Florida Lottery Rip-Off
GTech And Their Accomplices Shortchange Florida
Italian gaming consortium, Lottomatica, has been granted a contract renewal to provide instant-ticket vending machines and online lottery games and services within Florida, through its Rhode Island based subsidiary, GTech corporation, for another 4 years, without allowing any other potential vendor the ability to bid on the contract and to possibly offer better terms, better technology, better oversight, and better games to the Florida residents and taxpayers who are supporting the State lottery.
In 1996 the Florida State Lottery Commission released a Request For Proposal (RFP) to run Florida's online lottery business. Automated Wagering won the bid but GTech sued the state, claiming that the state's selection process was flawed. GTech won the appellate court battle and was subsequently awarded the lottery contract, despite the wishes of the elected leaders of the state of Florida who chose a better and less expensive company to run Florida's state sanctioned gambling enterprise. GTech proved to be the better litigator, not the best guardian of the Florida lottery. Automated Wagering was ultimately allowed to continue limited lottery operations through the end of the contract term, with certain restrictions, but GTech's aggressive court battle paid-off when the next contract was awarded.
In 2005, GTech was given a 10 year "integrated services" contract to replace Florida's lottery machines and to provide technological support and maintenance services for 6 years, with two, two-year extensions allowable under the terms of the contract.
The new contract extension began on March 28, 2011 and continues to lock out all other competitor bids through March of 2015. How does a company with a worldwide reputation of committing fraud, orchestrating bribes, and promoting government corruption get one of the most lucrative Lottery contracts in the country? Examples of GTech's shady past could illustrate how they are able to acquire so many lottery contracts around the world.
GTech's "History of Corruption"
GTech has been mired in scandal in Texas since the early 1990's when they were found to have paid former Texas Lieutenant governor $3.2 million for only 1 year of "lobbying" work while in the employ of GTech. GTech then hired his top aide and also the aide of Governor George Bush during their efforts to run the Texas State lottery. When GTech lost their lottery business in Brazil due to the proven governmental corruption that took place during the awarding of the Brazil contract, the Texas Department of Public Safety Criminal Intelligence Service took a closer look at the way GTech operates, their history of corruption, and the potential for similar scandals in Texas.
In 1996, a GTech sales manager from New Jersey was convicted of operating a kickback scheme in which political "consultants" were paid to bribe public officials who voted on the state lottery contract that GTech was subsequently awarded. New Jersey assistant state attorney Kimberly Guadagno stated, "If they're paying $20 million to buy access to public officials, there has to be something wrong with that."
GTech paid a $90,000 fine in NY because one of its lobbyists gave overly generous gifts to politicians who were to vote on a pending state lottery contract with GTech, and then lied on his financial disclosure forms about the contributions.
New York state Sen. Frank Padavan has issued a series of reports since 1997 that are critichal of GTECH over its "history of corruption." Senator Padavan stated, "I would say their method of doing business is somewhat surly and unethical, and in some cases illegal, I don't think the state should be doing business with this sort of company," he said.
In 2008 GTech was fined 1.4 million by the district of Columbia for a ticket scam, which resulted in a Securities and Exchange Commission investigation?
A Rhode Island House of Representatives member was found guilty of accepting a bribe from GTech while a no-bid contract for the Rhode Island lottery was being debated among House members. The Rhode Island Ethics Commission stated that the "respondent had an interest that was a substantial conflict with the proper discharge of his duties in the public interest, in violation of R.I. General Laws."
GTech made payments to a California based company, who then diverted the funds to pay government officials in the Trinidad/Tobago Lottery Control Board $1.9 million to help facilitate gaining a gaming contract on the island nation. The country has asked the U.S. Securities and Exchange Commission to investigate. Additional investigations are ongoing.
A "consultant" hired by GTech "for his influence" was paid $18 million to help get GTech awarded the Poland lottery contract. The consultant admitted that he did little or nothing for the $18 million he received. Suspicious overpayments to political cronies often lead directly into the pockets of a politician or his campaign account. GTech seems to have perfected the overpayment scheme.
While negotiating a contract in the Czech Republic, GTECH agreed to make a $20 million "loan" to the country for a new sports stadium. U.S. Criminal Intelligence Service personnel asked GTech CEO Bruce Turner for details about the $20 million loan and whether or not GTECH was in the business of loaning money. Turner advised that "this was a necessary business expenditure."
In 1998, while GTech was competing with Richard Branson for the rights to operate the England lottery, the founder of GTech, Guy Snowden, was found guilty of trying to bribe Branson and his non-profit group into stepping aside and letting GTech take control of the British lottery. Snowden resigned his position as president of GTeck UK as a result of losing the court case.
GTech lost their contract to provide lottery services to the country of Brazil after it was revealed that GTech paid millions in bribes to government officials and power-brokers to guarantee they would be awarded the exclusive rights to provide lottery services within the country. They have also been accused of concealing information in government investigations.
In a 2003 incident, GTech sent $380,000 to a paper company that has been suspected by governmental oversight agencies of laundering money for political candidates. The front company then contributed the proceeds to government officials who were to vote on the pending lottery contract.
GTech and Lottomatica have a long and scandalous reported history of bribes and corruption by enticing government officials to accept illicit campaign donations, providing "loans" to those who are about to rule on a GTech contract, in addition to other documented accusations of criminal and ethical violations, in jurisdictions where the company was bidding for a lottery contract or maintaining an already awarded contract.
That fact that GTech and it's parent company, Lottomatica have been embroiled in so many investigations for bribes and other crimes committed while negotiating contracts with state and federal officials should demand that any contract being awarded to these companies receives extra scrutiny - and multiple competing bids for proposal, at the very least - but more aggressive regulatory oversight is clearly needed to rein in these rogue businessmen and their FOR-PROFIT corporations.
The United Stated of America was founded on the principles of free markets and open competition. To award a no-bid monopolistic contract to a foreign company, without offering any U.S. owned company the opportunity to compete is unpatriotic at best, but smells more of insider deal making than anything resembling a fair and impartial "Request For Proposal."
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