The Annapolis High-Rollers and the Keno Caper

BARRY RASCOVAR

December 20, 1992|By BARRY RASCOVAR

If William Donald Schaefer had his way, Maryland not only would be on the verge of plunging into keno, but also video draw poker, blackjack and bingo. The modern-day equivalent of the one-armed bandit would be back in business at 600 locations on January 4, at 1,800 locations by July and 4,000 locations in 1994.

We're talking big-time gambling.

Clearly, the governor has been bitten by the gambling bug. He loves to play the lottery. Always has. He's been pressing lottery officials to expand their games of chance ever since he took office. He intervened two years ago in a contract dispute over lottery computers. This fall he gave the order to proceed with both a keno game and a video poker game.

But there was a problem. One day after lottery officials were told in September to implement the keno and poker games, the attorney general's office informed Mr. Schaefer's minions that keno was OK, but video poker wasn't.

''We believe that the proposed video lottery game is a type of gambling that the Legislature did not intend for the Lottery Agency to operate under its current statutory authority,'' the legal opinion reads. ''We note further that the video gambling devices at issue appear to constitute [illegal] 'slot machines'.''

So the ''video lottery,'' offering games such as draw poker, blackjack, bingo and even keno, was shelved. But because the other keno game being proposed by the Lottery Agency ''is played in a social setting and not on individual computer terminals'' and ''is sufficiently similar to those games that were tradition ally considered to be 'lotteries','' the attorney general said this keno version is, indeed, legal.

How a game of keno played on an individual computer terminal differs from keno played through a central computer terminal eludes us. It's the same game, played the same way. Yet one is legal and the other isn't. Only the attorney general can tell the difference.

So the governor, now down to one game, on September 14 called in William Rochford, director of the lottery, and instructed him to implement the legal version of keno by January 1 and to raise $50 million in revenues for the state in the following six months. The governor's implicit command -- ''Do it now!''

Mr. Rochford, a former city police commander, knows how to follow orders. He called in his assistant attorney general and asked her if the agency could skip the formal bidding process because of the time urgency. He wanted to award the keno contract to the lottery's computer vendor, GTECH, which runs ++ similar keno games elsewhere.

The lawyer asked Mr. Rochford and the agency's marketing director if GTECH were the only company that offers this game. They assured her that GTECH was. She then gave the officials the legal go-ahead to award GTECH a ''sole-source'' contract for keno.

Yet two weeks later, another gaming company, International Totalizator Systems, wrote to the Lottery Agency inquiring about the keno game. It wanted to make a formal bid. The company's request was summarily rejected on October 29.

No one, it appears, bothered to check the facts. GTECH is, indeed, the industry leader in computerized keno gaming. But International Totalizator operates its own computerized keno game in New South Wales, Australia. Other companies also offer keno games, including a Catonsville outfit, Advent Technology.

Yet GTECH was awarded a $49 million ''sole-source'' contract for which it is not the sole source.

At least four reasons have been advanced for circumventing the state's procurement law and rushing into a deal with GTECH. Not one holds up under scrutiny.

Excuse No. 1: The original contract obliges the state to purchase keno from GTECH.

That's not so. The bid request simply stated that the new lottery system must have the capability to run a keno-type game. GTECH's formal bid said that its version of rapid-fire keno, which it calls ''Club Keno,'' ''is available to the Lottery as an option, but has not been priced in this proposal.''

In other words, the state wasn't obliged to award keno to GTECH.

Excuse No. 2: GTECH is the only vendor that operates ''Club Keno.''

That's like saying Ford is the only vendor that sells an LTD. Yet plenty of other manufacturers offer a luxury car model similar to the LTD -- just as plenty of other gaming companies offer a version of computer ized, rapid-fire keno. It's just not called ''Club Keno.''

GTECH's keno game is not the ''only game in town,'' as Attorney General J. Joseph Curran maintained last week.

Excuse No. 3: ''The accelerated time schedule did not allow the Lottery time to competitively procure the game, given the revenue needs of the state.''

That is not a valid excuse for by-passing the procurement law. Attorney General Curran admitted as much to legislators last week. Only in an ''emergency'' -- as defined by state regulation -- can competitive bidding be discarded. Mr. Curran conceded to lawmakers that the time element is ''not within the definition of 'emergency'.''

Excuse No. 4: It would cost the state an extra $11 million to hire a vendor other than GTECH because of GTECH's expertise and the computer gadgetry it already has installed in Maryland.

That's the same logic the governor rejected two years ago when he overturned the Lottery Agency's bidding process. The difference: last time, GTECH was the outside bidder trying to win the lottery contract; this time, GTECH is the insider trying to safeguard its monopoly.

The truth is that state officials had no way of knowing if extra costs would be involved because they never bothered to ask other companies to submit data or bids. They just took GTECH's word for it.

Clearly, we have not heard the last of Maryland's keno caper.

E9 Barry Rascovar is editorial-page director of The Sun.

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