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R.I. gaming company refiles Cahill suit

Alleges treasurer helped bidders who gave money

By Frank Phillips
Globe Staff / July 10, 2010

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A Rhode Island gaming firm is headed back to court to pursue its contention that state Treasurer Timothy P. Cahill rigged lottery contracts in exchange for campaign funds, a move that could reignite a troublesome controversy for his flagging campaign for governor.

Bingo Innovative Software refiled its suit in Suffolk Superior Court yesterday after talks last week with the attorney general’s office aimed at settling the case fell apart. In its bid with the state Lottery Commission to televise bingo games, the company says it failed to get a contract because it has not been a major contributor to Cahill’s campaigns.

The reemergence of the legal battle comes at a sensitive time for Cahill, as he struggles to gain a foothold in the race for governor. Recent polls show him slipping far behind Governor Deval Patrick and Republican Charles D. Baker.

Cahill’s staff said he would not be available for comment. First Deputy Treasurer Grace Lee lashed out at the move by Bingo Innovative, accusing the company of making bogus allegations to put political pressure on the treasurer and clear the way for getting a contract with the Lottery Commission, which Cahill chairs.

“This is nothing more than extortion by litigation,’’ she said in a statement.

Bingo Innovative contends Cahill blocked the firm’s contracting with the agency to create a bingo game, despite predictions of profits it would create for the lottery. The company had originally filed its suit in federal court, but agreed earlier this year to withdraw the case, saying it would instead seek redress in the state courts.

Since then, however, the firm’s lawyer, Lee Blais, had been talking with Attorney General Martha Coakley’s office, which is representing the lottery, in an effort to reach a compromise, according to people involved in the case.

According to sources involved in the negotiations, the breakdown of settlement talks came when the Lottery Commission insisted that, if Bingo Innovative wanted the state bingo game contract, it had to negotiate a separate deal with a competitor; Bingo Innovative rejected the demand.

Blais said he plans to begin taking depositions immediately, and his list of those he says he will cross-examine include Cahill and several high-profile figures, including public relations powerhouse George Regan; Patrick’s former chief of staff and current chief political strategist, Doug Rubin; and Thomas F. Kelly, Cahill’s close political confidant.

Bingo Innovative contends that Cahill and Cavanagh engineered a ‘’pay to play’’ scheme that favored Scientific Games International. The suit alleges that Scientific Games, the state lottery’s longtime supplier of scratch tickets, was given favored treatment in a $22 million contract renewal in 2004 in exchange for campaign donations. Bingo Innovative did not bid, but has used the deal to argue that the odds were stacked against the company when it sought subsequent state work.

Scientific Games and Bingo Innovative were the only bidders for a 2007 bingo contract. The Lottery Commission rejected the bids, but signed an agreement with Bingo for a pilot program, which did not go forward.

At the center of the allegations is Kelly. Scientific Games paid him $3,000 and $4,000 a month in its effort to retain the contract, because of his relationship with the treasurer. The payments, not revealed at the time, were directed through Regan’s firm, which Scientific Games hired to help win the contract.

While Cahill and the Lottery Commission pondered the contract, Kelly, who collected $132,000 from the company in consulting fees, was pushing Scientific Games executives to donate to Cahill’s political committee, according to sources involved in the procurement process.

Cahill has denied he knew about Kelly’s fund-raising or his income from Scientific Games.

Scientific Games cut ties to Kelly in December 2008 after the Globe reported that he also had an agreement with Bingo Innovative that guaranteed him as much as $2.4 million from the sale of the televised bingo game if the lottery used its product.

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