Aug 18, 2006, 3:15 pm
The Texas Lottery Commission began laying the groundwork Wednesday to take over the $95 million-a-year operation historically carried out by a private corporation in the event that the state is no longer satisfied with its work.
Officials made clear that the prospect of the lottery severing its 14-year relationship with Rhode Island-based Gtech Corp. was highly remote.
But they also expressed deep concerns over recent reports that the gaming giant, which is soon to be sold to the Italian firm Lottomatica, had engaged in bribery with lottery officials in other states and countries and had paid money to consultants in countries where it was seeking to do lottery business.
Many of the questionable dealings were first laid out to the lottery commission last month by Texas Department of Public Safety officials who have examined Gtech's operations to make sure Texas' interests are not compromised once the deal with Lottomatica is finalized.
Bruce Turner, Gtech's chief executive officer, said the corporation has instituted numerous changes and safeguards in recent years to raise the ethical standards of its employees and consultants worldwide. And he said those standards would remain in place after operations are realigned under Lottomatica's management.
"We have voluntarily opened the company to greater inspection and review," Turner said.
Gtech has run the Texas lottery's instant-ticket games and provides other support services for the agency.
It is paid 2.699 cents for every dollar in ticket sales, which amounts to about $95 million a year. It also operates lottery functions in about two dozen other states and 50 foreign countries.
Several states have endorsed the pending deal. The Texas Lottery Commission has no plans to formally endorse the transaction, but Chairman C. Thomas Clowe said he has been presented with no evidence to suggest the new company would be unsuitable to keep the contract.
Some lawmakers, however, have raised concerns over whether Texas' interests would be safeguarded when the deal is completed. And if the new company were to fall out of favor with Texas, it's doubtful that another vendor could be found to take over.
When the current contract with Gtech was signed in 2000, no other company was qualified to meet the terms laid out by the Texas lottery.
Clowe said he instructed the lottery staff to develop a plan for a state takeover of Gtech's functions as a fail-safe option. However, it would take an act of the Legislature to actually implement the plan.
State law caps the number of full-time lottery employees at about 180, and the lottery commission does not have the authority to buy the computers and other equipment it would need to carry out Gtech's functions, Clowe said.
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