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N.J. Lottery throws out GTECH contact

New Jersey LotteryNew Jersey Lottery: N.J. Lottery throws out GTECH contact

State to rebid lottery deal as lobbyist concerns arise

Seeking to erase concerns the state's long-time lottery vendor might have enjoyed an inside edge in winning its latest contract, New Jersey state treasurer Bradley Abelow announced yesterday the state will rebid the job for the third time in 15 months.

Abelow ended special hearings that have been going on before former state Supreme Court Justice Daniel O'Hern Jr. and said the department will move "quickly" to solicit new bids.

During those hearings, GTECH Corp., the previous winner and operator of the state's lottery since 1984, was trying to prove the original bid was legitimate. Scientific Games, the loser and GTECH's main industry competitor nationally, challenged it on ethical and technical grounds. Abelow had ordered the hearing in August to get an independent review of the bidding process.

After several days of hearings, Abelow said he concluded it would be impossible to convince the public MWW Group didn't influence the Lottery Commission in GTECH's favor.

Until April, MWW worked for both the Lottery Commission, doing lobbying and public relations, and GTECH, as the company's lobbyist.

Abelow said the hearings made clear MWW officials may have discussed with GTECH officials strategies to put GTECH in a better position to win the lottery contract. GTECH and MWW officials previously have said they were careful to avoid doing anything that compromised the process.

"In the context of the award of a multiyear, multimillion-dollar contract to operate a two-billion-dollar-a-year operation, the integrity of the lottery cannot be placed into question," Abelow said.

The treasurer not only ordered a new round of bids, but also put in place procedures that will create a more open and fair bidding process "free from outside influence and any apparent or real conflict of interest."

The news predictably distressed GTECH officials.

"We were surprised and disappointed," said Robert Vincent, spokesman for GTECH. "This is unfair and really makes a mockery of this entire process."

However, Hersh Kozlov, attorney for Scientific Games, GTECH's main industry competitor and the losing bidder up until now, applauded the treasurer's action.

"We are pleased with the outcome," Kozlov said. "A full and fair and open competitive bidding is all we asked for. And we look forward to participating in that process."

In July 2005, GTECH bid $142.5 million for a five-year contract; Scientific Games bid $75 million. Treasury department officials later declared GTECH's proposal technically superior but asked each bidder to submit a new "best and final offer."

GTECH bid $106.7 million, Scientific again submitted a $75 million bid. GTECH won the second bid in November 2005.

Because the five-year lottery contracts may be renewed for an additional five years if there are no problems, the difference between the high and low bids, over a decade, would amount to $63 million. Despite a chronic state budget crisis that made the low bid tempting, GTECH convinced state officials it uses more reliable, state-of-the-art technology that is worth the higher price.

After a protest by Scientific Games, the state ordered the hearing before O'Hern while temporarily extending GTECH's contract until Dec. 2007. During the hearings, Scientific Games contended GTECH's advantage is exaggerated while contending GTECH received preferential treatment because of its connection to MWW.

Testifying as a paid expert for the challenger, former state Attorney General John Farmer, Jr., said he was convinced MWW had at least an appearance of a conflict of interest, even though he found no evidence of an actual crime.

In canceling the hearings, Joel Sterns, GTECH's attorney, said he felt the state "called the game before we got a chance to bat." He was preparing to submit testimony from two national ethics experts rebutting Farmer's testimony.

But O'Hern, in a letter to Abelow, said he agreed with the decision to rebid the contract and stop the hearing. Further testimony would not have dispelled doubts over the potential MWW conflict, he said.

O'Hern said he found no evidence of "actual wrongdoing" by anyone and "I believe that all acted with good intentions." He added, however, that it may have been an "error of judgment" to believe MWW could work for both GTECH and the Lottery Commission without tainting the contract.

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5 comments. Last comment 10 years ago by rdc137.
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United States
Member #1826
July 11, 2003
2645 Posts
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Posted: October 22, 2006, 1:36 am - IP Logged

Or in layman's terms, New Jersey will have to wait a little longer for new terminals.

(insert signature here)

    MADDOG10's avatar - smoke
    Beautiful Florida
    United States
    Member #5709
    July 18, 2004
    20108 Posts
    Offline
    Posted: October 22, 2006, 9:26 am - IP Logged

    Since when has this State worried about the public?

    The mention of no actual wrongdoing, means that there was actual wrongdoings.

    Looks as though some political cronies will have to give back their kickbacks...!

    Geez, I wonder if Corzine saw that the State would be losing $63 million over the five year period. Oh christ, silly me he raised the sales tax to help pay for this...!

                                                 

                                                   "  When Injustice Becomes Law, Resistance Becomes Duty "

      Todd's avatar - Cylon 2.gif
      Chief Bottle Washer
      New Jersey
      United States
      Member #1
      May 31, 2000
      23260 Posts
      Online
      Posted: October 22, 2006, 9:34 am - IP Logged

      Since when has this State worried about the public?

      The mention of no actual wrongdoing, means that there was actual wrongdoings.

      Looks as though some political cronies will have to give back their kickbacks...!

      Geez, I wonder if Corzine saw that the State would be losing $63 million over the five year period. Oh christ, silly me he raised the sales tax to help pay for this...!

      Hi Maddog,

      Someone who doesn't live in NJ may look at what you wrote and think it's a big overreaction, but the sad truth is that NJ historically has one of the most corrupt governments of any state, and it's probably worse than you describe.  All the NJ citizens pay dearly for the corruption with the highest taxes in the nation.  And we keep electing the same people to state government again and again, right along party lines.  I am convinced that the people here will never get it. 

      NJ is like a hard disk crash, and the whole state needs to be rebooted.

       

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        MADDOG10's avatar - smoke
        Beautiful Florida
        United States
        Member #5709
        July 18, 2004
        20108 Posts
        Offline
        Posted: October 22, 2006, 10:00 am - IP Logged

        Hi Maddog,

        Someone who doesn't live in NJ may look at what you wrote and think it's a big overreaction, but the sad truth is that NJ historically has one of the most corrupt governments of any state, and it's probably worse than you describe.  All the NJ citizens pay dearly for the corruption with the highest taxes in the nation.  And we keep electing the same people to state government again and again, right along party lines.  I am convinced that the people here will never get it. 

        NJ is like a hard disk crash, and the whole state needs to be rebooted.

        I could,nt agree more Todd. The people of this State would rather close their eye's and their mouths, rather than stand up and fight for their rights.

        I can remember long ago, my father told me the "State" had been corrupt for as long as he could remember. I still laugh when I think about the Parkway going to toll free after so many years, and here it is 2006 and they're still floating the bonds.

        After all the mishandling this State has done, by every politician concernded, the people still turn their heads the other way. To damn lazy to speak their minds and stand up. It's very true, they'll never get it...! Instead of coming together they continue to split apart like the nucleous. It's right in front of them and everyone is still to busy eating used bones, instead of biting into a corn-dog.

        Strength comes in numbers people. Open your eye's..........! 

                                                     

                                                       "  When Injustice Becomes Law, Resistance Becomes Duty "

          Avatar
          Delaware
          United States
          Member #30273
          January 14, 2006
          494 Posts
          Offline
          Posted: October 22, 2006, 2:06 pm - IP Logged

          Hi Maddog,

          Someone who doesn't live in NJ may look at what you wrote and think it's a big overreaction, but the sad truth is that NJ historically has one of the most corrupt governments of any state, and it's probably worse than you describe.  All the NJ citizens pay dearly for the corruption with the highest taxes in the nation.  And we keep electing the same people to state government again and again, right along party lines.  I am convinced that the people here will never get it. 

          NJ is like a hard disk crash, and the whole state needs to be rebooted.

          Better still: Give Northern Jersey to New York and Southern Jersey to Pennsylvania.