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Scientific Games In Running For Both Major N.C. Lottery Contracts

Posted December 28, 2005

— A company under investigation for possibly breaking state lobbying laws is prepared to bid for both major contracts offered by North Carolina's new lottery, officials said Wednesday.

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  • Scientific Games Corp. has submitted a letter of intent to bid for both the online, or automated numbers games, and scratch-off ticket contracts, said lottery commission executive director Tom Shaheen.

    Two other firms applied for each of the separate seven-year contracts, which could generate tens of millions of dollars in revenue for the winner. Rhode Island-based GTECH Holdings Corp. plans to bid on the online contract, while Oberthur Gaming Technologies, based in Canada, intends to bid for the scratch-off ticket contract.

    "We have two bids in each side," commission chairman Charles Sanders said during a commission meeting. "As far as I'm concerned that's very good."

    Bids are due Jan. 13, and Shaheen said he wants to choose winners by Feb. 3. The first instant-ticket games for the North Carolina Education Lottery are projected to begin in early April.

    State prosecutors are investigating whether Scientific Games, whose lottery division is based in Georgia, violated lobbying laws while the Legislature debated the creation of a lottery earlier this year. The company allegedly paid former lottery commissioner Kevin Geddings tens of thousands of dollars to advocate the games and also allegedly paid House Speaker Jim Black's political director, Meredith Norris, and allegedly helped write the lottery law.

    "There's some questionable ethical behavior, and for them now to be awarded a multi-million dollar contract -- that you're going to give it to them -- that's a pretty risky operation," said Bob Hall, of the government watchdog group Democracy North Carolina, which believes Scientific Games is already tainted.

    Sanders and other lottery commissioners, however, have said they do not mind Scientific Games bidding because they have not been convicted of any wrongdoing.

    Any lobbying law violation would be a misdemeanor. The lottery law bars the commission from entering into a contract with a company convicted of a felony in the past 10 years.

    Scientific Games is "a legitimate bidder," Sanders said after the meeting. "The noise surrounding their activity in North Carolina is just that ... until they have been precluded for any other reasons, they are a legitimate bidder."

    The instant-ticket bid request requires the winning bidder to provide the printing, warehousing, distribution and marketing of lottery tickets. Oberthur, which prints tickets, would have to subcontract with another company to provide the other work, Shaheen said. Oberthur already provides instant tickets in Virginia and Maryland.

    The commission also agreed Wednesday to allow two members to oversee how potential lottery retailers will be reviewed before they are approved to sell tickets. The state Division of Alcohol Law Enforcement will perform criminal background checks. A dozen ALE agents and five retired state Revenue Department workers may be hired to perform the work.


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