Competition hot for Texas lottery contract
AUSTIN, Texas
And big businesses want a piece of that action.
Companies that run lotteries around the world are expected to
ante up by next week, proposing how they would oversee the Texas
lottery if they land its lucrative operations contract. The Texas
contract, currently held by GTECH Corp., rarely comes up for bid,
so the stakes are high for the competing businesses and taxpayers.
It's a coveted contract, one that could pay the winning bidder
as much as a hundred million dollars per year.
Three firms -- Scientific Games Corp., Intralot Inc. and GTECH --
are likely to submit bids, according to comments and actions by the
companies since the beginning of the year, when the Texas Lottery
Commission issued a request for proposals.
"The Texas Lottery is a highly valued customer of GTECH's and
we are preparing to bid," said GTECH spokesman Bob Vincent, who
wouldn't discuss the bidding process any further. Other likely
bidders wouldn't offer any comment this week.
Since the request for proposals, the bidding process has been
caught in conflict because a consulting company the commission
hired to help write the bid request had been doing business with
GTECH. That led to questions about whether GTECH has an unfair
advantage in the selection system.
The consultant, Gartner Inc., had its contract revoked by the
commission, and the deadline for bids was twice extended to remove
any doubts about unfairness in the bidding, lottery officials said.
The new deadline for bids is Tuesday.
A panel of lottery commission officials and a representative
from the Texas comptroller's office will evaluate the bids, with a
decision expected in September. The lottery commission hired a new
consultant company, Battelle, to take the place of Gartner and help
check the bids to see if they meet all the commission's
specifications, said lottery spokesman Bobby Heith.
The bidders' financial proposals won't be revealed by state
officials even after Tuesday's deadline passes. Only when the
winning bid is selected will provisions of the new contract be
public, Heith said.
GTECH, a subsidiary of the Italian firm Lottomatica SpA, holds
the current 10-year lottery operator contract. Texas' lottery games
generate some $3.7 billion in sales per year, and the company gets
to keep a percentage. It was paid $101 million by the state in the
last fiscal year.
Intralot, a Greek firm and an intense rival of GTECH, has been
the competitor most outspoken about a potential conflict of
interest between GTECH and Gartner. In the past, an Intralot
consultant called for a third-party investigation of GTECH's
dealings with Gartner and the company wrote a letter to the lottery
commission this spring voicing concerns about a "potential patent
unfairness" of the bid system.
GTECH and Gartner representatives have said the two companies
had no improper communications about the Texas lottery. Lottery
Commission officials said their internal review found no evidence
of impropriety.
State Rep. Jim Dunnam, a Waco Democrat, wants state lawmakers to
ask more questions about that business arrangement and any plans
for generating additional lottery sales in light of the estimated
$18 billion state budget shortfall legislators will face in 2011.
In a letter to several Texas House committee chairmen last week,
Dunnam also questioned why the lottery commission makes a point of
banning bidders from offering other gambling options such as slot
machines, when those aren't even legal in Texas. And, he said, he
would like to know if lottery advertising and marketing are
targeting lower-income Texans.
"This is too big of an issue to not have some heavy duty
discussions," Dunnam said.
(Copyright 2010 by The Associated Press. All Rights Reserved.)
APTV-06-24-10 1159CDT
