IBJNews

Lottery Commission inks contract, losing bidder files protest

Back to TopCommentsE-mailPrintBookmark and Share

Hoosier Lottery officials signed a 15-year contract Friday afternoon with private manager GTECH Indiana, which promises to bring the state $1.76 billion over the first five years of the contract.

Meanwhile, the only other bidder in the landmark outsourcing deal, Scientific Games, has submitted a letter of protest. Games, which is the lottery's largest vendor, complained in the Oct. 5 letter that it was not given an opportunity to give a "best and final" offer even though its bid was only 1.7 percent less than GTECH's. The letter, which asked the lottery commission not to execute a contract with GTECH, said the commission also failed to consider the cost savings that would have come from assigning the lottery contract to an existing vendor.

Indiana will be only the second state, following Illinois, to shift all its lottery operations to a private manager. Lottery officials have generally discussed outsourcing as a can't-lose proposition because the private manager will owe a penalty if it fails to meet the income targets set out in its bid, and the state would share in excess profit.

On Friday, however, lottery spokesman Al Larsen noted that GTECH's penalties and bonuses will be limited to 5 percent of the threshold income, as laid out in the bid. That means the state would miss out on some of the promised income if GTECH under-performs by more than 5 percent.

GTECH's bid documents, released Friday, show the company promised to deliver $256 million in its first full fiscal year of operations, ending June 30, 2014.  Then income is supposed to ramp up to $410 million by 2017 and 2018.

GTECH has not yet laid out its business plan for the remaining 10 years of the contract. The Indiana Lottery Commission will keep control over “significant” business decisions and will approve or reject the company’s business plan each year.

The commission chose GTECH, a subsidiary of the Italian firm Lottomatica, at its Oct. 3 meeting.

GTECH Indiana will be led by Connie Laverty O’Connor, who recently oversaw a consortium of private managers in Illinois and held senior management jobs at lotteries in New York and Georgia. “Working hand-in-hand with the Hoosier Lottery, we will build a world-class team aligned around a common goal, a commitment to delivering incremental revenues to the residents of Indiana,” she said in a prepared statement.

GTECH’s bid documents, released Friday, revealed little about its business plan. Most of the more than 1,600 pages were redacted as "trade secrets," including GTECH's plans for draw games such as Lotto, scratch-off tickets, and much of its retailer expansion strategy. Officials said earlier this month that GTECH wants to broaden the lottery's customer base by expanding sales to grocery stores, big box stores and discount stores.

The lottery and GTECH are keeping confidential the “brand transformation and marketing plan.”

The lottery commission requested bids that didn’t hinge on expanding gaming, which the commission defines as the addition of new games like Keno, or an Internet-based lottery. But lottery providers were encouraged to submit an “enhanced bid” describing the outcome of those options.

Should Indiana want to expand gaming, GTECH says it could produce another $233 million over five years with “monitor games,” which would include Keno.

Adding Internet-based games could bring $23 million over five years, and video lottery terminals could produce $920 million over five years.

Hoosier Lottery brought in about $227 million for the fiscal year ended June 30, and expects to generate $221 million next year. Lottery officials predict that a state-run lottery would bring in $4.2 bilion through 2028 but that the private-sector manager could generate $6.3 billion.

ADVERTISEMENT

  • Something Smells
    Why is the Hoosier Lottery sharing any income with a vendor? Is Karl Browning so incompetent that he couldn't sign distribution agreements with big box retailers himself and get 100% of the volume growth for the State of Indiana?
  • How much will this cost?
    I missed the part about how much the company will make to bring in the anticipated amount of revenue, before it gets to split the revenues about the anticipated amount. I can't wait for all the flashing casino lights and bells they will install at the gas stations in their attempts to sell more tickets.

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. The Affordable Care Act is not the reason for the slow recovery and lack of high paying jobs for low skill workers. This is a trend that has been going since the early 80's. The recovery is real in the sense that GDP has been growing steadily at a rate of roughly 2.5% since the recession ended in late 2009 (newsflash, the stimulus worked) and the unemployment has been steadily dropping. The reason issue we are facing deals with a skills gap (not enough workers with the right credentials / experience) and wage stagnation due to corporate America being focused solely on maximizing profits for shareholders and not caring about the American middle class. Why should they? Multi-billion dollar mutlinational companies keep offshoring their profits in order to avoid paying taxes (which makes our deficit worse) they convince Americans to fight amongst themselves. If you want to create jobs and reduce the deficit, raise the minimum wage and change corporate tax laws. Of course, if you want to continue to belive that tax cuts for wealthy create jobs (which they don't) and allow corporations and the wealthy to continue to make you cover more and more of the costs of maintaining infrastructure, funding the military and other government services, then keep voting Republican. Hopefully someday you wake up and realize what's been going on since Reagan took office.

  2. Helloooooo, my name is Kate. I am so joyous to share this wonderful testimony about what Dr. Osoijiakhena, a great spell caster, did for me and my family. I wedded a year and 6 months ago, we were very happy during this whole period, i really love my husband so so much. I started noticing changes when he started coming home late at night, he stop paying attention to me, i later found out that he was having an affair with another lady, i dont know what she did to get to him but she really got a hold on him. He started spending weekends with her, and threaten for divorce. I was so heart broken and devastated, i spent many night thinking on how to get my husband back. A friend took it upon herself to to introduce me to one Dr. Osoijiakhena, a great spell caster, who once helped her with a spell that reunited her family and helped her husband secure a very prolific job. Though i had my doubts and never believed, but i decided to give it a try because i was helpless. I contacted Dr. Osoijiakhena, the Spell caster, to help me reunite my family by bringing back my husband from that other woman and break whatever hold she had on him. He only just told me that it's a minor issue, once i provide and do everything he will ask me to do, then i will have my family back again. I did everything he required. And he did it!!!!! My husband returned back to me and pleaded for forgiveness, and i also secured a well paid job in a big company, just as the great spell caster, Dr. Osoijiakhena said. I am so so happy to share my testimony on this wall. I am using this medium to tell every one that has same or similar problem to try the great Dr. Osoijiakhena through his mail: drosoijiakhenaspell@gmail.com......he is so real!!!!! He can also help you with: (1) IF YOU WANT YOUR EX GIRL/BOYFRIEND TO RETURN BACK TO YOU (2) IF YOU WANT YOUR HUSBAND/WIFE BACK (3) IF YOU WANT TO BE PROMOTED IN YOUR OFFICE (4) IF YOU WANT YOUR MAN OR WOMAN TO LOVE YOU (5) IF YOU WANT A CHILD (BARREN) (6) IF YOU WANT TO BE RICH/WEALTHY (7) IF YOU WANT YOUR HUSBAND/WIFE TO BE YOURS FOREVER (8) IF YOU'VE BEEN SCAMMED AND WANT YOUR MONEY BACK (9) IF YOU ARE HAVING DELAY IN GETTING MARRIED (10) IF YOU HAVE A COURT CASE AND WANT TO WIN (11) IF YOU'RE A DRUG ADDICT AND YOU WANT TO REALLY STOP (12) IF YOU CANNOT IMPREGNATE A WOMAN (STERILE) (13) ALL TYPES OF DISEASES I advise you to contact the great Dr. Osoijiakhena, the spiritualist for solutions via his email: drosoijiakhenaspell@gmail.com

  3. Sergeant McNally is buried in Cathcart Cemetery on a hill known as McNally%u2019 Hill. The Cemetery is in a natural bushland setting and is very well maintained.The emergency department at Ararat Hospital is known as the John McNally Emergency Department. Cathcart is approx. 4.6 km from Ararat and is approx. 345 m above sea level.

  4. My spring chicken of a Mom is turning 75 years young. She is a big fan of Frankie and I think she would get a big kick out of the film. I wanted to take her to the Broadway play but am priced out. Thanks for your time and consideration. Oh yea, Wildwood! Joie

  5. I thought this company would go bankrupt in 2013/2014. I predicted that four years ago. I was wrong. It will take another couple of years, but they will get there.

ADVERTISEMENT