Keno: Slippery Legal Slope?

December 16, 1992

State officials used some tenuous arguments yesterday to justify the rapid -- and private -- approval of keno-style video gambling for Maryland. It left skeptical legislators puzzled by the rush to approve the game and to award the $49 million contract -- without competitive bidding -- to a politically well-connected company, even though other firms might have been able to offer the state a similar game at a greatly reduced price.

Explanations as to why the Lottery Agency acted so precipitously kept changing during the five-hour hearing before the Senate Finance Committee. It was an "emergency" situation, the agency's legal adviser said. But her boss, the attorney general, later conceded that the keno caper doesn't fit the legal definition of an "emergency."

Since Gov. William Donald Schaefer wanted the keno game started Jan. 1 to help close a budget deficit, a decision had to be made quickly, lottery officials claimed. But an expert on the state's procurement law later asserted this doesn't give the agency the right to short-circuit the normal competitive bidding process.

Ah, but GTECH is the only company offering this kind of keno system, according to state officials. That's why they skipped the bidding process. But legislators discovered that while GTECH may be a leader in keno, other firms -- including one in Catonsville -- offer similar games.

Attorney General J. Joseph Curran Jr. at one point said he had been informed by the Lottery Agency that GTECH was "the only game in town" when it came to keno. "If that information is not true," Mr. Curran conceded, "then the principal foundation of our decision can be challenged."

It was -- repeatedly.

Without any legal research or taking time to find out if other gaming companies offered cheaper keno systems, state officials privately okayed the no-bid contract on the same day the governor gave the order to implement keno in a hurry.

What came out at yesterday's hearing raises disturbing questions. Mr. Curran and his aides appeared to be climbing a slippery legal slope trying to justify their earlier actions. Lottery officials seemed most concerned with maximizing profits, in line with the governor's mandate. And senators seemed perplexed about what, if any, steps they could take to derail keno at this stage.

As Lt. Gov. Melvin Steinberg said in testimony harshly critical of the Schaefer administration, the approval of keno "is a blatant illustration of the adage, 'the ends justify the means'." He called the entire episode "shortsighted public policy." It is, indeed. There are much more responsible ways to raise funds to balance the budget. There certainly was no "emergency" or any valid reason to trample the state's procurement law.

We hope Mr. Curran, at least, will ponder the statements he made before the legislative committee. The entire keno matter ought to be re-opened. So far we've heard a lot of justifications from state officials. That's not good enough. Not when a public policy issue of this magnitude is involved.

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