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N.C. Lottery Commission Awards Vendor Contracts

Jan 31, 2006, 6:50 am

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North Carolina Lottery

The North Carolina Education Lottery Commission awarded contracts for both instant-win tickets and lotto-style games to GTECH Holdings Corp. on Monday. The deals were estimated to be worth $19.2 million in the first year alone.

Tom Shaheen, executive director of the lottery, said the selection process was "fair, comprehensive, had the greatest integrity and achieved the best result."

He said he felt good about the selection, adding: "I think we have a really strong company."

GTECH, which is headquartered in West Greenwich, R.I., offered to run the state's lottery business for a fee of 1.6 percent of the expected $1.2 billion in sales in the first full year of the games. The company also agreed to push up the start dates for scratch-off tickets by about a week to March 30.

GTECH's industry rival, Scientific Games Corp., which is based in New York, did not submit a complete bid for the lotto-style ticket contract, and the lottery commission decided GTECH submitted a better bid for the instant-win ticket contract.

As the winner of the instant-win ticket contract, GTECH must print tickets, distribute them to thousands of retailers and put other operations in place within about two months.

GTECH must pay a $100,000-a-day fine through April 5 if it fails to meet the March 30 scratch-off deadline and $400,000 a day after that.

The first lotto-style automated numbers game — probably the multistate Powerball — is expected to start May 30 under the GTECH bid, instead of in mid-June as initially expected.

The license holder for the Italian lottery, Lottomatica SpA, said earlier this month it will pay about $4.65 billion in cash for GTECH, the world's top operator of lottery systems.

GTECH and Scientific Games already operate lotteries across the country and have dozens of overseas clients.

The lottery law requires at least 35 percent of gross revenues to be spent on public school construction projects, need-based college scholarships and class-size reduction and More at Four preschool initiatives. The state projects net profits of $420 million in the 2006-07 fiscal year.

GTECH shares closed down 11 cents at $33.35 on the New York Stock Exchange, while Scientific Games shares were up 13 cents at $32.16 on the Nasdaq Stock Market.

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