INDIANAPOLIS (AP) — The Hoosier Lottery’s largest vendor is protesting Indiana’s decision to award a private management contract to a rival company, contending in a letter that state officials discriminated against it throughout the contract selection process.
Attorneys for Scientific Games also said in their Oct. 5 letter that lottery officials failed to take into account transition costs that would be lower for the New York-based company since it is currently the largest Hoosier Lottery vendor.
Last week, the State Lottery Commission chose Rhode Island-based GTECH over Scientific Games to run the lottery’s marketing, sales and distribution services. Officials announced Friday that the state had finalized a 15-year contract with GTECH.
The Indianapolis Star reported (http://indy.st/QW85Cf ) Friday that Scientific Games also argues in its letter that it should have been given a chance to improve its bid because the profit promised to the state in the two bids differed by only 1.7 percent.
Lottery officials responded in a letter Thursday rejecting the allegations and asking Scientific Games to be more specific about its charges.
GTECH promised in its contract proposal that it would generate $1.76 billion in profits for the state over the first five years of the 15-year private management contract. That sum is about $500 million more than lottery officials projected the lottery would bring in on its own.
Lottery officials have said GTECH will be required to make up the difference if it doesn’t meet its goal.
GTECH will take over day-to-day administration of the Hoosier Lottery’s marketing, sales, distribution and customer service operations on or about Feb. 1, 2013, making Indiana only the second state to outsource management of its lottery.
Hoosier Lottery Executive Director Karl Browning said in a statement Friday that the goal of the lottery’s search for a private manager was ‘‘to create a positive working relationship with a provider that could substantially improve the performance of the Hoosier Lottery.’’
‘‘Our selection team was clearly impressed by GTECH’s business plan, as was the Commission, and the credibility of that plan paved the way for a smooth negotiation over the past several days,’’ Browning said.
GTECH’s business plan includes expanding the number of locations where lottery tickets are sold to places like Wal-Mart and Walgreens.
However, many details of the company’s plan remain unclear. The Star reported that the vast majority of the documents in GTECH’s proposal were blacked out to protect ‘‘trade secrets.’’
Other lottery vendors have questioned whether GTECH’s promised income is attainable.
In Illinois, the first state to outsource management of its lottery, results have been mixed. Northstar Lottery Group, a partnership between GTECH and Scientific Games, brought in record profits but fell short of the $825 million it promised that state to win the bid.
Illinois is now in arbitration over that issue, and an independent mediator has tentatively ruled that Northstar should be allowed to reduce its initial profit projection based on the state’s actions.
GTECH’s new Indiana entity, GTECH Indiana, will be led by Connie Laverty O'Connor, a 32-year lottery veteran who recently served as Northstar’s CEO.