PD Editorial: New state lottery director must rebuild public trust

That didn't take long. California Lottery Director Hugo Lopez announced his resignation on Friday, and Gov. Gavin Newsom had a nominee to replace him queued up by Monday. Insiders say that the governor had requested the resignation, but the speed was still impressive. Whatever happened behind the scenes, the nominee, Alva Vernon Johnson, will have his work cut out for him fixing a troubled agency.

Lopez tried to frame his departure as a leader leaving on a high note. His letter announcing the resignation pointed to record sales this year. He predicted that this year public education will receive close to $2 billion from the lottery.

Take all that with some skepticism. Lopez is probably looking for a job, after all. The reality was much bleaker. The state Justice Department and the state Controller Betty Yee's office have been investigating problems at the lottery since last summer.

The Justice Department investigation is looking into allegations that senior lottery staff engaged in inappropriate, bawdy behavior at a bar following a 2016 sales conference. The racy photographs that accompanied the allegations didn't help the defense.

Meanwhile, the controller conducted an extra-vigorous audit and found that the lottery had misspent $300,000 on travel, food, accommodations and gifts for employees like lip balm and T-shirts. Those gifts were called “learning aids” and “training tools.”

That might not sound like much compared to billions in revenue, but a few hundred thousand dollars misspent are a few hundred thousand dollars not going to classrooms.

It all happened under Lopez's watch, but the problems were systemic, not just his leadership. Removing the head will not fix things. Johnson must cultivate a new culture, one based on serving the public first.

On paper, at least, Johnson appears up to the challenge. He knows his way around the state capital after more than a decade as a tribal lobbyist and before that as a legislative liaison to the lottery. He holds a master's degree in public policy from UC Berkley.

As he refocuses the lottery on its core mission, he must rebuild public trust. He should start with transparency. The most recent annual report to the public on the lottery website is for the fiscal year ending June 30, 2016. Even the comprehensive annual financial report is a year behind. If California is going to be in the business of fleecing gambling addicts and people who don't understand that the house always wins, the least it could do is make itself accountable to the public on a timely basis.

For example, it might surprise Californians to learn that in the 2015-16 budget year, the top selling lottery product wasn't Mega Millions or Powerball but scratch-off tickets. They outsold every other lottery product combined by more than two-to-one. The scratchers were $4.4 billion of $6.3 billion total revenue that year.

The lottery was sold to Californians as a way to generate money for schools. It does that, albeit with very modest totals (total spending on K-12 education is about $100 billion a year). Californians also were promised it would be well run and accountable to the people. For the past few years, that part of the mission has failed. Johnson's job is to fix that.

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