora Linares, was fired in 1997 after it was learned that her boyfriend had secured a consultant's contract with the private firm that the state pays to run many of the lottery's operations.

Linares' successor, Lawrence Littman, was fired after just five months on the job when lottery commissioners discovered that he had instructed his staff to examine the campaign contributions given to several senior lawmakers.

Littman's successor, Linda Cloud, resigned in 2002 after acknowledging that she had lied to a Star-Telegram reporter about the circumstances surrounding the investigation of a sexual harassment complaint made against one of the lottery commissioners.

Greer said he was not sure what his next career move might be.

"I am immensely proud to have served our great state during my time here," he said, "and I depart with full confidence and deep pride in knowing that I am leaving the commission better than when I arrived."

The Lotto Report
Dawn Nettles
P. O. Box 495033
Garland, Texas 75049-5033
(972) 686-0660
(972) 681-1048 Fax

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