I noticed something very interesting while reading a recent article in The Washington Post about recent events at the Maryland Lottery and Gaming Agency.
IGT Global Solutions Corporation (formerly GTECH) lost out on a $263 million contract with the Maryland Lottery for its “central monitoring and control systems” according to the article. After losing the contract to Scientific Games International, IGT filed a letter of protest. They didn’t stop there.
IGT doubled down and filed a second letter of protest targeting Maryland Lottery director Gordon Medenica. He sent an email to lottery staff explaining the decision-making process. The director noted in that message that the technical requirements were more important than being the low bidder.
Medenica’s statement to the Associated Press about the protest:
The real story here is the attempt by the losing bidders to bring political pressure to an ongoing procurement process. Their manipulation of an independent, objective, competitive procurement is blatantly inappropriate.
Two recent posts at Red State by an out of state blogger seemingly discuss the matter from IGT’s viewpoint. The first, by Dan Spencer, notes that Medenica “has been appointed, but not yet confirmed by the state Senate.”
That sure sounds like IGT is sending a warning shot at Medenica, as well as a subtle attempt to encourage legislators to threaten his confirmation.
Another post at Red State cites “an industry insider” who claims that “bid protests” and “legislative scrutiny” could cause problems for Medenica because he was senior executive for Northstar New Jersey Lottery Group, a “business venture that was partially owned by Scientific Games.”
What this shadowy “insider” left out is that – in addition to Northstar being partly owned by SGI – it was primarily owned by IGT. In fact, IGT owned just over 82% of Northstar, and also provided part of Northstar’s staff.
More on IGT and Lottery Director Intimidation
This all seemed strange, so I started looking into previous lottery contracts around the country and found that IGT has tried similar intimidation tactics in a few other states.
In Texas in 1998, GTECH paid out a $725,000 settlement to former lottery director Nora Linares to settle a lawsuit. The Linares suit claimed GTECH “was to blame for interfering with her employment, emotional distress and making it difficult for her to get a new job.”
Linares claimed GTECH, which operated the Texas lottery, gave her boyfriend a $30,000 consulting contract she knew nothing about before it was made public in 1996. She also alleged that the GTECH engaged in a “systematic effort” to get her fired from her job in an attempt to cover up what they had done.
In Arizona in 1993, lottery director Bruce Mayberry was fired from his job, allegedly thanks to the insistence of a former staffer of Arizona Gov. Fife Symington who then worked for GTECH. Reportedly, Mayberry “tried to force the vendor to live up to its contract.”
As a result, the Arizona Attorney General announced an investigation of the firing.
One thing mentioned in coverage of that firing involved Maryland back then:
If [Attorney General] Woods looks for a pattern, he won’t have to look far, because GTECH has a habit of hiring political insiders to do its bidding. GTECH hired two associates of Maryland’s governor during a controversial bidding war for that state’s lottery contract. GTECH won the contract, but the U.S. attorney for Maryland has conducted a yearlong criminal probe into alleged bid-rigging.
Reporting from Arizona also mentions that the Kentucky lottery director and the entire lottery board resigned after a state audit showed that “GTECH had benefited from contract loopholes and sloppy oversight.
In 2015, former Rhode Island Speaker of the House Gordon Fox went to federal prison after pleading guilty to accepting bribes. While GTECH wasn’t involved in this case, they were supporters of him. In fact, he paid a $10,000 fine in 2003 for a conflict of interest when he voted for legislation that would give GTECH $770 million and result in his law firm being hired by the company. Fox was regularly “schmoozing” with lobbyists from the company, including at Red Sox games in Fenway Park.
This is probably only the tip of the iceberg with lottery and gaming contracts across the country and around the world. While I do not really care who the Maryland Lottery agency selects to run the lottery, this kind of political hardball by a government contractor in my own state does get my attention.
More to come.