Company with ‘Checkered History’ Awarded State Contract

The state Department of Revenue awarded a five year contract to the GTECH corporation earlier this year "to supply terminal-based game services to the Pennsylvania Lottery," potentially worth $25 million/year. This is in addition to GTECH’s existing five-year contract in which it provides a computer-control system that monitors slots gaming in Pennsylvania.

The awarding of contracts to GTECH has not been without controversy. In 2005, the Rhode Island company, which specializes in casino-related operations, hired Ballard Spahr partner Ken Jarin for assistance in contract negotiations while it was attempting to win its contract. Mr. Jarin maintains a close relationship with Gov. Ed Rendell, and has contributed $90,000 to his campaigns. Ballard Spahr is the Governor’s former law firm, and has been the recipient of over $10 million in state contracts during Mr. Rendell’s Administration. State legislators have expressed concerns about how much state business Ballard has received since 2002, including large dollar no-bid contracts.

GTECH business dealings have come under fire from around the world. Former GTECH Chairman Guy Snowden was convicted in 1998 of attempting to bribe Richard Branson of Virgin Airlines, who had bid for a lottery license in Britain. In 2006, New Jersey State Treasurer Bradley Abelow declared he would re-bid the state lottery contract amid concerns that GTECH had an insider advantage, according to the Lottery Post. And the NJ.com news site reported this past September that, "GTECH Corporation, the longtime operator of New Jersey’s lottery, has been fined $1.4 million by Washington, D.C., over charges that subcontractors of the company or a partner firm hacked into the District’s lottery system and printed winning tickets for themselves two years ago."

In a 2006 letter to Governor Rendell, the top two Pennsylvania state senate leaders expressed reservations about awarding GTECH a state contract, writing, "…there is considerable concern regarding the award of the central control computer contract to GTECH, given that company’s long and checkered history of reported misconduct in venues across the globe."

A 2007 edition of the Lottery Post reported that GTECH "hired the former patronage chief for then-New York Gov. Mario Cuomo as a $20,000-a-month consultant. Tonio Burgos held the job for about three months until the deal leaked out." Additionally, The Post reported that GTECH "awarded a former gubernatorial aide in Missouri a 10-year, $80,000-a-year consulting contract after GTECH won that state’s business," and hired "lobbyists in Texas who included two former aides to then-Gov. George W. Bush, as well as former Lt. Gov. Ben Barnes. In 1996, public pressure led to Barnes’ contract being bought out for $23 million."
A 2006 report issued by the Texas Department of Public Safety stated that GTECH paid $380,000 to a Brazilian nonprofit organization that "was a paper company suspected to be used in Brazil as a means for laundering money and making illegal political contributions."
The gaming company has acknowledged the U.S. Securities and Exchange Commission had investigated the company’s operations in Brazil.
GTECH has contributed nearly $500,000 to the Democratic Governors Association (DGA). The DGA has contributed over $1.3 million to Gov. Rendell’s campaigns.

Chris Freind can be reached at [email protected]