Of All Lottery Payoffs, This is the Fat One

BARRY RASCOVAR

December 06, 1992|By BARRY RASCOVAR

It's the mother of all payoffs; the largest of wins; the biggest lottery jackpot ever in Maryland.

The winner? GTECH of Rhode Island. Thanks to a friendly governor, a friendly budget director and influential lobbyists, GTECH has parlayed a loss-leader computer contract with the Maryland Lottery Agency into a monster pay day.

We're talking megabucks. GTECH is being paid an extra $49.2 million for computers and software to operate an electronic keno game in Maryland. When the original $64.6 million deal was signed in 1991, after a bitter brawl with Control Data Corp., a new keno game was not part of the contract price.

But Control Data had included keno in its rejected bid. Control Data estimated the cost of adding hardware, satellite link-ups and keno software at roughly $5 million. Now the state is paying roughly 10 times that amount.

Many manufacturers make the type of keno software GTECH is using in Maryland. Yet there was no competitive bidding. GTECH was handed the contract, without any questions asked about the true cost of the new computer game.

From the start, the handling of this computer contract has been troubled. Lobbyists, especially ex-Gov. Marvin Mandel and Bruce Bereano, have proved influential. The state's procurement statute, once a model for others, was bypassed so effectively that political influence may have now replaced competitive bidding as the modus operandi for big Maryland contracts.

From the start, there were strong suspicions GTECH had intentionally underbid the contract because it realized there would be ample opportunity later on to make up the difference. Keno may be just the start.

Under the guise of a "contract modification," GTECH now gets a nearly 70 percent add-on without going through the hassle of a competitive bid. Once the keno operation is in place, the sky is the limit.

This electronic network could be used for the kind of progressive slot-machine set-up in Atlantic City casinos. Video poker is a natural add-on, too. Any type of gambling via a computer console is now feasible.

GTECH also is acquiring AmTote International Inc., the country's biggest race track computer operator, which runs the wagering system at Laurel and Pimlico. Tying AmTote into the lottery LTC network looks like another option, opening up enormous new gambling avenues.

The beauty of it all is that GTECH might be able to call all these moves "contract modifications" that could be handled through negotiation with friendly state officials. The governor certainly has been receptive to the firm's overtures. The company is promising a cash-strapped state tens of millions of dollars in new revenue. This lure is working.

In fact, the state has set up a system that rewards GTECH for enlarging gambling activities in Maryland. The Board of Public Works' deal with GTECH gives the company a percent of the action. The more gambling business there is, the more profit for GTECH -- and the state.

So it's not GTECH's fault that state officials have gotten greedy, that they care more about generating extra cash for the treasury than the morality of the situation. The company has simply taken full advantage of this opening.

The enormity of the "contract modification" approved last week by the Board of Public Works cannot be underestimated. It is the biggest non-bid contract in Maryland history, bigger than 98 percent of all state contracts ever signed.

It's the equivalent of the board awarding a $60 million contract for a science complex at College Park, then a year later approving a $40 million "change order" -- without any competitive bidding -- so the same builder can put up a library addition across campus.

Is that fair? Is it the best use of taxpayer funds? Competitive bidding was created to ensure that the state receives the lowest market price and that the award is made without political interference. "Contract modifications" were designed to permit modest changes in the work while it is in progress. That's not what happened here.

The General Assembly is supposed to approve all major appropriation requests. It didn't get the chance this time. Nor was it allowed to examine the propriety or discuss and vote on its willingness to extend gambling from a straight lottery to an electronic video wheel of fortune. It was totally shut out of the keno caper by the governor.

There were no public hearings, no public debate until last Wednesday's pre-ordained rubber-stamping of the GTECH contract expansion at the Board of Public Works by the #i governor, Comptroller Louis Goldstein and Treasurer Lucille Maurer.

GTECH expects to install a computer and a video monitor in 1,800 locations across the state. There will be a keno drawing every five minutes, 19 hours a day. That's 380 drawings a day, 2,660 drawings a week, 138,000 drawings a year. Big-time gambling has arrived in Maryland. You can thank the Board of Public Works for that.

Barry Rascovar is editorial-page director of The Sun. His column

on Maryland politics appears here each Sunday.

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