High Integrity Systems

The California Lottery Commission on Wednesday postponed awarding a non-competitive, $23-million contract to GTECH Corp. after it was alleged that the agency's staff had discouraged a rival company from submitting a proposal for the contract. The three-week postponement came at the suggestion of Commission member Edward L. Lammerding, who urged the panel to delay action until the matter could be more closely examined.

The state's mishandling of a lottery computer contract has added $44 million to the price tag for a new customer-friendly ticketing system--and may have cost California's financially strapped schools as much as $113 million in anticipated revenue, legal documents and interviews show.

One week after an auditor's report found that the lottery stifled competition for a $600-million computer contract, two Georgia companies formally demanded Monday that the state cancel its contract with the winning bidder. Automated Wagering International argued that the lottery's contract with GTECH Corp. of Rhode Island to install and run a central computer system to take bets was invalid, contending that the transaction last year violated California law by squeezing out competing bidders.

One week after an auditor's report found that the lottery stifled competition for a $600-million computer contract, two Georgia companies formally demanded Monday that the state cancel its contract with the winning bidder. Automated Wagering International argued that the lottery's contract with GTECH Corp. of Rhode Island to install and run a central computer system to take bets was invalid, contending that the transaction last year violated California law by squeezing out competing bidders.

The state's mishandling of a lottery computer contract has added $44 million to the price tag for a new customer-friendly ticketing system--and may have cost California's financially strapped schools as much as $113 million in anticipated revenue, legal documents and interviews show.

In a sudden decision, Gov. Pete Wilson replaced the head of the embattled California lottery Wednesday and named an official from the state prison system as interim director. A Wilson spokesman said Maryanne Gilliard, 35, a deputy director in the Department of Corrections, will take over as the lottery's top official effective Monday. She will be paid an annual salary of $98,652. The lottery has a budget of about $356 million a year and generates more than $2 billion in revenue.

The installation of a convenient, efficient system for cashing Scratcher tickets was delayed for years while the California lottery wasted millions of dollars on a lawsuit that it had virtually no chance of winning, a new audit found Thursday.

The California Lottery's costly mishandling of a multimillion-dollar computer contract demonstrates the need for tougher laws that would give the Legislature and the governor more control over the state's biggest gambling operation, a government report said Monday.

Since its inception in 1984, the California Lottery has operated under rules that, compared with those imposed on other state agencies, give it extraordinary fiscal freedom. But costly missteps--including a fiasco in which millions were lost because of a canceled computer contract--have led some state officials to conclude that greater oversight is needed. High time. In a way the lottery invited trouble from the start.

The Wilson Administration ordered an internal audit Wednesday of the California Lottery's bidding process after only one company responded to a request for bids on a $250-million contract to run its computerized games. Officials said they found the lack of response from other bidders troubling and wanted to examine the bid specifications to ensure that "we have a fair and open competitive process."

The California Lottery Commission on Wednesday postponed awarding a non-competitive, $23-million contract to GTECH Corp. after it was alleged that the agency's staff had discouraged a rival company from submitting a proposal for the contract. The three-week postponement came at the suggestion of Commission member Edward L. Lammerding, who urged the panel to delay action until the matter could be more closely examined.

Despite the introduction of an array of games designed to bring players back, sales of California Lottery tickets have remained flat and forced officials to cut another $5 million from the administrative payroll. "The situation is very, very difficult," Lottery Director Sharon Sharp said Tuesday. "It's crazy. We're bringing out new products and we have almost no money to advertise them."

She describes it as a "hellish" three months. First there were accusations that she mishandled one of the largest contracts ever awarded by the state by favoring the one company that bid. Then there were investigations of her actions by a governor's task force and a legislative committee. In the end, state Lottery Director Sharon Sharp weathered it all, but at a cost.