Keno decision awaited Lack of bidding for job is faulted by a critic of gambling

December 01, 1992|By Marina Sarris | Marina Sarris,Staff Writer

On Jan. 4, Maryland may take a $49 million plunge into a keno lottery game that would operate almost around-the-clock at hundreds of restaurants, bars, bowling alleys and pizza parlors.

Top state officials may decide as soon as tomorrow whether Maryland should launch the new game, which would be based on a drawing of winning numbers every five minutes from 6 a.m. to midnight, seven days a week.

The Board of Public Works, which consists of the governor, comptroller and treasurer, will consider a $49 million contract for keno at its meeting tomorrow. Gov. William Donald Schaefer proposed the game in September as part of his plan to eliminate Maryland's $450 million budget shortfall.

According to lottery officials, Maryland's keno game would work like this:

Players would select from one to 10 numbers from a field of 80 numbers and mark them on a game slip. Every five minutes, a different set of 20 winning numbers would appear on a television monitor in the participating bar or restaurant.

Gamblers could bet from $1 to $20 on each game and play numerous consecutive games with a single slip. However, the maximum wager on each slip would be $100.

Lottery officials hope that keno would not cut into the $800 million in annual sales from its other games.

The proposed keno contract is unusual because the state ignored its competitive-bidding procedures and negotiated the price in private meetings with only one company, GTECH Corp. of West Greenwich, R.I.

GTECH won the state's lottery contract last year by dramatically underbidding the previous holder of the state's contract, Control Data Corp. If approved tomorrow, the modification for keno would raise the value of GTECH's five-year contract from $71 million to $120 million, a 70 percent increase.

Del. Leon G. Billings, a Montgomery County Democrat who has been critical of gambling, yesterday blasted the state's failure to solicit prices for keno from other companies. "There's only one way to determine if the state got a fair price and that is to competitively bid it. And they didn't do that."

Most of the contracts the state lets are competitively bid, said Scott Livingston, a former assistant attorney general for the state who helped write its procurement laws.

"It's got to be among the largest, if not the largest, contract modifications in the history of modern Maryland procurement, which began the time when Spiro Agnew lost his job as vice president because of a Maryland procurement scandal," said Mr. Livingston, who once worked briefly for GTECH's rival, Control Data.

The state lottery agency says it decided not to seek other bidders because GTECH already operates the game in other states and because the agency did not have enough time to solicit bids from others. The agency speeded up development of the game to meet the January launch date, which was set so that the budget problems could be fixed quickly.

The state expects to have 600 retailers on board to launch keno on Jan. 4, said Martin R. Goldman, the lottery's deputy director of marketing. Some 1,800 retailers, the bulk of whom do not now sell lottery tickets, will hold licenses for keno by June 30, when the current fiscal year ends, he said.

He expects keno to generate $155 million in sales from January through June and bring $50 million in revenues to state coffers during that time.

William S. Ratchford II, the legislature's chief budget adviser, said he doubts the new game would raise half that much.

So who's right?

When asked to reconcile Mr. Ratchford's estimate with his own, Lottery Director William F. Rochford replied, "I don't say he's incorrect. He has a different viewpoint than we do." Lottery officials say the game would earn about $120 million a year in revenues for the state from July onward.

The keno game being considered for Maryland most resembles the versions played in Oregon, Rhode Island, Kansas and California, Mr. Goldman said. At a time when other state agencies are laying off workers, the Lottery Agency is planning to hire five regular workers and 12 contractual employees.

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