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Aug 9, 2006, 9:39 am (1 comment)
GTECH Holdings Corp., which has agreed to be bought by Italy's Lottomatica, said on Tuesday that its contract to provide lottery services to its largest customer, Brazil, will not be renewed.
The contract will expire on Aug. 13, the company said in a filing with the U.S. Securities and Exchange Commission.
Its subsidiary, GTECH Brasil Ltda, has provided lottery services to the operator of Brazil's national lottery, Caixa Economica Federal, since 1997.
Revenue from the contract accounted for 11.1 percent of GTECH's fiscal 2006 sales, making Caixa its largest customer.
GTECH had previously said that Caixa was developing an in-house system to replace the services provided by its Brazilian unit.
The company's initial contract expired on May 14, and it was providing services under a new 90-day agreement.
GTECH agreed earlier this year to be bought by Lottomatica in a $5 billion deal that will create the world's biggest lottery operator.
Reuters
No surprise here - CAIXA would have been lost to GTECH even without their being "accuired" by LOTTOMATICA!
This vendor's reputation for heavyhandedness has eventually come home to roost and CAIXA seized the chance to fire them when other jurisdictions (especially in the US) started voicing concerns about potential security and 'sovreignty' effects, created by the proposed merger.
Added to this reverse, is the fact that competion from INTRALOT and to a lesser degree SCIGAMES has already robbed the giant of a few mid-size accounts and a few more are currently being RFPed .
The truth is that lack of pricing power for ALL system vendors will be a major problem, going forwrd.
PELHAMMR