Saturday, October 20, 2012

Hoosier Lottery Puts Privatization Documents Online

The Hooiser Lottery has now made available documents related to the award of a 15-year privatization deal with an Italian-owned company, GTECH, including the final contract the state signed with the company. A quick review of the contract reveals that it is strikingly similar to the privatization agreement the state of Illinois' lottery entered into with Northstar, a joint venture between GTECH and Scientific Games. The contract headings, definitions, and terms are virtually identical, suggesting that attorneys for the state of Indiana simply "cut and paste" the Illinois contract. GTECH has promised the state of Indiana $1.76 billion in revenues during the first five years of the agreement. Illinois officials have already been feuding with Northstar because it failed to meet income targets provided for in its contract with the state. Efforts by the state of Illinois to force Northstar to pay a penalty under the contract were unsuccessful during an arbitration of the parties' dispute.

Scientific Games, an incumbent vendor with the Hoosier Lottery, has protested the awarding of the contract to GTECH. In a letter written by attorneys at the law firm of Krieg DeVault, Scientific Games complains that the award of the contract to GTECH violated the Indiana Administrative Code, Indiana's procurement statute, Indiana's Antitrust Act and the equal protection and due process clauses of the state's constitution. Scientific Games' attorneys complains that the process for protesting contract decisions in the Indiana Administrative Procedures Act was repealed in February, 2011 and no substitute regulations were promulgated. When Scientific Games' attorneys asked the Hoosier Lottery's attorney what procedures were to be followed for protesting an award, the attorney told them that the protest procedures could be found within the Request for Information; however, Scientific Games' attorneys complain that the RFI provided no procedure or deadline for protesting a final decision.

More specifically, Scientific Games' attorneys complain that the Commission awarded the contract to GTECH without seeking best and final offers from the bidders despite their being only a 1.7% difference in income offered by the second-highest offer. The protest letter complains that the Commission discriminated against bidders by not sharing all questions and answers submitted during the bidding process by competing bidders. Scientific Games complains that the evaluation criteria used by the Commission were "vague and ambiguous" and that the Commission failed to property evaluate its business plan since its transition costs would be less as an incumbent vendor. In a reply letter from the Commission's attorney, the Commission denied the "blanket allegations" contained in Scientific Games' protest letter. It added that the allegations were too "general and conclusory" to offer a formal response. It gave Scientific Games' attorneys one day to respond after taking nearly a week to respond to Scientific Games' protest letter.

As a Fort Wayne Journal-Gazette story earlier complained, little information can be gleaned from the proposals submitted by the two bidders because so much of their responses have been redacted under a claim of confidential and proprietary information.


I know said...

The Lottery Commission clearly took their game plan from the Indiana Gaming Commission who pulled the same contrived stunts when it awarded the 40 year contract to the favorite children who had been state appointed committee representatives to the Gaming Commission.

Just ask for State Rep. Jerry Denbo from French Lick and he can tell you it is the same story all over again!

The Attorney General will tell Ronald Perlman and the other shareholders of Scientific Games that have been vendors in Indiana before that no good deed goes unpunished.

Boy the spots on the leopard in Indiana government never change colors do they?

Cato said...

Indiana government is completely absent any moral authority or social contract to tell me that I can gamble with one private party, but not another.

If any private gambling is legal, all is legal.