Lottery seeks $71M unbid pact
The Ohio Lottery Commission again will trek before the State Controlling Board on Monday and ask lawmakers to approve an unbid, $71 million contract with the Greek company that operates its gaming systems.
Intralot has been paid $259 million since receiving its first contract in 2009 to provide the state’s system of lottery sales terminals, later supplemented by electronic slot machines at racinos such as Eldorado Scioto Downs.
A consultant recommended last year that the Lottery Commission extend
Intralot’s contract through 2021 and then accept bids from competitors to “produce the optimal results.”
But the lottery is disregarding the advice of Spectrum Gaming Group, which was paid $601,600 last year to suggest ways to improve operations and the current $1 billion in annual profits — which go to schools.
In addition to the contract through mid-2019, the commission is asking the Controlling Board to waive competitive bidding and approve two-year contract renewal options with Intralot through mid-2027.
“The lottery is constantly working a number of new initiatives to help generate more money for education. Maintaining the current gaming vendor will help the lottery implement those programs in a cost-effective and timely manner,” said spokeswoman Danielle Frizzi-Babb.
Another consultant, Rossi Enterprises, negotiated with Intralot this year to obtain the best possible contract for the state, the lottery commission said in its contract submission to the Controlling Board, which must OK all such deals.
Extending the contract through mid-2027 is desirable because Intralot charges a low rate and its competitors never “will beat or even match the existing commission rate or services,” Rossi wrote.
Intralot currently receives 0.82 percent of lottery sales, the second-lowest rate (behind Virginia’s 0.78 percent) among 12 states surveyed by Rossi. The rate in the new contract would remain the same.
The Spectrum report recommended against a long-term contract because “extending the current contract without a competitive bid does not ensure that the lottery is receiving the best value. ... A well-managed competitive bidding process can advance the public interest and produce the optimal results.”
Rossi disagreed, citing the cost and time of converting
to a new sales system. “When a contract is one of the least expensive in the industry, as in this case, going out to bid should be considered carefully,” the firm wrote.
In exchange for the sixyear extension, lottery officials said Intralot will provide nearly $70 million in savings, equipment and upgrades, including $39 milllion for 13,000 upgraded retailer sales terminals.
The lottery also is asking the Controlling Board, a bipartisan board of state lawmakers and an appointee of Gov. John Kasich, to approve an unbid $12 million contract with Intralot to purchase and operate up to 750 multipurpose “Quick Keno” self-service lottery terminals for placement at retailers.
Intralot has opened a lottery vending-machine manufacturing facility in Mason, near Cincinnati, and consolidated other operations to now employ 166 people in Ohio, the lottery commission reported.