Lottery Pact Eases Financial Report Rules

Times Staff Writers

In a last-minute deal that adds a contender for the world’s largest lottery contract, Assembly Democrats on Thursday made things easier for contractors by loosening financial disclosure requirements.

Sacrificed in the arrangement was an effort to guarantee that women and minorities be given a bigger slice of the lottery pie, a provision opposed by Republicans.

The proposed change in the voter-approved lottery initiative would mean that at least one major corporation--in danger of being frozen out of bidding for a $200-million, four-year lotto and numbers game contract--would be in competition.

The agreement, subject to approval by the full Legislature, would allow companies to compete for contracts without providing detailed financial reports and income tax statements from officers and major stockholders of their parent corporations.


By eliminating those disclosure requirements, the legislation would open the door to GTECH Inc., the only major lottery company that had announced it could not for those reasons bid on the upcoming contract.

“I’ve never been so busy in my life,” said GTECH lobbyist Clayton R. Jackson.

Earlier in the week, most of the nation’s largest lottery companies told the Deukmejian Administration that they were prepared to bid on the contract to provide lotto and numbers games, despite the initiative’s tough disclosure rules. The contract calls for setting up and managing 5,000 computer terminals at lottery sales outlets throughout the state. Formal bidding will start on Nov. 1 on the contract, which takes effect Jan. 1, 1986.

Only GTECH said it could not comply and the company lobbied heavily to persuade the Legislature to change the requirements.


Under the lottery ballot initiative, GTECH’s principal stockholders, including the Texas billionaire Bass brothers, would have to turn over income tax records to the Lottery Commission and the attorney general’s office--something that the Bass brothers are unwilling to do.

Drive Abandoned

To remove the objections of Republicans and assure passage of the disclosure bill, Assembly Democratic leaders abandoned their drive to give minorities and women a 30% share of all large contracts.

Instead, they substituted a watered-down provision urging the lottery commission to take a number of steps intended to give minorities and women preference in contracts and adding a deputy director for minority affairs to the commission staff.


The key players in the compromise were Assembly Democrats Richard Alatorre and Maxine Waters of Los Angeles and Republican Frank Hill of Whittier.

“Richard Alatorre, Maxine Waters and I slugged it out in the Speaker’s conference room for half an hour,” Hill said.

Deliberations Influenced

He acknowledged that GTECH’s lobbying affected the deliberations. “I’m sure that it’s part of it.”


Alatorre and Waters had been holding out for the 30% minority requirement for months. Alatorre chairs the Assembly Governmental Organization Committee, which hears most lottery-related legislation.

He said that he was reluctant to drop the minority provision. “I don’t like it . . . (but) I’m interested in fair competition. I’m interested in seeing that as many companies that want to bid can bid.”

The author of the measure, Sen. Ralph C. Dills (D-Gardena), said he was pleased with the changes. “They’re good if they are going to spring this thing loose,” he said.