Lottery contract dispute may be bound for court

Posted Dec. 27, 2010, at 7:46 p.m.

AUGUSTA, Maine — The fate of a $35 million contract to operate the Maine lottery remains up in the air several weeks after the current operator convinced an appeals board to renege on a contract awarded to their competitor.

Two national gaming companies — Scientific Games Corp. and Intralot Inc. — have been battling for months over the contract to provide instant lottery ticket terminals and online lottery services to the state.

In a reflection of the tough economy, the public debate over the lottery contract has focused on which company can offer the most cost-effective services to the state while employing Maine workers.

Earlier this fall after a competitive bidding process, Intralot won the six-year contract to provide the services to the Maine Bureau of Alcoholic Beverages and Lottery Operations. Intralot, which is headquartered in Greece but has offices in Georgia, submitted the lowest bid, at $35 million, and scored the highest on a points scale.

That decision was appealed by Scientific Games, which holds the current contract that expires next year. Earlier this month, an appeals committee within the Maine Bureau of General Services agreed with Scientific Games after finding fault with the point system used to score the bids.

“Scientific Games felt strongly that all of the advantages of its proposal were not fairly considered,” said Charles Dingman, an attorney with the law firm Preti Flaherty who represented the company.

Intralot, meanwhile, has roughly two weeks to decide whether to take its case to the courts in hopes of heading off another bidding war for the lottery system.

“I’m told they are examining all of their options,” said Mark Robinson, who handles public relations for Intralot in Maine.

Jobs and rumors of potential outsourcing to other states have become a focal point in the debate over the lottery contract.

Scientific Games, which is based in Georgia but has offices in Gardiner, claims that Intralot’s proposal would result in the loss of 20 Maine jobs that would be shipped to an Intralot facility in Vermont. As a result, Gardiner-area elected officials joined the effort to overturn the contract award.

Intralot representatives insist those claims are untrue.

“The bottom line is the Intralot proposal proscribed that they would have 20 employees in Maine, which is two less than what Scientific Games currently has,” Robinson said.

Additionally, Intralot’s bid on the six-year contract was roughly $2 million less than Scientific Games’ proposal, according to published reports. Those savings would grow to $3.6 million if the state agrees to four one-year contract extensions, as allowed in the rules.

“So yes, there are two less jobs but that has to be balanced by the $3.6 million in savings,” Robinson said.

Scientific Games officials counter that they have three decades’ experience working in Maine and that the scoring system used by the bureau could not take into account other aspects of why their application was superior.

“We believe the record shows that, from our experience in the American market and our expertise with game design, we are able to increase [participation] and improve lottery performance better than anyone else in the business,” said Patrick Traub, a regional vice president at Scientific Games.

The Maine Lottery generated $49.5 million in revenue for the Maine General Fund and provided $144 million in prizes to players during fiscal year 2008, the last year for which figures were available.

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