Maryland Lottery Director Stepping Down Just Before Sports Betting Starts
While Gordon Medenica has been a popular choice to be a panelist at various gaming conferences over the years, the soon-to-be-retiring Maryland Lottery and Gaming director hardly has been a “lifer” in the industry.
In fact, Medenica was AARP-eligible with many years on the business side of the newspaper industry when he made what looked like an abrupt change in 2007 to become the head of New York’s lottery — the nation’s largest.
How does someone get tapped to make such a switch?
It turned out the stars were aligned, Medenica — a longtime New York Times Company corporate strategist as well as an executive with a company that owned the Philadelphia Inquirer and Daily News — recently told US Bets.
Medenica, who plans to retire on June 1, said that a neighbor and friend of his who had become an adviser to then-newly-elected New York Gov. Eliot Spitzer suggested that maybe Medenica might think about converting over to a state service role in some manner.
As it happened, Medenica also said that while overseeing the Times‘ involvement in a takeover of the Inquirer, one of his first hires for a marketing position was a former Pennsylvania Lottery executive.
“I came to find that field pretty interesting,” Medenica said.
Spitzer soon was looking to fill a similar position in New York, and asked Medenica if he was interested.
“Spitzer said he wanted to bring more ‘business DNA’ to state government, to run it like a business,” said Medenica, who has an MBA from Harvard. So with duties as an internal management consultant and reviewing potential mergers and acquisitions under his belt, Medenica was well-positioned for the change in careers.
Time to move traditional lottery online
Medenica said that a key hire for him was Bill Murray as general counsel, and he and Murray concluded that moving the lottery more into the modern world would be wise.
“We played around with the idea of going online, and there seemed to be sufficient gray area in New York law where we thought we could just do it,” said Medenica.
But officials with their vendor, IGT, were more skeptical. After all, as a company with national and international connections, if there was any “prosecutorial risk,” that could threaten IGT business elsewhere.
So Medenica said IGT agreed to begin the process of building such an online system, while Medenica and colleagues elected to ask the Department of Justice for clarity on the matter. That strategy was approved by then-Gov. David Paterson, and leaders of the Illinois Lottery joined in the effort.
After a couple of years of silence, the DOJ famously — at least, in the confines of the U.S. gaming industry — wrote a 2011 memo giving the “all clear” to states to offer an online version of the lottery games.
Illinois went ahead, as did a few other states — but new New York Gov. Andrew Cuomo did not, much to Medenica’s consternation. Medenica said that Cuomo seemed to have been won over by lobbyists for convenience stores in the state over concerns that the new product would badly damage the bottom lines of that sector, forcing some of those small businesses to close their doors.
(That DOJ ruling seemed to eliminate any concerns about the validity of multi-state games such as Mega Millions or Powerball, while paving the way for an interstate online poker compact among Nevada, New Jersey, and Delaware. That is, until the Trump Administration voided the 2011 ruling seven years later, creating some turmoil in the gaming industry until a favorable circuit court ruling and then a change at the White House appeared to have restored the status quo of a decade ago.)
First New Jersey, then Maryland
Medenica moved on to New Jersey, where he served as “transitional CEO” for Northstar New Jersey Lottery Group to aid in a privatization of that state’s lottery that Medenica says “in reality was just an outsourcing of sales and marketing.”
That experience — which led to widespread criticism of Gov. Chris Christie regarding the takeover due to lower-than-expected revenue — led Medenica to conclude that with privatization of lotteries, in any form, “the savings that were expected might have been overly optimistic.”
By 2015, Medenica had taken on his current role in Maryland — a position that brought with it controversy at times. The key there, Medenica says, was “simply getting back to basics” of the lottery at an agency that was overtaxed with newfound responsibilities of overseeing the state’s new casinos as well.
Medenica said he also “did not like” his sense that lottery officials wanted to act as regulators for casinos but operators of the lottery. In each case, Medenica said, communication between government and business “did not need to be an adversarial relationship.”
“If it had been more of a straightforward bill with just casinos and an online component, it could have been a lot of fun,” Medenica said. “But this is all going to take years to implement, and I had to ask myself, ‘Do I really want to do that?’”
Sports betting coming to Maryland
Maryland’s casinos, professional sporting venues, racetracks, off-track horse race betting sites, and up to 30 additional companies or individuals can obtain licenses. The law also states that it is designed to “maximize the ability of minorities, women, and minority and women-owned businesses to participate in the sports wagering industry.”
Misconceptions abound about sports betting, Medenica said, from a quixotic idea that “mom-and-pop operations” have a realistic chance to succeed, to outsized claims by proponents of what tax revenue numbers truly can be expected.
As for the startling number of potential sports betting licensees under the law, Medenica, concluding that the number will never be reached, quipped, “Sixty is a proxy for infinity, I think.”
As for the national debate on whether lotteries are the best choice by state lawmakers to oversee sports betting, Medenica said that it depends on the state.
“Some states like Maryland also oversee casinos, for example,” Medenica said. “But for lottery-only state agencies, the issue understandably would be more challenging. It can be a heavy lift there.”
After serving as president of the North American Association of State and Provincial Lotteries and as lead director of the Mega Millions, Medenica last fall was chosen for the Lottery Industry Hall of Fame.
Now Medenica has elected to let others handle “the heavy lift” of Maryland’s unique new sports betting law.
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