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Intralot wins Idaho Lottery from larger rival Gtech

May 3, 2006, 8:36 am

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Idaho Lottery

The Idaho Lottery will have a new vendor starting next February after a Greek company that's expanding in the U.S. won a $30 million contract to run the state's scratch ticket and online gaming system from a larger rival.

Intralot USA, a Georgia-based unit of Athens, Greece-based Intralot, beat out Rhode Island-based GTech by promising better service — for instance, Idaho's online games, including Powerball, will run 24 hours a day under Intralot, up from the previous 22 hours — and a more-attractive price.

The seven-year contract has an option to extend for up to three years. The arrangement could be finalized as soon this month, said David Workman, a spokesman for the Idaho Lottery in Boise.

The state's lottery last year chipped in $26 million for public schools and buildings on total revenue of $113 million.

Intralot, which started operating in the U.S. in 2001, has won contracts in Montana, Nebraska and Idaho in part through a strategy of aggressive pricing. George Parisot, director of the Montana Lottery, has said his state will save $13.9 million over the next seven years under a new contract Intralot won over existing vendor Scientific Games International of Alpharetta, Ga.

It's both technology and price, said John Pittman, a spokesman for Intralot's U.S. unit, which is based in Duluth, Ga. "In Idaho, we did win technically and we had lower costs. We do research into the state. We talk to major retail groups, about what they like and don't like about the current system. We try to prepare as much as we can, about that individual state."

Last year, the Idaho Lottery paid Gtech $3.5 million to provide the lottery's online services and terminals that print Powerball, Wild Card and Pick 3 game tickets, and verify winning tickets. Workman wouldn't disclose specifics of how much Idaho will save with Intralot over the bid from Gtech, which has had the contract to run the Idaho Lottery online games since 1989.

"Both bids (were) technically sound," he said. "Yet, when it came to providing the services for a better cost structure, Intralot's bid became much more attractive to the lottery."

The date for the actual switch in Idaho to Intralot machines is Feb. 19, 2007.

Workman said lottery customers likely won't notice any changes, though employees of convenience stores may require some training.

Intralot, which has won three of eight lottery contracts it's bid for in five years, also plans to compete with its larger U.S. rivals on upcoming bidding in Oregon, New Mexico, West Virginia, Kansas and Illinois.

For Montana, the switch to Intralot machines on March 31 was that state's third vendor transition. Lottery officials did a three-week, 17-city tour to explain the new system to retail employees before the change from Scientific Games.

Some Montana stores during the new system's first week of operations experienced problems, which were exacerbated by high ticket volumes due to a large jackpot, said Jo Berg, a spokeswoman for the Montana Lottery. Since then, however, sales have returned to normal levels — around $36 million annually — and sales clerks have said the new systems are easy to operate without errors.

"It's been a smooth transition overall," Berg said. "Those bugs seem to be pretty minimal."

Intralot expects to boost its existing 100-employee U.S. payroll by 30 workers after the Idaho contract win.

It'll likely interview employees from Gtech, Pittman said. Intralot's largest market is still Greece, but it does business in 33 countries and had total revenue of $660 million last year.

The company will install an all-new Idaho satellite system, said Christos Tzoumaras, who oversees the Montana and Idaho operations. It will also have warehouse and distribution sites in the state and will replace Gtech equipment — in place since just 2003 — at retail lottery ticket sale locations including convenience stores and gas stations.

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