Lottery’s Big Backer Lands the Contract

California lottery officials announced to no one’s surprise Wednesday that the company that bankrolled last year’s successful lottery initiative campaign is the apparent winner of a multimillion-dollar contract to provide the state with its first year’s supply of instant lottery tickets.

As expected, Scientific Games Inc. of Atlanta was deemed the only qualified bidder because it was the only firm that supplied lottery officials with the detailed financial data required by the state initiative that an attorney with the firm authored.

The only other company to submit a bid, British American Bank Note Inc. of Canada, was disqualified because it failed to submit the required financial disclosure data.

The state Lottery Commission is expected to award the instant ticket contract on June 3.

Depending on how many of the instant “scratch-off” tickets are ordered by the state, the contract could easily be worth $40 million or more in one year.

The controversy over the role of Scientific Games in the initiative process boiled over into the news conference held for the contract announcement as state Sen. Ralph C. Dills (D-Gardena) stood among reporters and fired hostile questions at lottery officials, accusing them of failure to obtain a competitive bid.

Officials Challenged

Dills, author of a bill to loosen lottery contractor financial disclosure requirements that has been stalled in the Legislature, questioned lottery officials’ assertions that Scientific Games presented a “competitive” ticket bid as determined by a survey of other states.

“How can it be competitive when you only had one bid?” Dills demanded of newly appointed Director M. Mark Michalko.

Michalko said Scientific Games’ offer to print instant tickets at about 2 cents each was a “fair” bid.

“I’m pleased with the proposal,” he said.

Lottery officials say the average cost of supplying instant tickets in other states is about 2 1/2 cents each.

6 Instant Games

Dills argued that the projected volume of ticket sales in California of 1.9 billion should lower the price per ticket and that state officials should have given his disclosure bill more time to move through the Legislature.

Scientific Games’ recommendations to lottery officials call for six instant games to be played during the first year of the lottery, using such names as “California Jackpot” and “The Sky’s the Limit.”

The first game, expected this fall, would offer a top instant payoff of $5,000 and, by the sixth game, the top prize would be $100,000.

In addition, under Scientific Games’ recommendations, the winners of instant games would qualify to take part in drawings offering multimillion-dollar jackpots.

Critics of Scientific Games contend that the lottery initiative disclosure requirement gave the company an unfair advantage over competitors because its parent company, Bally Manufacturing Corp., had already put together such detailed data to obtain a casino license in New Jersey.

Scientific Games contributed $2.1 million of the $2.4 million raised by proponents of the 1984 lottery initiative.