Ticket Firm Recaptures Part of Rich Lottery Pact
A Georgia firm won a major victory Friday when it recaptured part of the ticket-printing contract with the California Lottery that had been rescinded over a legal dispute.
Lottery Director Mark Michalko, acting under emergency provisions approved by the California Lottery Commission last week, awarded a stopgap, $3.5-million contract to Scientific Games Inc., for 200 million scratch-off tickets to be used in the lottery’s ninth “instant winner” game, which is expected to begin sometime next fall.
The new contract means that for the first time, Scientific Games will be able to use a plant it erected months ago to print California Lottery tickets in California.
Scientific Games, which wrote the initiative that created the lottery and bankrolled the campaign that saw it voted into law in 1984, won an initial contract in 1985--worth an estimated $40 million or more--to provide the first year’s tickets for the lottery.
Won an Extension
Last May, the company won a six-month extension of that contract, worth $16 million to $20 million more.
In June, however, Michalko demanded that Scientific Games, based in Norcross, Ga., give up the extension and the remainder of the initial contract--worth a combined total of about $32 million--if it could not sever its agreement with Dittler Bros. of Atlanta, a subcontractor that printed the tickets. Dittler, involved in a longstanding legal wrangle with Scientific Games, had been found by court-appointed officials to have fraudulently overcharged Scientific Games for material. Michalko said the fraud finding threatened, by association, to taint the California games.
When a judge in Georgia ruled that Scientific Games still had to honor its exclusive subcontract with Dittler, Scientific Games lost its contracts with the California Lottery. As a result, Michalko decided to award a contract for a single game to keep the state from running out of tickets before a long-term deal could be negotiated.
Freed From Subcontract
Then, in a reversal last week, the judge freed Scientific Games from the Dittler subcontract. This permitted Scientific Games to bid again on California contracts and to use its newly constructed plant in Gilroy to print tickets under any contract that it might win.
Scientific Games was joined in the bidding on the single-game contract by Dittler Bros. (operating under the name of Lottery Production Services) and Webcraft Games of New Brunswick, N.J. Lottery officials said that under the emergency provision in force, Scientific Games won the contract Friday solely on the basis of the lowest qualified bid. They said the Dittler bid was not evaluated “because the firm is in the process of restructuring.”
Dr. John R. Koza, board chairman of Scientific Games, said in Sacramento Friday that the new contract “vindicates” his belief that his firm is “the best vendor for the California lottery.”
He said the firm will begin printing tickets in Gilroy in about 10 days.
Scientific Games, Dittler and Webcraft are among eight companies that have expressed interest in bidding on the remainder of the six-month contract extension once granted to Scientific Games. A contract for that extension is expected to be awarded next month.
The lottery’s instant games will be supplemented this fall--probably in September--by computerized “lotto” games featuring multimillion-dollar jackpots. The primary contract for the $230-million lotto system has been won by GTECH Inc., of Providence, R.I.
