Governor Is Betting Billions on the ‘Nice Guy From Ohio’ : Lottery’s Chief Feels the Odds Are on His Side

Two items on the desk tell you a lot about California’s new lottery director:

One is the can of Pepsi he’s swigging as he plunges into his first full week on the job as the youngest and one of the highest-paid department chiefs in state service.

The soda pop fits.

This is a squeaky clean, straight-arrow, high-on-principles Republican workaholic; a Jesuit-educated altar boy with rosy cheeks who hates smoking so much that they never light the candles on his birthday cake; a conservatively dressed weekend racquetball player who loves his dog and Italian food.

Meet Mark Michalko, 31, Pepsi generation administrator of the Golden State’s new billion-dollar gambling operation. He may be the only lottery director in the nation who bakes his own bread.

The other item on Michalko’s desk is a congratulatory telegram from Scientific Games, the large Georgia-based company that financed the lottery initiative campaign in California last year and is the top candidate for winning the massive $40-million instant ticket contract here--a contract that Michalko must sign off on.

This holds a clue to the questions in the Mark Michalko story.

Can this cheerfully disposed former Ohio lottery lawyer hold his own among the big gambling interests and others that will be seeking the multimillion-dollar contracts that California is about to parcel out?

Can he withstand the inevitable pressures? Can he keep the nation’s biggest legal lottery honest? Running smoothly? Running creatively?

Can this third son of a close-knit Slovak-American family from Garfield Heights, Ohio, get the long-stalled games up and running by fall as promised? Is he experienced enough? Savvy enough?

He says he is. His brother says that if you knew him, you wouldn’t ask. His father says any of his sons could run the lottery. His 24-year-old wife says her husband will do better than “some middle-aged person would.” But his former boss demurs.

Time will tell, says the former superior. “Yes, frankly, I was surprised when he got the job,” the boss said.

“He has not had an extensive amount of experience as an administrator. It’s an area he is going to have to grow into,” said Tom Chema, former executive director of the Ohio lottery, where Michalko served as legal counsel for five years and as a legal aide for three years before that.

“The other thing is, people might view Mark as too much of a nice guy,” Chema added. “He may have some problem with people (gambling industry vendors) coming in trying to take advantage of him with that ‘nice guy’ image. This after all is a very competitive and tough business.”

But the gambling industry ought not to underestimate Michalko, either, Chema said:

“Mark is not a devotee of winning by intimidation; he won’t pound the table, but he knows what he wants and he knows what he thinks is right . . . and he’s tough. Sometimes toughness is not a matter of showing people up in public or being hard. Sometimes it’s just a matter of raw determination, and that’s what Mark has.”

Chema, a Harvard Law School graduate who now heads the Ohio Public Utilities Commission, said Michalko “came into his own” during the last year and a half in Ohio, when he directed a revamping of the state’s $50-million computerized lottery games, including instituting provisions that can keep one gambling firm from controlling an entire operation.

“He impressed everyone,” Chema said. “He was no typical government attorney” who did just enough to get by. “He used his post to gain an extraordinary amount of knowledge about the lottery business.”

But until just before last week, when Republican Gov. George Deukmejian tapped him to be the state’s first lottery director, Michalko thought he was ready to leave government work, he said.

More precisely, he had had it with the lottery business.

‘Time for Change’

“It was time for a change,” Michalko said. “I’d assisted the (Ohio) director with most of the major decisions. . . . I’d done it all, sort of. . . . I was just looking to get out of government altogether and into private (legal) practice or corporate practice.”

Then he heard about California’s search for someone to manage the world’s largest lottery. Michalko called acting director Howard Varner. Varner liked what he heard. Meetings and negotiations ensued and in the end, Deukmejian decided to gamble on the young Ohioan.

Michalko said it was “the tremendous challenge” that attracted him to the $73,780-a-year director’s post. (His salary in Ohio was $27,164.) It was his “good balance of experience, energy, creativity and integrity” that attracted Deukmejian to Michalko, the governor said.

The new lottery director talks excitedly about getting some kind of instant “scratch off” games on the market for Californians by late September or early October. These will sell for $1 and will probably be available at a variety of outlets, including neighborhood markets and convenience stores. Michalko said the “scratch off” tickets will probably pay prizes in the range of $5 to $100, with a few awards from $1,000 to $10,000 to generate more excitement.

Michalko estimated that the major games, in which the prizes will hit the million-dollar mark, should be under way by 1986 and probably will include lotto, a game in which players pick six numbers then wait to see how well they match the six numbers drawn by the lottery. Six of six wins the big jackpot.

‘A Fun Game’

“Lotto is a fun game,” said Michalko, somewhat wistfully. California lottery employees are forbidden by law to play any of their own games. The same was true in Ohio. Michalko said he has been able to try his luck only a couple of times with lottery tickets while traveling in other lottery states.

Did he win?

“Obviously not,” he said.

In an interview, Michalko talked about protecting the lottery from dishonest players, about the principle of ensuring that minority bidders share some of the lucrative lottery contracts and about whether too many poor people are spending precious dollars on his gambling games.

As for cheating, “it’s not going to happen here,” Michalko said flatly.

“Compromising a game--that’s the worst thing that can happen to a lottery. If a lottery doesn’t have security and integrity, it has nothing,” Michalko said, lamenting how Pennsylvania was wracked with scandal a few years ago when some people figured out how to cheat on lotto. “But that’s a situation that will not be able to occur here because I will propose we adopt the system we have in Ohio. I cannot go into detail for obvious reasons, but Ohio has an incredible security system. It’s a model for other states. It can’t be compromised.”

Michalko was less adamant about the use of black, Latino, female and other minority contractors in various lottery jobs, an issue that has generated some controversy before the state lottery commission and in the Legislature.

‘Place for That’

“Well, I can tell you this,” he said, hunching over his Pepsi can at his new corner-office desk, “there certainly is a place for that, particularly in a state that has the ethnic makeup of California. Now I don’t know to what extent the participation level ought to be--that’s going to require a lot more study on my part . . . but in principle, certainly I think there is a place for some participation.”

Michalko said studies done in Ohio and elsewhere show that the “vast majority” of lottery players are not poor people spending their rent or food money but are middle class people spending “disposable dollars.” There’s very little participation, Michalko said, by the rich. “The lottery is generally a middle-class recreational activity,” he said. “I would be concerned if it were otherwise.”

Michalko conceded that his job habits put him in the workaholic category: “I work until late at night; 10- to 12-hour days are pretty standard for me. That’s just the way I am. You’ll probably see me in here on weekends too.”

When he isn’t working in the spring and summer, the 6-foot, 2-inch Michalko shoots basketball; in the winter, he skis. And all year round, he plumbs gourmet cookbooks for interesting recipes, especially from Northern Italy. He speaks with equal intensity about making a garlic-basil spaghetti sauce and keeping California’s lottery cheater-free. Michalko’s mother, Lorraine, a librarian, taught all four of her sons how to cook before they were 12, and it stuck with Michalko as a hobby.

Married 4 Years

The new director’s wife of four years, Kimberly, is a department store children’s wear buyer who hopes to find another buying job in Sacramento.

Ask Michalko what it took to bridge the gap from low-paid summer lottery intern to lottery chief in just eight years and he’ll jut his chin and speak precisely: “I think I have a certain sense of desire to achieve and do something positive and, you know, make an impact.”

“Mark always knew where he was going,” said his father, Paul, a former Cleveland sheriff’s deputy who is now a domestic relations investigator. “He never started something he couldn’t finish.”

When he was getting straight A’s in his political science courses at John Carroll University, Michalko had visions of himself as a future public office holder. But those ideas, he said, have been relegated to the back burner. “I haven’t totally ruled it out,” he said, “but I certainly am not actually considering any of that sort of thing now.”

Paul Michalko said he thinks that his lottery director son would make a good judge someday.

“I don’t think you can be anything finer than a judge,” the elder Michalko said. “It’s the closest thing you can get to God.”