As part of a major deal with 24 states, including California, an Italian company has purchased the United States firm that runs lotto and other online games for those states. The merger, where Lottomatica acquired GTECH, was finalized in August and expected to be completed by year's end.

The agreement surprised and stunned state lawmakers. Not even the attorney general's office, which is supposed to defend the state lotto, was aware of it. The deal was orchestrated by the state lottery's acting director, Joan Borucki, a gubernatorial appointee who stands firm in defending the $4.7 billion merger with little, if any, public scrutiny.

Legislators and watchdog groups are concerned after seeing internal documents about the company's business practices, lotto terminal shutdowns, lack of audits, absence of vendor and employee background checks and whether the U.S. accounting and legal probes of the deal were adequate.

According to records obtained by MediaNews Group through a California Public Records Act request, the Italian government levied a $7.5 million fine against Lottomatica for colluding with a competitor and a similar penalty for a one-day outage of the country's games.

"This decision brings into question the lottery's integrity," said Fred Jones, an attorney for the California Coalition Against Gambling Expansion. We couldn't agree more.