Keep Keno on Hold

December 02, 1992

Before it embarrasses itself and the state of Maryland, the Board of Public Works ought to delay acting on a massive expansion of the state's gambling activities when it is asked today to approve an unprecedented no-bid contract that will enrich the lottery agency's private computer company, GTECH, by a whopping $49 million.

The appearances of a "sweetheart deal" are all too evident. When GTECH won the intense battle for this contract in February of 1991 with the help of lobbyists Bruce Bereano and former Gov. Marvin Mandel, we warned in an editorial that the "yawning gap of more than $20 million between the low bidder, GTECH," and the rival bidder "raises the immediate concern that this may have been a 'low-ball' bid by the winner, which will inevitably lead to add-ons [and] change orders. . ."

That gloomy prediction has now come true. What started out as a $64 million contract between the lottery agency and GTECH has mushroomed into a $120 million bonanza. GTECH added $6 million to the deal for providing an "instant ticket validation system" and now will receive another $49 million for "development and operation of a 'Keno On-Line Lottery Game System.' "

It is most alarming that this gambling expansion is gestating without any input from the state's legislative branch. There was no General Assembly review of this major step forward into big-time gambling. The Schaefer administration, desperate for extra revenue to balance the state budget, simply gave the go-ahead for keno, a form of electronic bingo that is a first cousin to video poker and electronic slot machines.

Equally troubling, this lucrative contract is being awarded without any competitive bidding. This makes a mockery of the state's contract procurement law. It is no mere "contract modification," as budget officials maintain. It is a brand-new gambling venture that bears little resemblance to the lottery. GTECH's expanded contract -- for an extra $49 million -- would be the largest no-bid award in state history. It cries out for some sharp questioning and investigation by Comptroller Louis L. Goldstein and Treasurer Lucille Maurer.

It is understandable why Gov. William Donald Schaefer, faced with a massive budget deficit, would turn to the lottery for additional revenue. But permitting widespread electronic gambling day and night is not the answer. Is this how Mr. Schaefer wants to be remembered, as the governor who opened the door to big-time gambling in Maryland? That's not the kind of legacy for the history books we think he deserves.

For all these reasons, the three-member board consisting of Mr. Schaefer, Mr. Goldstein and Mrs. Maurer should shelve the $49 million "contract modification" proposed by the lottery agency. This is far too important a decision to make without legislative input, public hearings and a thorough evaluation of the impact of electronic keno gambling on the citizens of this state.

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